Using focus to avoid fundraising

Building a software company is hard… and expensive. In some ways, building an open source company can be even harder — open source is a great way to build a product, but getting the monetization right can be a struggle. This is probably why so many open source startups take venture funding.

On the other hand, not all open source startups take venture funding… and some of those startups end up being quite successful. There are certainly advantages to taking venture funding, because the money allows for growth — but it can also mean losing control of the business, and by default losing control of the project. For some people, that doesn’t matter. For others, the whole point of starting a company — and starting an open source company — is to be a master of your own fate and retain the ability to make decisions about the direction the company takes, even if that means doing things that aren’t in the short term financial best interests of the company.

If you’re a person like that, perhaps one who has a grand mission to make X more accessible or another mission that is not directly tied to getting massively rich, getting venture funding might end up making you miserable.

If you’re going to avoid VC money, you’re going to need to focus. Every example of a successful open source company that’s bootstrapped itself, either entirely or at least for long enough to get extremely favorable terms when it does raise money, has been crazy focused. They start with a very, very specific market — French auction houses, the U.S. Department of Defense, European railways, etc. Usually the market is choosen because the founders have some inside knowledge both of the ways in which it is underserved and how they can help as well as personal connections that will make initial sales that much easier.

Focus is a good idea even if you have venture funding, because getting word of mouth traction, increasing your ROI on marketing activities and building buzz are good regardless. But it’s absolutely critical if you’re going to bootstrap. If you have no idea of how to focus, think again. Is there an audience where you, as a founder, have an advantage over others, because you know the market, know the pains and know the people? Start there.