Nasscom ranks the Indian start-up ecosystem the third largest globally, adding 800 start-ups annually. With only a small fraction of these start-ups bagging angel, private equity or venture capital investment, the founders of the rest must turn to their own network to raise funds—or bootstrap the venture.

Bootstrapping is a viable alternative financing option, according to Faisal Husain, co-founder and CEO of Synechron, a provider of technology consulting and outsourcing for the financial services industry. A firm believer in self-funding for the freedom it bequeaths, Husain shares how he has made bootstrapping work for Synechron.

Put your thinking hat on

Bootstrapping has its share of challenges—the most obvious and the biggest being a lack of funds to scale up. When you hit that wall, get creative. Let this challenge drive lateral thinking. If your product isn’t good enough as it is, what would make it appeal to a bigger market? How could it better solve the real world problem you started out to address? Could an add-on product or service help grow your basket of target customers? There is no replacement to product development and enhancement. The right offering will scale.

Cut costs

When you’re hard pressed for money, you scrimp and pinch. Bootstrapping forces the CEO to evaluate and prioritise every cost—and cut out all but the most essential. Limited funds make for leaner, close-knit teams and can compel even the top guns to multitask, which is a good thing. Leaders who stay in touch with grassroots are more likely to introduce time and money-saving optimised business processes. For instance, a CEO who gets personally involved in the despatch of hard copies of client contracts is more likely to think in terms of creating an online/cloud based contracts management system than one who relies on office assistants.

Tap into your networks

IT services start-ups can bag new business on the basis of reference and relationships, and gradually scale up. Synechron’s early clients came from my networks. In fact, I conceptualised Synechron while I was working with Merrill Lynch. I saw a gap in the technology consulting space for financial companies. I tapped into those networks when we started up and it worked very well. Word of mouth referrals helped us grow. Incidentally, other areas conducive to bootstrapped start-ups are the e-commerce and fast food segments. Building an e-commerce platform is relatively easy nowadays. Several major domain sellers and web service providers help start an online store within an hour. Comparatively higher margins in the food industry allow entrepreneurs to break-even faster.