EU-Startups – Bootstrapping a coaching success story | The story of Bettercoach
Bootstrapping a coaching success story | The story of Bettercoach
2023-02-15Bootstrapping is a funding journey many entrepreneurs and startups take. It reflects the hustle, grit and determination needed to build a startup. A company that is bootstrapped takes on little or no external funding, relying on pulling together personal savings, initial revenue generated, or other non-traditional sources of capital. Bootstrapping requires being resourceful and creative: […]
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Bootstrapping is a funding journey many entrepreneurs and startups take. It reflects the hustle, grit and determination needed to build a startup. A company that is bootstrapped takes on little or no external funding, relying on pulling together personal savings, initial revenue generated, or other non-traditional sources of capital.
Bootstrapping requires being resourceful and creative: seeking out solutions to maximise impact with minimal resources.
It’s not easy to bootstrap a startup. But, when economic times are strained, and investors perhaps less willing to pump cash into young companies, it could prove a viable, healthy strategy for startups wishing to grow.
Based in Berlin, bettercoach is a startup with an impressive bootstrapping backstory. Launched in 2017, the edutech startup works with companies and organisations to co-create impactful coaching and development programs. It’s been bootstrapped from the beginning, and currently provides users with a global pool of 1,000+ rigorously selected certified coaches, facilitators, and experts – available in German, English and French.
The company counts clients such as SAP, Audi and NTT Data and has enjoyed revenue growth of 123% whilst being self-financed. We chatted with Matthias Hüthmair, Co-Founder and Managing Director, to learn more about the story – and how bootstrapping can help create long-term, sustainable growth.
Can you tell us about bettercoach?
Markus, Rouven and I started bettercoach in 2016 with the mission to support people to feel more fulfilled at work. Based on our personal experience, we believe that offering coaching to organizations and their employees makes this mission a reality.
Since then, we quickly grew from an online coaching marketplace into an all-in-one management platform for coaching. This way we enable our customers to monitor and reduce their HR development costs while at the same time offering high quality coaching to their employees.
Up to now, we have grown our pool to 1,200 carefully selected coaches worldwide and added further (team) formats to the platform such as mentoring, workshops or change-facilitation. Today we focus on developing our own Leadership model and building up a bigger community in personal & leadership development to share and exchange expertise.
What inspired you to start the company?
The inspiration for bettercoach was pretty simple: Markus, Rouven and I completed coachings before founding bettercoach. For me personally, coaching was a life-changing experience that positively influenced my way of thinking and helped me find my path in a deep personal crisis. Until today, we all continue to work with our coaches. Rouven even became a certified coach himself.
Foremost, coaching has taught us the power of what we call “Leadership Essentials”: emotional intelligence, purpose, resilience and to actively embrace change. We believe that a deeper understanding of yourself unleashes and elevates those core “Leadership Essentials”. For us, everyone is a leader independent of their role and responsibility within a company. Those beliefs inspire and move us.
What moments are you most proud of?
There are lots of proud moments in our history – we have successfully been competing against heavily funded companies like Betterup, Coachhub or Sharpist. Up to now, we have won 70% of the tenders we have been invited to and 50% of the biggest 10 German companies are working with us. Since we started, we have had a client fluctuation rate of 0% which comes back to our offer but especially to our client relationships: we strongly emphasize co-creation and our clients appreciate our unique mindset and our passion for coaching.
And all of that is the result of our strong team culture. We are very proud to have such a satisfied team. Although we have a high amount of autonomy and freedom in our company, everyone works hard and focused.
bettercoach is bootstrapped – is there any reason you decided to take this fundraising approach?
Bootstrapping is the most suitable fit for us. We did not start bettercoach to make an exit. Our main aim was to build a company that we like to work for, driven by our own values with the mission to grow sustainably.
Autonomy is one of our core values and bootstrapping has given us the financial freedom to decide for what seemed right for our clients, our team and the company – independent of any interests of external investors. And fortunately, the organic growth worked out.
How did you go about it?
We started with a MVP and built an online coaching marketplace, we called it coaching-on-demand. That’s how we could generate revenues from early on without a big commitment of our clients. The first revenues enabled us to hire a CTO, who started developing our all-in-one coaching platform with integrated features for coachees and HR in co–creation with our first client, Deutsche Telekom. We continued like this and hence could afford a bigger team to iteratively built a better product.
How has the experience been so far?
Overall, the bootstrapping experience is great but also challenging at the same time. It feels right to go at our own pace, step by step, and to be conscious about money. On a personal level everyone can also grow into their roles, including us as a leadership team.
However, bootstrapping of course also limits us in some ways so there were times when we also thought about an external investment. But in the end, we feel more independent from financial and economic crises. Although economic developments also affect us, they do not risk our funding, like many competitors who have to let go of their employees at the moment.
In the beginning, our office got too small so Markus, Rouven and I made cold calls to enterprise clients in the courtyard, during wintertime in ice-cold Berlin sitting on a garbage bin. Another struggle was that the three of us waited very long for our first salary. So there simply was no luxurious life or big holidays. Bootstrapping means you have to earn yourself every penny and be very patient.
What are your top 5 bootstrapping tips?
- Make sure that bootstrapping really fits your business model, your personality and your personal financial situation. You have to be able to cope with less income for a while.
- Try to find ways to make revenues as soon as possible, this helps feeling more safe and confident.
- Test the market fit by co-developing your product / service with a first client
- Work in a smart and effective way, save your resources and take care of yourself.
- Get help from outside if needed, e.g a coach etc. to build up your company.
What 3 things does a founder need to know before embarking on this funding route?
- Be aware that it might not be more relaxed than having investors. It is just a different path.
- You have autonomy but you need a great sense of responsibility and leadership.
- You have to be your own investor and business angel and act like it.
What is the benefit of being bootstrapped now we hit times of economic uncertainty?
We are more independent from financial markets than funded companies as we are not relying on interest rates or investor interests. This flexibility allows us to adapt our goals to current market circumstances which again translates to stability and sustainable growth even in tough economic times.
Do you think it gives you an edge over your competitors?
Clients choose to work with us not only because of our great product but especially because of our amazing team which is highly motivated and experienced in the field of coaching. And we believe that it is also our healthier growth targets and culture that has put us into this luxurious position in which we could easily attract great talent with a deep passion for personal and organizational development.
It’s not the ultimate proof but you will not be able to survive for long if your product does not have a market fit. But: The suitable funding and approach depends on the business model. There are also great and supportive investors out there. Between bootstrapping and VC are many other forms of funding possibilities. We can highly recommend a bootstrap experience but are also aware that from a systemic point of view, this decision does not only depend on entrepreneurial grit but also on privilege.