VC funding for software startups isn’t as big or as hyped up in Europe as it is in the U.S.
But there is still a funding culture in startup communities in major European cities such as London and Berlin, perpetuating the same funding myths.
You can still hear, “I want to create a software startup, so I need some funding” in Europe, too.
But VC funding is rare—and rarely works for founders—everywhere.
The new reality: costs to a software company are very low and the risks of outside startup capital are very high.
Chris Erler was co-founder and COO of ComX.io, a sales pipeline generation for mid-market B2B companies in Germany and Europe.
Chris and two other founders started the company in 2018 to conduct turnkey modern digital marketing and lead generation solutions for traditional German companies.
As a bootstrapped tech-enabled service that combines technology, data, and people-powered solutions, ComX delivers proven results through subscription and outcome-based pricing.
They grew quickly to approximately $20 million in revenue in four years before being acquired by the private equity firm FLEX Capital.
As Chris explained on my podcast this week:
“99% of the time, I ask the founder, Why are you raising money from investors that early? I’m very pushy on that one because I know the freedom that you can create when building a bootstrapped business.
“For me, raising money from investors and giving away shares very early means you’re not focusing on customers, but rather focusing on collecting capital to build the product without having it validated too early. I just share our bootstrapped story with ComX which I believe works well.
“That’s why I’m a big fan of your podcast. There’s a huge education needed, especially in Europe. People need to be educated on how to found properly.
“Of course, it can go well with big funding, but the chances that something f***’s up are much higher. And then young people are in a very bad situation.”
Outdated myths about raising outside startup capital exist in every major city in the world.
VC funding is still rocket fuel for rockets aiming for the moon. Investor expectations are even higher in the new AI world.
The Funding Industrial Complex is better funded than the Bootstrap Industrial Complex!
In this episode, Chris talks about:
– Starting in Germany with mid-market companies
– Growing a team of 70 employees in South Africa
– The challenges of debt financing of private equity buyouts
Check out this thoughtful interview with Chris Erler on the Practical Founders Podcast.
