Bootstrapping all the way to positive cash-flows

There’s enough capital, the investors say, for the promising start-up. And yet, access to funds remains an issue, considering the number of new businesses that are being set up in India every year. Often, many entrepreneurs use own money in the first phase of building their companies up.

In the early phase, an entrepreneur may still want some control over how his product and company grow, while also being able to choose the folks he goes to for guidance. The founder also learns to use the capital where it matters. But while these benefits of bootstrapping are real, what’s important to note is that many start-ups that manage this successfully have a lean model in place right at the outset and do not tread without testing waters first.

It is possible in India to progress without seed funding. However, many start-ups that have done so across the world are online businesses. But taking delivery online alone does not do the trick.

Edureka, an online education company started by two IIT graduates, reports growing 15 times in a given year. Founders Lovleen Bhatia and Kapil Tyagi had previous experience bootstrapping a mobile app development company before they started Edureka in 2011. Nearly three years on, Edureka has survived without external investments.

The skill gap in the technology education space was a glaring need in the market at the time, and then, there was also the opportunity of emerging areas such as big data, cloud and mobility. Edureka began as a blended model – a combination of classroom sessions and online lessons. When a pilot with a group of 60 students worked, the number was scaled to 1,000 students in the next six months.

“By mid-2012, we took the business entirely online and we had trained nearly 2,000 students. We started with one course (an Android one) and once we gained expertise in delivery, we added more courses.

“It cost us ₹1.5 crore to bootstrap Edureka, but by April 2013 we had broken even and we’ve had positive cash-flows since then,” says Bhatia.

Since its inception, Edureka has worked with 80,000 IT professionals and has a subscriber base of over two lakh mid- and senior-level IT professionals across the world. With the help of 55 trainers on payroll and 150 contractors (external experts who work in the industry), Edureka gets 65 per cent of its revenues from the US, the UK, Australia, Singapore and South Africa with nearly 60 per cent of its sales continuing to come from referrals.

“World over MOOC completion rates are as low as 4-5 per cent whereas in our case, they are as high as 70-80 per cent. Udacity, Coursera, Udemy and others may offer the same courses, but what we brought to the learner was interactivity and 24x7 support.

“Going forward, we will look at external investments. We will look beyond the technology education space, but we want to tap into the potential there is with our current domain before expansion,” reveals Bhatia.

Edureka currently reports annualised revenue of ₹30 crore. Its learners have consistently been absorbed by Siemens, L&T, Microsoft and Adobe while mid-level learners continue to pour in from large MNCs such as Microsoft, IBM and Cognizant Technologies. One of the clear advantages to bootstrapping a business venture is that entrepreneurs can focus on developing and refining the company’s vision at various fronts – people, product/service, domain, target markets and business model. Which is what Bhatia and Tyagi cracked first.

And they weren’t rushing things, or biting off more than they could chew. Edureka is now aiming at ₹100-crore revenue in the next two years.

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