Breaking Tradition

Securing financial backing through venture capital rounds has always posed significant challenges, yet the landscape has evolved over time, rendering these hurdles even more visible in recent years. At ActiveCampaign, we know what financing is like during these very challenges your business might be facing today. However, the crucial periods for our company didn’t revolve around an influx of investments within a few year’s span. Rather, they encompass the twenty years prior, during which we gained the flexibility to progress without relying on funding. We recognize that today’s funding landscape is only that much tougher, so this advice will aim to help you weather the storm.

Don’t Let the PR Sway You

From my experience, I’ve noticed that many small businesses are drawn into the belief that high-profile venture capital investment rounds are the sole solution for startups. The media’s coverage of such funding events tends to present them as the ultimate validation of a business strategy, a milestone moment that launches it into the big leagues. This portrayal blurs the lines between public relations, perceived brand benefits, and the actual funding process. The reality is that funds obtained by selling a stake in your business hold no inherent superiority over funds acquired through alternative channels, so don’t let the fear of missing out creep into your overall business strategy. Control your own destiny as much as you can.

Investment Rounds Are Not the End-All Be-All

At ActiveCampaign, we decided to hold off on raising venture capital until we could find the right strategic partners with the resources and knowledge to continue opening doors for our business. We were well aware that forming such partnerships stood as the primary aim of any funding endeavors for ActiveCampaign, maybe even more important than the funding itself.

Nonetheless, managing without venture capital at ActiveCampaign was not an easy call. It meant we had to explore various alternative avenues to fund growth and maintain our trajectory. While these options may not have appeared as glamorous or as reassuring as announcing a significant funding round, we discovered they actually provided greater long-term value to our business by affording us more flexibility down the line. This is why, when I engage with fellow business owners grappling with funding challenges today, I encourage them not to lose hope. At various growth stages, external investment might not necessarily be the most optimal choice. Even today with its intense competition, I can attest that it’s certainly not the only one.

During our initial phases of growth, we sought aid from the U.S. Small Business Administration. We didn’t experience any stigma in this approach — as a small business striving to expand, we were precisely within the scope of the SBA’s loan offerings. We enhanced our cash flow by requesting advances on receivables (currently, multiple lending services provide loans based on a monthly recurring revenue multiplier). Additionally, we devised incentives for yearly and advance purchases. We also functioned as consultants to secure more substantial income portions compared to what we’d achieve through the organic growth of our platform.

Each of these avenues serves as legitimate funding options for an expanding business. Several of these sources challenge you to enhance your offerings and operational strategies in a financially sound manner. If you can address funding obstacles partially by shaping your business model to prioritize robust cash flow, it’s a valuable advantage that will continue to benefit you over time, with or without funding.

How To Make The Current Landscape Work For You

I recognize that your journey getting off the ground will be different from ours in many ways. Nonetheless, I wanted to provide ways to fortify the core of your business during this tough funding landscape.

1.   Momentum Mentality

The strategy here is centered on a purposeful commitment to doubling down on the bedrock principles and tangible substance that underpin your business. This shift entails a deliberate focus on your existing customer base, as well as harnessing the momentum you’ve built. In fact, these challenging moments should serve as a catalyst to propel you even further in your building endeavors, steadfastly pursuing growth even when the funding environment appears less accommodating.

2.   Step into Their Shoes

To navigate these waters, consider adopting tactics that amplify your customer-centric approach. Regularly step into the shoes of different customer personas to comprehensively understand their experiences. Scrutinize your customer journey to discern areas that are streamlined for you and your team, rather than solely for the customer. Refocus your attention on the pain points your customers and prospects face, and strategize on how to address these challenges more intensely than ever before.

3.   Swarm

These trying times call for a swarm mindset – rallying around your existing customers, honing your business strategies, and molding your offerings to fit the evolving needs. By championing a collective effort that identifies and addresses customer pain points, you create an agile response mechanism that not only navigates the shifting landscape but also thrives within it.

Just Keep Swimming

By recalibrating your internal mechanisms to capitalize on alternative funding routes and prioritizing customer needs, you can keep your business more than just afloat. This collective effort will galvanize your pursuit of growth, propelling you through turbulent funding times with agility and purpose. I truly believe the synergy of these strategies will carve a trajectory that ensures your businesses not only endures the storm but emerges more resilient than ever.