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3 Things Dealmakers Can Learn from a "Best of Bootstrapped" Founder

3 Things Dealmakers Can Learn from a "Best of Bootstrapped" Company Founder

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August 30, 2021

Every year the team at Sourcescrub harnesses the power of its private company intelligence platform to highlight the fastest-growing bootstrapped companies.

Each of the 1 million+ founder-owned companies in Sourcescrub's database is profiled and ranked according to key growth signals, including: employee growth, Alexa ranking, and job postings. The companies are then segmented by industry and compiled into "Best of Bootstrapped" lists for e-commerce, health and wellness, financial services, technology, and more.

DearDoc, a cloud-based medical practice growth company, topped the list. Founded in 2019, DearDoc has grown to more than 110 employees and is used by more than 2,500 practices "all without taking a single dollar of outside capital.

We recently sat down and spoke with DearDoc's CEO, Joe Brown, to learn more about his experience as a bootstrapped founder and DearDoc's journey to success. Here are three pearls of wisdom for investors that he shared during our conversation.

#1: Personal Connections Go a Long Way

Just because Joe hasn't taken any money from investors doesn't mean he hasn't met with a few. But most invitations he's accepted have one thing in common: they came through a personal connection. 

"I've taken a few meetings, but it's been through personal connections," shares Joe. "Like if a good friend of mine is like, 'Hey, listen, I'm part of this healthcare fund, would you meet with the founder of the fund?' I think those personal connections work really well, so if you can figure out a way to get introduced, I've taken almost every meeting that way."

Of course, depending solely on network introductions for leads doesn't cut it in today's highly competitive deal landscape. New school dealmakers are using the latest data and technologies to directly source high-quality leads that match their investment criteria, and then identify common connections. 

#2: Figure out What Motivates Bootstrapped CEOs

With more than $3 trillion in dry powder waiting for investment, companies looking for a capital are sure to find it. And while technology has made it possible fo rbusinesses to successfully start and grow with little to no funding, taking the bootstrapped route still isn't easy. Joe and the first 9 DearDoc employees worked out of his one-bedroom apartment in New York City.

So if a high-growth company is bootstrapped, there's likely a compelling reason why. Potential capital partners need to do their research before meeting with the owner or operator to understand how to position investment in a way that is consistent with the founder's vision.

"If someone's bootstrapped, I would first figure out what it is that motivates them," recommends Joe. "For me I think it's pretty clear: I like having control of the business without having to give up a big piece of that control. But there's other reasons behind it, too."

Finding common connections and asking for insight into the company's bootstrapped status is one way to figure out what motivates owners and operators. It's also informative to look through the company's job descriptions, website, and press mentions, all of which are easily accessible in Sourcescrub.

#3: Domain Expertise Trumps Capital

While Joe currently has no plans to raise funding, he's open to the possibility in the future. "Sometimes people will cold call me and I'll say, 'Listen it's a no for now, but it's not a no forever,'" he says. "There could be a time in our lifecycle when we will need that capital."

When would that time be? "If there was a part of our business where we felt like we really needed assistance or expertise," he reveals. And he's not alone. More companies are prioritizing domain expertise over fund size when choosing an investor. "There is an argument for learning from people who have done it before," says Joe. 

Developing deep domain expertise is another key benefit of new school dealmaking. Over time, taking this proactive, structured, and methodical approach to finding and closing the right deals creates a virtuous cycle of success.

As CEO and founder of one of the fastest-growing bootstrapped companies out there, Joe Brown has valuable advice for equity investors:

  • Use data services like LinkedIn Sales Navigator to identify personal connections.
  • Do some research to learn what has motivated founders to remain a bootstrapped company.
  • Build deep domain expertise and relationships that will add value for current and future portfolio companies.

If you're ready to take what you've learned and apply it to your next prospect conversation, Best of Bootstrapped is a great place to start! You'll find lots of downloadable lists of up-and-coming companies on our Best of Bootstrapped page.

And if you'd like to listen to our conversation with Joe, you'll find it here.