Many aspiring entrepreneur believe that to build a successful company they first need to get funding from some venture capitalist or angel investor. This, "backing" they believe is critical if they are to make a sufficient amount of investment in product research and marketing.
While there is no doubt most successful startups out there are being funded by venture capitalists, one also needs to understand that some of the biggest startups in business (some of them are huge companies now) were self-funded when they first began their operations.
Over time, VCs started pumping money into them.
Let's take a look at a curated list of successful startups that had humble beginnings as they were self-funded when they first started out:
GitHub, a web-based Git repository hosting service was founded by Tom Preston-Werner, Chris Wanstrath and PJ Hyett.
This startup basically began as a weekend project by founders to meet the necessity of sharing code. In 2008, Preston-Werner turned down $300,000 bonus and stock options offer from Microsoft in order to go full-time on GitHub.
All 3 founders funded the setup themselves to cover the cost of a domain and hosting. Today GitHub has over 3.4 million users with 16.7 million repositories, making it the largest code host in the world.
In January, 2009, GitHub won a Crunchie (an award bestowed by TechCrunch to celebrate the most compelling startups) for best bootstrapped startup.
The biggest social networking platform today Facebook, formerly known as thefacebook, was founded by former Harvard student Mark Zuckerberg (while at Harvard); he ran it as one of his hobby projects with some financial help from Eduardo Saverin.
Initially, the membership was limited for Harvard students, but later on Mark expanded it to other colleges in the Boston area. It gradually spread to most of the universities in Canada and United States.
It received its first investment in June 2004 from PayPal co-founder Peter Thiel. Today, Facebook is the world's largest social network with over 1.39 billion monthly active users.
Dell Incorporated owned by Michael Dell is a computer technology company that develops, sells, repairs and supports computers and related products and services.
Michael Dell created Dell, initially named PC's Limited in 1984 while attending University of Texas as a student. After receiving capital worth $1000 from his family, Dell dropped out of school to focus full-time on his fledging business. In the very first year, the company grossed more than $73 million.
In 1986, Lee Walker, a venture capitalist joined Dell as president and chief operating officer. The company went public in 1988.
Today, Dell is one of the largest technological corporations in the world.
4. Apple Inc.
Apple Inc., headquartered in Cupertino, California is a multinational corporation that creates personal computers, computer software and consumer electronics.
It was founded by Steve Jobs, Steve Wozniak and Ronald Wayne on April 1, 1976, to develop and sell personal computers. Wayne sold his share of the company to Jobs and Wozniak for $800 in 1977.
The company received initial funding of $250,000 from Mike Markkula, a multimillionaire investor. In the first 5 years, the company saw an average growth rate of 700% with revenues getting doubled every four months.
Apple is the first U.S. Company that is valued at over $700 billion.
Cisco Systems, Inc. is a multinational corporation headquartered in San Jose, California that specializes in products for networking and the Internet. The name "Cisco" was derived from the city name, San Francisco.
Cisco was formed by the married couple, Len Bosack and Sandy Lerner, who worked as computer operations staff at Stanford University. The early days were difficult for the duo.
In 1988, Donald Valentine, a venture capitalist agreed to capitalize Cisco. On February 16, 1990, Cisco Systems went public with a market capitalization of $224 million.
In August 2014, the company reported revenues of $47 billion.
Microsoft was founded on April 4, 1975 by Bill Gates and Paul Allen in Albuquerque. Allen suggested the name ‘Micro-Soft', a portmanteau of words microcomputer and software. Bill Gates, a then Harvard student took a leave of absence to fully focus on the project. He never went back to Harvard.
In 1980, Microsoft formed a partnership with IBM to include Microsoft operating system with IBM computers. For every sale made, IBM paid royalty to Microsoft.
The company's best-selling products are Microsoft Windows operating system, Microsoft Office suite, Xbox and Bing. According to reports, as of June 2014, Microsoft has a global annual revenue of around $86.83 Billion USD.
TechCrunch is a leading technology website that offers news, videos, and events about the latest happenings in the IT world, technology, startups and entrepreneurship. It was founded in 2005 by successful serial entrepreneur, Mike Arrington along with Keith Teare.
In 2010, TechCrunch was sold to AOL. The transaction was rumored to be between $25m and $40m. At that time, Arrington personally owned 85% of the company.
TechCrunch and its network of websites have around 12 million unique visitors and draw more than 37 million page views per month.
eBay, originally called AuctionWeb was founded by a French-born Iranian American computer programmer Pierre Omidyar in his living room in September 1995.
It was meant to be a marketplace for the sale of goods and services for individuals. One of the very first items sold on it was a broken laser printer for $14.83. eBay was simply a side hobby for Omidyar until he was asked to upgrade his account by his ISP due to the high volume of traffic it received.
In 1997, the company received $6.7 million in funding from the venture capital firm Benchmark Capital. The company went public in 1998.
Currently, the company is projecting revenues of around $16.05 billion.
A great startup IDEA is only the beginning of a long and glorious journey that will have its ups and downs. The next and most important step is to execute this idea in the right manner. Managing your finances correctly can make a big difference in its execution.
Take an inspiration from these successful companies that were started as self-funded startups and today are making profits in millions!