Leadership
5 min read
How 5 Famous Startups Got Funding
You’ve been bitten by the entrepreneurial bug. You're dreaming about launching your own startup, bringing your ideas to life, and surrounding yourself with a team of people all working to build something great. Suddenly your wallet gives you a wakeup call: where are you going to get the money? Unless you win the lottery or know some impressive counterfeiting techniques, you’re going to need to raise a decent amount of cash. There are a bunch of different ways to finance your startup, and we’ve got the scoop on 5 tech giants that each pursued a different funding strategy on their way to becoming household names.
1. Bootstrapping GoPro
“I moved back in with my parents and went to work seven days a week, 20 hours a day.”
—Nicholas Woodman
In 2002, a surfing trip to Australia got Nicholas Woodman thinking: how great would it be to have a camera that could capture his POV as he caught a wave? He took $265,000, scrounged up from personal savings and borrowed from his parents, to develop his camera. Woodman took early products to trade shows, growing GoPro slowly until the company started to generate its own revenue. A fervent proponent of bootstrapping, Woodman held out as long as he could before taking on outside funding. It wasn’t until 2011 that GoPro accepted $88 million in outside investments from five venture capital firms. At its IPO in 2014, the company was valued at $2.95 billion.
2. Charging Google to AmEx
"We had to use all of our credit cards and our friends' credit cards and our parents' credit cards....”
—Larry Page
Larry Page and Sergey Brin met as Stanford University graduate students, later collaborating on a search engine project. Committed to their studies, they ran the program out of their dorm rooms while pursuing their degrees. But by 1998, Google was getting 10,000 searches a day, and the pair decided their project had a real future. They maxed out $15,000 worth of credit cards to buy a terabyte of disk space and drafted a business plan. Page and Brin later went on to raise $100,000 in seed money from Andy Bechtolsheim, co-founder of Sun Microsystems and fellow Stanford alum. At its IPO in 2004, Google was valued at $26.4 billion.
3. Building Apple on 30-Day Credit
“It was unbelievable — we were in business. All of a sudden we needed about $20,000 to buy parts.”
—Steve Wozniak
After partnering with Steve Wozniak to build a personal computer, Steve Jobs approached a local computer store and agreed to sell them fully-assembled computers for $500 each, payment on delivery. The only problem was, the duo didn't have the money to buy the parts they needed. So Jobs took the computer shop’s purchase order to an electronic parts distributor and worked out a deal: if he could get the parts in advance and pay 30 days later, he would build and deliver the computers within that month. Then he'd use the earnings from the computer shop to pay what they owed for the parts. After calling the computer shop to verify the purchase order, the parts distributor agreed. Working round-the-clock, Wozniak and Jobs delivered the computers, paid their supplier, and used leftover profits for their next order of parts. At its IPO in 1980, Apple was valued at $1.7 billion.
4. Fueling Facebook with Angel Investments
"I literally coded Facebook in my dorm room and launched it from my dorm room. I rented a server for $85 a month.”
—Mark Zuckerberg
After launching Facebook from their Harvard dorm rooms in February 2004, Mark Zuckerberg and partner Eduardo Saverin covered operations costs out of their own pockets, along with running a few ads. Later that summer, Zuckerberg met with Peter Thiel, president of Clarium Capital. Thiel was impressed with Zuckerberg’s vision and made a $500,000 angel investment in exchange for a 10.2% stake in Facebook. A year later, Thiel and Accel Partners would go on to invest an additional $12.5 million as Facebook continued to grow past 5 million users. At its IPO in 2012, Facebook was valued at $104 billion.
5. Crowdfunding Pebble Smartwatch
“[Paul Graham] was like, 'You guys need to do something wild. What could you do that's wild?’ I thought for a moment and said, 'We could go on Kickstarter.'"
—Eric Migicovsky
By the end of 2011, Eric Migicovsky had a prototype for a smartwatch and $375,000 in angel investments. It was enough to keep his company afloat for a little longer, but not enough to fund a full production run. When he and Y Combinator founder Paul Graham started brainstorming fundraising options, Migicovsky mentioned Kickstarter. He’d backed a few projects before and thought it might help raise some extra money. Migicovsky studied successful projects, created his campaign page, and set his fundraising goal for $100,000. In the first day alone, backers pledged $600,000, and Migicovsky’s Pebble Watch went on to raise over $10 million from 68,929 backers.
Are you ready to fund your startup?
Which option would you pick? Check out our 7 Ways to Fund Your Startup Infographic and add your own page to the history books!
