How much MRR before first hire + possible funding?

I’ve developed and bootstrapped a niche SaaS product. Started with a beta 1.5 years ago, launched and started charging 1 year ago. £0 to £4k MRR from 190 customers in 1 year. Trend suggests this will at least double in year 2 even if I continue as a one man show.

However, it’s easily at the point where I can’t do everything myself, and I feel like I’m starting to bottlekneck progress by not doing all the development/marketing/sales/support I could be doing. Got tons of ideas on all fronts and I’m in a market that I now know inside out (having spoken to hundreds of customers over phone and email) and which is genuinely there for the taking. I have 4 direct competitors but 2 are old/desktop based and going nowhere, and the other 2 don’t appear to be being actively developed either.

Currently it’s a bit like a (fun but intense!) job that I own. All the MRR goes straight out the window on mortgage and bills! I desparately want to take it to the next level but how? I can’t afford my first hire yet and I could probably do with hiring 2-3 people! Do I have something that might attract funding here? If not now maybe in a year or two? I really have no clue!

Look forward to everyone’s thoughts and any follow up questions 🙂 Tell me how it is!

  • Thats not a lot of MRR. How big is your market? If it’s not at least 100x what you are doing, you might seriously want to think about sucking it up and bootstrapping for another year or two to get yourself profitable

    You can probably get some seed funding now, but you should really decide if you want to go that route.

  • That’s pretty good for doing everything on your own and being only 1 year old. Not sure it’s quite enough for investment interest, though–and besides, if you’re profitable, why not hold out a bit longer and see if you can make it without investment?

    I know you probably don’t have much time, but try to do a bit of research on conversion rate optimization if you haven’t already.

    Even a few small changes to your homepage could bring you in significantly more annual revenue.

    On top of that, consider searching for people who believe in what you’re doing and are willing to team up with you as a co-founder or for sweat equity.

    Best of luck! Congratulations on finding such a promising niche.

  • It’s funny. I’m in the same position. MRR is $3,000. 150 customers. Not a whole lot but it’s what you’d call ramen profitable. It’s not success but it does buy you time.

    For example, I know of entrepreneurs who run startups and running out of money. Money-related stress is the worst thing that can happen to startup. It’s so common. You are beyond that stage. Don’t mess it up.

    You can’t hire anyone at this point. You just need to suck it up and keep going for another year by yourself. Perhaps you can outsource some tasks for a few hundred a month. That’s what I’m going to do to concentrate fully on development.

    Don’t take any investment. It will only add to your stress-level. Take it easy.

  • Thanks guys for the level-headed encouragement 🙂 Great to finally get some input on this. I work from home and there isn’t exactly a buzzing startup scene where I live so it can be hard to know how well you’re doing and what you should be doing when it comes to the business side of things (I read a lot but that only gets you so far).

    So, according to one of the trade magazines, the vertical I’m focused on comprises around 120,000 businesses in the UK. I have 190 so far so it seems there’s room to grow! Even if I only ended up with 5% of that market at current ARPU (which I’m looking to increase over time) I’d have a £120k MRR business here!

    Or maybe that’s just crazy pie in the sky talk?! Honestly I can’t figure it out.

    It certainly seems like the industry needs the software I’ve built. Many of my users talk about how it’s “lifting the industry out of the dark ages” etc, and once they’re on the software engagement is off the charts, I mean they’re on it all day every day, whether it’s on the web app or the mobile app while out working. They come to rely on it hook, line and sinker. One guy even called it “addictive”!

    It’s a dilemma (a good one I appreciate!) do I hunker down for another year until I can afford some help, and perhaps bottleneck progress and leave the door open for someone else to swoop in and close the market down quicker… Or do I hit the bricks and get the money in place to build a team through whatever means?!

    I know conversion optimisation would help, so would a better website, SEO, blog, content strategy, screencasts, retargeting, a referral programme, AdWords, partnerships with other suppliers (which I’ve got ready to go but need to produce promo materials for), improving the onboarding process, tutorials, knowledge base, consistent follow ups and trial auto emails, split testing everything etc etc!

    I just feel if I had someone to do support (it takes 110% and you have to know the product inside out, the users don’t suffer fools, not something you could VA out) and someone to kill the marketing on all angles, day in day out, while I focus on development and leading the business, we’d be really motoring…

    But then other times I just think “get a grip”, let it pan out in it’s own time, keep grinding away like this, you don’t want funding or a loan or anything like that, “don’t mess it up” as one of you said!

    I do have a promising conversation going with a guy who emailed me out of the blue. He conveniently has a solid online marketing background AND direct industry experience (he used to own a business in my vertical)… my gut feeling, there might be co-founder potential there. We’re testing things out (he’s writing a piece for the blog I need to launch!) so we’ll see where things go from there!

    Anyhoo, thanks for listening! I’ll end on a question to keep things rolling a bit 😉

    What level of MRR / growth / market potential would you need to show to get any investment? Would angel investment be a possibility (I’ve heard that comes with a certain level of mentorship which could be handy!) My feeling is I’d need at least £50k for it to be worthwhile, i.e. so I could hire a marketing guy/gal and have some budget for him to do his/her thing for a year, but obviously I’d need to put a proper business plan together! (I’ve been running numbers in Excel but nothing formal yet).

    • If all you need is 50K to 100K you can definitely get it from Angel investors. The question is the dilution and the possibility of having an investor nag you. From what you’re saying, you should be able to close Angel no problem since you can show traction among your current users.

      Many people get Angel investments with zero traction so you’re definitely above that bar.

  • I work at a college in career services. Why don’t you reach out to a local college and see if they will distribute a job listing for a internship? You could give the intern a token stipend and try them out for a few months.

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