Earlier today, I read the Entrevestor blog entry entitled "Startups are an urban phenomenon". It reminded me of something I wrote while attending UITStartup in Sydney. UIT is the now-defunct Uhma Institute of Technology that ran with three different student groups before calling it quits). Entrevestor's post suggested that startups are better promoted in cities where there are more resources and talent available. My post from 2015 was based on my observations of what I believed to be a misguided fascination with a concept of "startup" at UIT. Everything was geared to an almost unachievable objective that would set local entrepreneurs up for certain failure. I'll repost it now with some modifications. I believe it shares some commonality with the ideas shared by Entrevestor.

The original version was written in 2015:

Somehow startup enthusiasts decided to call billion-plus-dollar startups unicorns. Do you know what's even more unfortunate than the word "unicorn" becoming a part of their entrepreneurial vocabulary? It's the belief that building a business worth a billion dollars or more is an almost mandatory goal of startups. There's some flexibility in the definition of a startup. However, in my opinion, it has no requirement of achieving a billion dollar valuation. Certainly not if the startup is based in Cape Breton.

When we start setting success benchmarks with such a highly probabilistically unlikely outcome, we're at risk of building the weak philosophical foundations of a startup that will certainly fail.

A startup strategy here must reflect reasonable expectations.

Otherwise, it's a bad strategy. Reasonableness isn't what we'd like to work. That's the stuff that "Chase the Ace" is made of... Giant enthusiasm in the face of terrible probability. Reasonableness in this context is a measure of the likelihood that a profitable outcome can be achieved.

Let's give some support to the definition offered by Silicon Valley-based expert Steve Blank. He talks about startups being companies that are "formed to search for a repeatable and scalable business model".

That is more or less the nature of an innovative product or service offering.

Likewise, when venture capitalist Paul Graham of Y Combinator impresses upon us that a startup must grow fast, we can agree to the extent that any business wants to develop expediently and get there without exhausting its resources.

One of my favourite books is "Differentiate or Die". In the book, one of the canons it offers is: "It's better to be first than it is to be better".

Growing fast ensures that being first out of the gate is actually worth something before direct or derivative competitors... the ones that can chomp up your market... emerge, outpace you, steal your target customers, and squeeze you out if you even managed to earn any revenue in the first place.

So what is an appropriate *regional* definition for a startup?

We start a business. We develop an innovative product or service. We try to figure out a way to sell it and generate revenue. And we try to do this as quickly as possible before exhausting our resources.

With that we're a startup.

A startup concept that goes after markets where there is an expectation for them to achieve a billion dollar valuation is an exciting yet statistically unrealistic goal.

That is true for all markets, but particularly for those with limited investment sources. We certainly can't compete with the capital flowing in Silicon Valley... unless we go there and try to get it.

But a startup that develops a business model that is much less likely to achieve valuations in the billions is still very much a startup nonetheless.

Proportionate Capital Requirements

If we aim for unicorns, then we certainly have to scale very fast.

A team of top tier professionals needs to be assembled. The product/service infrastructure needs to be built out and iterated. Major budgets have to be allocated for marketing and advertising to bring users onboard, to figure out how to keep them there, and to figure out how to get them to pay for something.

Can that scale of capital be raised in Cape Breton?

If the home base for our startup initiative is in Cape Breton, what is the likelihood that we'll be able to secure the millions of dollars in capital like that of startups in major markets like Silicon Valley, Boston, or New York, that is needed?

Certainly, amongst our most successful tech companies (Protocase, MediaSpark, Marcato Digital), they were all able to secure multiple rounds of more leverageable investment. And yet none are presently on the path of achieving unicorn level valuations.

That is certainly not a mark against them. In fact, it's a celebration of their tremendous success. By embracing the right scale for their businesses, and excelling at the difficult task of securing funding to do so, they have become regional success stories.

We are an island of bootstrapped startups

By accepting our most likely status as bootstrapped startups, we can choose businesses the are achievable given the high likelihood that investment capital is going to be scarce. It is.

While a startup located here in Cape Breton might not sound like they are destined to become unicorns, they may certainly be destined to become successful businesses that are profitable, growing, and able to hire a skilled workforce.

There's not much distinction between funding your startup by maxing out a credit card, selling your boat, or getting $50k in seed funding. All of these are situations of extremely limited resources. In fact, by Silicon Valley standards, so is a million dollars.

These resources are meaningful, but scarcely enough to keep a multiple co-founder team and staff in business for more than a few months - from the perspective of a Silicon Valley startup. Keep that mind the next time you read a news story about a Cape Breton startup that receives a similar level of funding.

At the level of startup capital that is available locally, it's likely that everyone has to keep their day job and cannot do what is critically necessary for their success: focus. And that's what we see quite frequently in Cape Breton, even with some of our startup ventures that are showing the most promise.

Whether we're bootstrapping out of pocket or going forward with extremely limited funding, startup life isn't about building a billion dollar company.  At least not here. It's about doing something you love, having a great passion for it, offering something to the world that someone values enough to buy and making an effort to grow that company over its lifespan.

If you do that, you're a startup.

After winning some seed funding ($10,000) from Innovacorp's Spark Cape Breton contest in 2014, I exhausted it as a one-person operation for as many months as possible by bootstrapping. While I made advancements with my web service socialresponseapp.com, I ultimately ran out of the roadway and had to confront the reality that food and shelter require an income!

Bootstrapping to success is possible if you're committed. I know from prior experience, taking a startup from the point of running out of rent and grocery money to launching and growing it to over $2 Million in software sales.

It's difficult. It's possible. But it's really only feasible with the right expectations and objectives.

When I had my success starting something from nothing, the intent was to build a startup that could be profitable and could grow. I and my partners didn't weigh ourselves down with false expectations of some billion dollar valuation.

In a region like Cape Breton, startup success won't be feasible unless reasonable expectations are set. For those who want to go for the Silicon Valley model of startups, they're going to need to book a ticket for Silicon Valley.

But there are bootstrappers here that are showing that it's possible to do it another way.