Meet Christian Springub, co-founder of an international startup called Jimdo.He and his two business partners are not millionaires. But they turned down over $10 million of VC funding.
The five-year old Jimdo does Web site hosting for people with no programing experience. It offering two flavours at $7.95 a month and $20 a month and has two claims to fame. It supports 11 different languages and its websites look great on mobile phones.
About three years ago, the company became profitable. It was growing almost entirely by word of mouth. UPDATED: They had raised ~$620,000 (€500,000) in angel funds and taken in an outside investor, 1&1 Web Hosting. But the partnership with 1&1 wasn’t going well. So the co-founders bought the partner out.
But they knew they needed money to grow. They needed more advertising.
VCs knew they were profitable and had been circling. Every day for months, they agonized over getting VC money. So they decided to talk to a few VCs and see what they could get.
They were shocked. The offer was for “eight digits” says Springub — or more than $10,000,000. This was tempting.
There was only one problem. They didn’t want to be pressured into an exit strategy on someone’s else’s time table.
“Why does a VC invest money? They have a fund which runs five to eight years or so, and at a certain point they have to get the money back. If it works well, they get a multiple of money back. What happens if we don’t’ want to sell? Or if we don’t want to do an IPO — because we don’t want that,” Springub said.
Since turning down the cash, Jimdo has been wildly successful, grown from its own profits.
“We have over 6 million websites created by Jimdo about 120 employees now, most of them in our Hamburg headquarters but we also have an office San Francisco and in Japan and China,” he says. “It was the right decision for all of us.”
There will be time for a cash out event later. Go Daddy took its time with no VC investment and then sold a chunk of the company to a group of private equity partners last year for over $2 billion.
In the meantime, Jimbo is another proof point that you don’t need a big VC fund to make it.