There’s nothing more delightful than when someone fixes your everyday problem with a convenient solution. LaundryHeap was born out of Deyan Dimitrov’s personal frustration after being faced by the closed doors of a dry-cleaners, because he didn’t make it on time to pick up his suit. Six years later, and LaundryHeap has become a leading on-demand laundry service, fuelled by hefty bootstrapping and some carefully timed fundraising (both VC and crowdfunding).
We sat down with Founder and CEO Deyan Dimitrov to get his insights on the benefits of bootstrapping, how he decided when was the right moment for VC and crowd-funding, and his thoughts on Brexit and US expansion from their base in London.
Hi Deyan, thanks for joining us! Could you tell us the story of LaundryHeap, and your mission?
Laundryheap was established in 2014, after one fateful evening that left me standing outside a closed dry-cleaners, with my suit on the wrong side of the doors. Although I was very aware of my own failure to get there on time, I was mostly frustrated by the lack of alternative options available. And the idea for Laundryheap was born.
The idea is very simple. It offers time-strapped individuals the opportunity to get through their daily chores without having to compromise on other responsibilities. All customers need to do is book a collection slot. Their laundry is washed, ironed or dry cleaned, then returned to their door. All within less than 24 hours.
Six years later, our service is now used by thousands of people across Europe and beyond. This demonstrates just one of the ways consumer behaviours have changed over the years and it’s our mission to support that.
What differentiates LaundryHeap from its competitors?
The on-demand service industry is a crowded market and I realised early on that Laundryheap needed to provide something special in order to stand out. That’s why we’re currently the only on-demand laundry business to offer a guaranteed 24-hour turnaround. I’ve found that a layer of added value to a streamlined service is what makes the difference. Helping us better align with modern consumer expectations, retain loyalty, and ultimately become market leaders. It’s not by chance that the majority of our business is repeat custom.
Laundryheap also bootstrapped for the first three years, as I was insistent that we shouldn’t accept external funding until we were sure our business model was solid. It was frustrating to see VC-backed competitors splashing the cash on ad campaigns, but I’m pleased that we stuck to our guns. It allowed us to scale up steadily and meaningfully; we’ve now got a much stronger business model as a result. It can seem as though VC funding is the only way to get a startup off the ground, and I’m glad Laundryheap shows that success can be sought through other means.
Having bootstrapped in the beginning, and then raised €2 million, what was behind your decision to grow first via self-funding?
I wanted to grow a business which was sustainable and profitable. This may sound obvious, but given the fact that 90% of startups fail, and often don’t see profits for years, we knew that the business idea needed to be tested and the model strengthened. Bootstrapping allowed me to better assess the viability of the business from an early stage, because any profits were invested straight back into the business; forcing it to grow only with what it had. If we had more cash to play around with in those first three years, we ran the risk of scaling up too quickly and losing sight of what we first set out to achieve.
What benefits do you see from bootstrapping?
Bootstrapping requires you to tread carefully and prioritise the aspects of the business that are crucial to its success. For many who choose to bootstrap, this often means more time and money is spent perfecting the product or service to ensure it remains in demand. And even for those who go on to accept external funding, the years spent bootstrapping remain invaluable in the way it encourages expertise required to keep business models lean, services perfected, and consumers happy.
Another benefit is that with bootstrapping comes less external influence. With fewer investors to keep happy, I had much more time to focus on my business and make long-term decisions. We only retained more equity and control. When the time came to raise funds externally, we could afford to take the time to find the right investors – those who shared our ethos.
What one piece of advice would you give to a startup thinking of doing the same?
To believe in your business idea, even if it isn’t a unique concept. Instead, focus on what makes you stand out from other companies offering similar services. If you’re operating in a crowded market, it’s this self-belief which will help you succeed. The same goes for bootstrapping. If you truly believe in your product, push as hard as you can to create a viable entity or a watertight business model before you seek external funding. Otherwise, the external input and pressures could throw you off trap, or you could be pulled into a never ending round of annual raises. Be as strategic as possible.
You also ran a crowdfunding campaign, do you have any advice for founders thinking of getting ready for their first campaign?
Crowdfunding is a very specific type of fundraising. They are often (wrongly) seen as a fall-back option if a VC round doesn’t work out. That approach will not do you any favours. Crowdfunding requires great messaging, an ability to tell your story, a plan to reach your target backers, and a whole lot of hustle. Don’t go into it if you think it’s an easy way to attract capital.
Crowdfunds are a great way to obtain feedback and build goodwill amongst prospective audiences, and could be crucial in your ability to move forward proactively. For this reason, it’s imperative that founders are as honest and communicative as can be with potential investors at every stage of the crowdfunding process. I think of it as seeking a collaboration, not a competition to be won.
Would you consider any VC funding in the future?
Yes, I would. My time spent bootstrapping has meant that I value VC funding as both an opportunity to scale the business in a sustainable way, and surround myself with the right people. This would mean doing my research and seeing those who understand the business and its key objectives. For me, VC funding exists to add value to a business, not to act as its lifeline.
With your HQ in London, how do you intend to navigate the challenges of Brexit?
I have an incredibly diverse team and believe it to be Laundryheap’s greatest asset. There will inevitably be concerns over sourcing talent in the future, and post-Brexit aim to place a greater emphasis on supporting my colleagues with their professional development. We also operate across a number of countries in the EU. We’re therefore keeping a close eye on developments in case we need to restructure any elements of our business model.
What is your long term vision for LaundryHeap?
We’ve been very fortunate to have expanded internationally over the past few years, and have recently begun operating in the US. In the coming years, I hope to see Laundryheap expand its reach further and serve as a global market leader.
We’ve talked about the ways consumer behaviours are changing, but it’s important to note the ways business operations have also shifted. More than ever before, we’re seeing businesses use on-demand services like Laundryheap to add value to their offering. Hotels and restaurants are among just some of the industries that are beginning to streamline their services by outsourcing tasks whilst also adding value to customers. These behaviours are likely to become the norm, and my vision for Laundryheap sees greater collaboration between these industries.
What has been one of your biggest failures, and what did you learn from the experience?
In the early years, Laundryheap’s first office also acted as our warehouse, which soon turned out to be impractical and unsustainable. We ended up changing offices three times that year and having to source new warehouse space. This wasted valuable time that could have been spent helping the business grow.
However, I’m fortunate that the experience has taught me to take smaller, more practical steps. This approach has gone on to become instrumental to Laundryheap steady success.