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Should You Bootstrap Your Business or Take Investors
 

Should You Bootstrap Your Business or Take Investors

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You want to take your brilliant idea to the next level but it requires time and money to grow. Do you bootstrap and grow organically or take on investment and accelerate progress? Bootstrapping your ...

You want to take your brilliant idea to the next level but it requires time and money to grow. Do you bootstrap and grow organically or take on investment and accelerate progress? Bootstrapping your company means doing more with less and potentially delaying financial rewards but leaves you with more ownership and control. Taking investment can speed growth, attract talented employees, and help you stay competitive but means giving up equity and some control. Learn the pros and cons of each approach and which is best for you.

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    Should You Bootstrap Your Business or Take Investors Should You Bootstrap Your Business or Take Investors Presentation Transcript

    • Should You Bootstrap Your Business or Take on Investors? Presenter: Holly Hamann Co-founder, TapInfluence @hollyhamann
    • “Entrepreneurship requiresbalancing unbridled optimism withdelusional foolishness” TechCrunch @hollyhamann
    • 4 Ways To Fund1. Self-fund2. Family and Friends3. Angel investors (and incubators)4. Venture Capital @hollyhamann
    • Investment is like dating 1. Develop pitch 2. Target VCs 3. Build relationship 4. Negotiate terms 5. Valuation 6. Due diligence 7. Seal the deal @hollyhamann
    • If you take on formal investors,you are expected to sell thecompany or IPO. @hollyhamann
    • 1% of start-ups get funded @hollyhamann
    • Bootstrapping Pro’s• Control• Ownership• No pressure to exit• No BOD Cons• Typically funded with job income• Harder to pivot• Alone in decision-making• Harder to attract talent• No lifeline @hollyhamann
    • Angels Pro’s• Industry expertise• Smaller rounds• They have skin in the game• Typically have been entrepreneurs themselves• More tolerant of risks• Easier to find than VCs• May support smaller exits Cons• Smaller rounds• Can be high-maintenance• Rarely make follow-on investments• Expect exit @hollyhamann
    • Venture Capital Pro’s• Help with decision-making• Larger rounds• Lifeline• More likely to do follow-on rounds• Hiring connections Cons• More money = more problems• Better at negotiating than you• Loss of control• Lengthy process• Expect exit within 10 years @hollyhamann
    • Three Things Investors Look For Angel / Incubators VCsMarket OK if market is unproven but • Big returns ($100s of millions) need to prove market within a • Rapidly growing user base few monthsTeam Typically includes someone • Need to be “backable” they know • Seasoned executivesTechnology Typically an area they are • Non-trivial technology familiar with • Entry barrier (too hard for others to do on their own) @hollyhamann
    • What’s Right For You?• How much do you really need?• What is best case revenue scenario?• Are you in a rapidly-changing industry?• How many years do you want to invest?• How much $$ do your competitors have?• Can you motivate others without salaries and equity?• Do you want to keep your company forever? @hollyhamann
    • Resources – Books and Blogs Mark Suster, Both Sides of the Table Ben Horowitz, Bens Blog Paul Graham Essays Fred Wilson, AVC Brad Feld, Feld Thoughts Nivi and Naval, Venture Hacks Foundry Group, Ask The VC @hollyhamann