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Bootstrapping - An Alternative to Funding
 

Bootstrapping - An Alternative to Funding

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Bootstrapping is a mentality. Running your business mean & lean. Being creative on avoiding costs, sharing costs, leveraging your own person, credibility, your network and resources. This presentation ...

Bootstrapping is a mentality. Running your business mean & lean. Being creative on avoiding costs, sharing costs, leveraging your own person, credibility, your network and resources. This presentation provided you pragmatic tips & tricks and website links to use. And definitely don’t forget to read all the inspiring stories on the web on successfully bootstrapped companies.

Author: Eva Hukshorn

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    Bootstrapping - An Alternative to Funding Bootstrapping - An Alternative to Funding Presentation Transcript

    • Bootstrapping  An  alterna)ve  to  funding  Author:  Eva  Hukshorn     1  
    •      1.  EFactor  is  a  Smart  Network  that  matches  entrepreneurs  with  the  very  people  who  can  help   them  grow  2.  Finding  Business  Partners:  from  partners  to  investors,  from  coaches  to  customers  3.  Largest  Entrepreneurial  Network  in  the  World  with  1mio  members  in  185  countries  4.  An  online  community  Offering  you  a  network,  knowledge,  events,  and  every    business   resources  you  need  to  succeed  @  discount!  5.  GO  Online,  fix  your  personal  profile  &  company  profile  and  get  MATCHED!   It’s  not  about  connecPons  -­‐  it’s  about  the  right  ones…   2  
    • Eva  Hukshorn:  An  introduc)on  •  Work  Experience   -  Current:    Partner  EFactor        Board  of  Advisory:  TreFoil  Energy  /  CleanDrinks  /          Global  Thinkers  /  ShowLinq            Coach  Startup:  Bootcamp  Amsterdam  /  New  Venture  McKinsey   -  2009  –  2010:  Dutch  Bou)que  –  Marktlink  Mergers  &  Acquisi)ons,  Amsterdam   -  2007  –  2009:    Royal  Bank  of  Scotland  –  Corporate  Finance,  Amsterdam   -  2004  –  2009:    ABN  AMRO  –  Corporate  Finance  New  York,  Amsterdam   -  2003  –  2004:    Accenture  –  Consul)ng  London,  Amsterdam  •  EducaPon   -  1997  –  2002:  MSc  Economics,  Finance  –  University  of  Groningen,  the  Netherlands   -  2003:      Interna)onal  &  Asian  Studies  –  Na)onal  Sun  Yat-­‐Sen  University,  Taiwan   -  2009  –  2011:    Cer)fied  Management  Accoun)ng  (CMA)  –  Ins)tute  of  Management  Accountants            (IMA),  United  States   -  2009  –  2011:    Colloquium  General  &  Modern  Art  –  Academy  for  History  of  Art,  the  Netherlands   -  2012:    Interna)onal  Financial  Report  Standards  (DipIFR)  –  Associa)on  of  Chartered  Cer)fied          Accountants  (ACCA),  United  Kingdom   3      
    • FUNDING  TUESDAY,  EVERY  TUESDAY  So  what  can  you  expect  from  us  each  Funding  Tuesday?  1.  Webinars  on  EFactor  on  Finance  &  Funding  related  topics  in  the  EVENT   Sec)on  2.  Blogs  &  interviews  with  informal  investors  and  funded  entrepreneurs   with  )ps  &  tricks  in  the  BLOGS  sec)on  under  NOW  3.  Finance  &  Funding  related  ar)cles  on  NOW  feed  4.  In  the  Finance  &  Funding  GROUP  on  our  website  you  will  find  Q&As  of  the  webinars  under   NETWORK  5.  In  the  KNOWLEDGE  base  you  will  find  more  and  more  presenta)ons  on  Finance  &  Funding   related  topics,  including  the  webinar  presenta)ons  6.  And  if  you  become  a  VIP  MEMBER  you  will  personally  be  supported  on  your  Finance  &  Funding   related  ques)ons   4  
    • Webinar  Program  Overview  2012  June  19:    Business  Plan  Wri)ng  -­‐  A  Roadmap  to  Success  July  3:      Pitching  &  Presenta)on  -­‐  3  Minutes,  1  Impression  July  17:    Strategy  -­‐  A  Vision  for  the  Future,  A  Strategy  for  Gehng  There  July  31:    Budge)ng  &  Forecas)ng  -­‐  Predic)ng  the  Outcome  Aug  14:    Working  Capital  -­‐  An  Unknown  Key  to  Success  Aug.  28:    Capital  Management  -­‐  Playing  with  Risk  Sept  11.:    Funding  &  Investments  -­‐  Some  Sources  are  More  Equal  then  Others  Sept.  25:    Valua)on  -­‐  Art  or  Science  Oct  9:      Exit  Strategy  -­‐  Nice  to  Have  or  Need  to  Have?  Oct.  23:    Bootstrapping  -­‐  An  AlternaPve  Answer  to  Funding  Nov  6:    Crowdfunding  -­‐  The  Power  of  Friends,  Family  and  Fools  Nov.  20:    Networking  -­‐  Nice  You  have  3000  Friends,  I  have  30  Relevant  Connec)ons  Dec.  4:    Marke)ng  &  (Social)  Media  -­‐  Noise  or  Value?  Dec.  11:    No  Sales,  No  Glory  Dec.  18:    Most  Common  Mistakes  of  Entrepreneurs   5  
    • Some  basic  ingredients  to  start  a  successful  company     An  average  idea  takes  9-­‐12month  from  creaPon  to  business  plan   6  
    • Some  basic  ingredients  to  start  a  successful  company     Most  successful  startups  consist  of  3  partners   7  
    • Some  basic  ingredients  to  start  a  successful  company     You  start  with  money.  You  end  with  money.                                                                                         And  then  there  is  money  in  between.   8  
    • Typical  life  cycle  of  a  High  Content  Growth  Startup   IDEA   PROTO  TYPE   LAUNCH   GROWTH  HIGH  RISK   PRE-­‐SEED       SEED           EARLY  &  LATER-­‐STAGE  /  GROWTH    LOW  RISK   IPO/EXIT   CAPITAL  DEFINITIONS   9  
    • An  overview  of  Funding  Providers  ac)ve  in  each  of  the  stages  PRE-­‐SEED  &  SEED  CAPITAL   EARLY  &  LATER  STAGE  / IPO/EXIT   GROWTH  CAPITAL   USD  0  –  1,5mio   USD  1  –  20mio   USD  25mio  +  •  Friend  Family  &  Fools   •  (Syndicate  of)  Angel   •  Venture  Capital  •  Grant  Funding,     Investors   •  Private  Equity  •  University  Funds,     •  Venture  Capital   •  Commercial  Banks  •  Angel  Investors,   •  Private  Equity   •  Hedge  Funds   Crowdfunding,   •  Commercial  Bank   •  Public  Market  /  Stock  •  Bootstrapping   Exchange  •  Compe))ons  •  Incubators  HIGH  RISK                                                    LOW  RISK   10  
    • What  kind  of  funding  do  these  Funding  Providers  give?   1.  Debt/Loan   2.  Equity   3.  Bootstrapping  Funding  external  parPes   Funding  external  parPes   Funding  through  own  without  ownership  +  fee:   with  ownership:   resources:   -  Personal  Loan   -  Common   -  Income   -  Bank  loan     -  Preferred   -  Savings   -  Conver)ble  debt   -  Mezzanine   -  Revenue   -  Mortgages     -  Et  cetera       11  
    • What  kind  of  funding  do  these  Funding  Providers  give?   1.  Debt/Loan   2.  Equity   3.  Bootstrapping  Funding  external  par)es   Funding  external  par)es   Funding  through  own  without  ownership  +  fee   with  ownership   resources    •  Friends,  Family  &     Friends,  Family  &   •    Income  &  savings   •  Fools   Fools   •  Revenue  •  Angel  Investors   •  Incubators   •  Friends,  Family  &  •  Peer-­‐2-­‐Peer   •  Equity-­‐Based   Fools   Crowdfunding   Crowdfunding   •  Pre-­‐Sale/DonaPon  •  Commercial  Banks   •  Angel  Investors   Crowdfunding,     •  Venture  Capital   •  Grant  Funding   •  Private  Equity   •  University  Funds   •  CompePPons   12  
    • So  why  bootstrap?  •  85%  of  ideas  do  not  startup  •  50%  of  the  startups  are  not  alive  aner  5  years  •  On  average  it  takes  3.8x  companies  to  be  successful  •  Less  then  10%  of  the  startups  get  funded  with  equity:   -  0.03%  venture  capital  /  2%  by  informal  investors     -  It  takes  1.5  years,  32  versions  of  your  business  plan  and  speaking  to  20  investors   at  least  3  )mes  •  65%  of  entrepreneurs  have  personal  loans  •  55%  of  startups  with  Angel  Funding  will  get  Venture  Capital  Funding  compared  to   10%  with  no  Angel  Funding  will  get  Venture  Capital  Funding  •  1  to  100  companies  having  a  mee)ng  with  Venture  Capital  gets  funded   13  
    • Bootstrapping:  What  is  it?   Achieving  as  much  as  possible  with   as  ligle  money  as  possible   1.  Funding  from  own  funds  &  FFF   2.  Organic  growth  through  revenue   3.  Business  type:  services  /  consulPng   4.  Lean  &  mean   5.  Delays  in  development   14  
    • Bootstrapping:  Why  do  it?   1   Crea)ng  value   2   Knowledge  and  asset  ownership  remains  internal   3   Reducing  risk     4   Remain  in  the  drivers’  seat     4   How  many  op)ons  do  you  think  you  have?    
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID:  DUTCH  EQUITY  BASED  CROWDFUNDING  PLATFORM   •  TOTAL  VALUE  PLATFORM:        EUR  2.046.000                      USD  2.7mio   •  CASH  OUT  SYMBID:          EUR  176.000                      USD  230k   •  TOTAL  BOOTSTRAPPING  PROFIT:  EUR  1.864.00                      USD  2.4mio   16  
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID  PARTNER   WHAT     VALUE:   SYMBID  PAID:  Accountant     500  hours  of  advice  (280  EUR/hour)   EUR  140.000   EUR  0           17    
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID  PARTNER   WHAT     VALUE:   SYMBID  PAID:  Accountant     500  hours  of  advice  (280  EUR/hour)   EUR  140.000   EUR  0  Lawyer   175  hours  of  advice  (280  EUR/hour)   EUR  50.000   EUR  20.000           18    
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID  PARTNER   WHAT     VALUE:   SYMBID  PAID:  Accountant     500  hours  of  advice  (280  EUR/hour)   EUR  140.000   EUR  0  Lawyer   175  hours  of  advice  (280  EUR/hour)   EUR  50.000   EUR  20.000  Technology   Shareholder       EUR  250.000   EUR  150.000   India  mockup  on  western  standards         19    
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID  PARTNER   WHAT     VALUE:   SYMBID  PAID:  Accountant     500  hours  of  advice  (280  EUR/hour)   EUR  140.000   EUR  0  Lawyer   175  hours  of  advice  (280  EUR/hour)   EUR  50.000   EUR  20.000  Technology   Shareholder       EUR  250.000   EUR  150.000   India  mockup  on  western  standards    MarkePng   Affiliate  Model,  Social  Media,  Free   EUR  500.000   EUR  5.000   Publicity       20    
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID  PARTNER   WHAT     VALUE:   SYMBID  PAID:  Accountant     500  hours  of  advice  (280  EUR/hour)   EUR  140.000   EUR  0  Lawyer   175  hours  of  advice  (280  EUR/hour)   EUR  50.000   EUR  20.000  Technology   Shareholder       EUR  250.000   EUR  150.000   India  mockup  on  western  standards    MarkePng   Affiliate  Model,  Social  Media,  Free   EUR  500.000   EUR  5.000   Publicity  Team   No  Salary     EUR  600.000   EUR  0     21    
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID  PARTNER   WHAT     VALUE:   SYMBID  PAID:  Accountant     500  hours  of  advice  (280  EUR/hour)   EUR  140.000   EUR  0  Lawyer   175  hours  of  advice  (280  EUR/hour)   EUR  50.000   EUR  20.000  Technology   Shareholder       EUR  250.000   EUR  150.000   India  mockup  on  western  standards    MarkePng   Affiliate  Model,  Social  Media,  Free   EUR  500.000   EUR  5.000   Publicity  Team   No  Salary     EUR  600.000   EUR  0  Advisors  Investors   Celebri)es  +  Specialists     @  discount  if  next  investor  at  higher   EUR  500.000   EUR  1.000     (2  dinners)   price   22    
    • BOOTSTRAPPING  –  CASE  STUDY  SYMBID:  DUTCH  EQUITY  BASED  CROWDFUNDING  PLATFORM   •  TOTAL  VALUE  PLATFORM:        EUR  2.046.000                      USD  2.7mio   •  CASH  OUT  SYMBID:          EUR  176.000                      USD  230k   •  TOTAL  BOOTSTRAPPING  PROFIT:  EUR  1.864.00                      USD  2.4mio   23  
    • What  to  conclude  from  the  case  study?   1   Prepara)on  is  key   5   Low  hanging  fruits  first       2   Solid  business  model     6   Leverage  yourself     3   Account  smart   7   Leverage  everyone  &  everything     you  know     4   No  cash  out  flow  unless     8   Everyone  &  everything  is   necessary   marke)ng         DON’T  FOR  GET  ABOUT  YOUR  OPPORTUNITY  COSTS  ARE  KEY!   24  
    • Sugges)on  1:  Know  your  numbers!   1.  Cost  per  sale   2.  Profit  per  sale   3.  Pipeline   4.  Repeat  orders   5.  Conversion  rates   6.  Gross  profit   7.  Fixed  costs  per  month   8.  VAT  return   9.  Budgets  &  Forecasts   10.  Results  compared  to  last  year   25  
    • Sugges)on  2:  No  cash  ourlows  unless  necessary   1.  Variable  costs  are  key   2.  Diminish  overhead  costs   3.  Avoid  capital  expenses   4.  No  long  term  contracts   5.  What  your  payroll   6.  Outsource  all  except  your  Unique  Selling   Point   7.  Barter   26  
    • Sugges)on  3:  Funding  sources   1.  UniversiPes  &  Grants  funding   2.  CompePPons   3.  Vendor  Funding   4.  Invoice  discounPng  &  Factoring   5.  Asset  funding   6.  Overdrals   7.  Barter   8.  Credit  cards   9.  Revenue,  savings   10.  Friends,  Family  &  Fools  (FFF)   27  
    • Sugges)on  4:  Crowdfunding   1.  Pre-­‐Sale  crowdfunding   2.  Reward  based  crowdfunding   3.  Peer-­‐2-­‐Peer  lending   28  
    • Source:  Paul  Grant,  The   Funding  Game  Sugges)on  5:  The  trick  with  patents  &  IP   1.  Think  before  you  spend   2.  Visuals  of  prototype   3.  No  Kinder-­‐Überraschung  effect   4.  Talk  to  tech  advisors   5.  Research  yourself   6.  Get  1  hour  free  meePng  with  IP  lawyer   7.  Fixed  Fee   8.  Patent  pending     29  
    • Sugges)on  6:  Leverage  yourself  and  others   1.  Get  a  well  known  coach   2.  Experienced  board  of  advisory   3.  Equity  stake  up  to  5%  incl.  vesPng  Pme   4.  Brand  associaPon   5.  Discount  for  high  profile  customers   6.  TesPmonials   7.  Use  resources  in  your  network:   •  Share  housing,  technology,  contacts,   databases,  distribu)on  &   communica)on  channels   30  
    • Sugges)on  7:  Power  of  Free  Marke)ng   1.  Measurable  MarkePng   2.  Concrete  &  Clear  Unique  Selling  Point   3.  Joint  Ventures   4.  Sales,  Sales,  Sales  =  Numbers’  Game   5.  Trial  balloons   6.  Find  opPmal  market,  message  &  price   7.  Find  angles  for  free  publicity   8.  Social  Media  /  Blogs   9.  Trigger  with  (basic)  test  products   10.  Repeat  customers   31  
    • Sugges)on  8:  Use  everything  that  is  for  FREE,  cheap  or  @  discount  •  Interns:          www.interns.com  /  www.stageplaza.nl  /  www.enternships.com  •  Employees:    www.elance.com  /  www.linkedin.com  /    •  Barter  &  Trade:    www.fiverr.com  /  www.tradekey.com  /  www.alibaba.com  •  CRM  for  SME:    www.highrisehq.com  /  www.marke)nvoice.com  •  Intranet:      www.dropbox.com  /  www.wetransfer.com  •  Events:      Local  entrepreneurial  communi)es  /  www.meetup.com  /            www.opencoffee.ning.com    •  MarkePng:    Local  &  regional  tradi)onal  media  (TV,  Radio,  papers,            magazines)  /  FB,  LI,  Twiter,  Pinterest,  Youtube,  Google+/  blogs  •  Newslegers:      www.mailchimp.com  •  Research:        Local  Bank  /  Accountant  /  Lawyer  /  Chamber  of  Commerce  /                Government  Trade  Ins)tu)ons  /  www.cia.gov  /  economist.com  •  Funding:      www.RocketHub.com  /  efactor.symbid.com  /          www.crowdcube.com  /www.fundingcircle.com  /            www.prosper.com  /  www.firsrunding.org   32  
    • Sugges)on  9:  Don’t  forget  to  leverage  EFACTOR  •  Match  with  Partners,  Investors,  Coaches,  Customers  •  Market  yourself,  your  company,  your  brand,  your  blogs  •  Network  events,  business  development  •  Find  employees  &  interns  •  325  knowledge  documents  for  entrepreneurs    •  Business  Resources  against  discount  •  FREE  Funding  Requests  &  Business  Plan  support     One  rule:  WE  provide  the  plasorm,  YOU  make  it  happen!   33  
    • From  bootstrapping  to  investors:  Timing   1   Intense  &  increased  compe))on   6   Marke)ng  &  sales  ac)vi)es     2   Strategic  support   7   Proven  concept  making  money     3   Partnerships,  Network   8   Increase  personnel         4   Credibility   9   Governance       5   Increase  product  development   10   Organiza)onal  infrastructure       34      
    • Conclusion:  Your  role  models   BOOTSTRAPPING  IS  A  MENTALITY!   35  
    • Webinar  Program  Overview  2012  June  19:    Business  Plan  Wri)ng  -­‐  A  Roadmap  to  Success  July  3:      Pitching  &  Presenta)on  -­‐  3  Minutes,  1  Impression  July  17:    Strategy  -­‐  A  Vision  for  the  Future,  A  Strategy  for  Gehng  There  July  31:    Budge)ng  &  Forecas)ng  -­‐  Predic)ng  the  Outcome  Aug  14:    Working  Capital  -­‐  An  Unknown  Key  to  Success  Aug.  28:    Capital  Management  -­‐  Playing  with  Risk  Sept  11.:    Funding  &  Investments  -­‐  Some  Sources  are  More  Equal  then  Others  Sept.  25:    Valua)on  -­‐  Art  or  Science  Oct  9:      Exit  Strategy  -­‐  Nice  to  Have  or  Need  to  Have?  Oct.  23:    Bootstrapping  -­‐  An  Alterna)ve  Answer  to  Funding  Nov  6:    Crowdfunding  -­‐  The  Power  of  Friends,  Family  and  Fools  Nov.  20:    Networking  -­‐  Nice  You  have  3000  Friends,  I  have  30  Relevant  Connec)ons  Dec.  4:    Marke)ng  &  (Social)  Media  -­‐  Noise  or  Value?  Dec.  11:    No  Sales,  No  Glory  Dec.  18:    Most  Common  Mistakes  of  Entrepreneurs   36    
    • BECOME  A  VIP  MEMBER  WITHIN  1  WEEK  AND  GET  YOUR  PLAN  CHECKED!  SPECIAL  OFFER,  ONLY  USD  12!  1.  FREE  checking  of  final  dral    business  plan  2.  FREE  discussion  on  next  steps  and  how  &  where  to  find  funding  in  your   region  3.  FREE  to  ask  addiPonal  quesPon  related  to  funding  &  investment  related   topics  4.  FREE  documentaPon  of  all  webinars  so  far,  presentaPons  +  notes!  5.  FREE  downloads  on  relevant  entrepreneurial  topics    6.  EXTRA  discounts  on  all  our  products  on  our  website  7.  Send  me  an  email  on:  www.efactor.com/hukshorn  8.  Follow  me  on:  www.efactor.com/hukshorn         HTTP://WWW.EFACTOR.COM/VIP     37      
    • Thank  you!    This  document  was  prepared  by  Eva  Hukshorn.  Several  people  and  organizaPons  have  inspired  her  to  write  this  presentaPon,  amongst  which  are,  but  not  limited  to  the  Founders  of  EFactor,  ABN  AMRO/RBS,  University  of  Groningen,  InsPtute  for  Management  Accountants,  Paul  Grant   Founder  of  the  Funding  Game