Confidential



 Growth S
 G     h Strategies f
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 Bootstrapped Companies
 Building Shareholder Value ...
Confidential
                        What do all these Companies
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Confidential
                        Bootstrapping Often Creates
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Confidential
                        Bootstrapped Companies Face
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Confidential
                        Raising Capital at the Right Time
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Confidential
                        Laying the Foundations for
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Confidential


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                                  www.kennet.co...
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Kennet - Growth Strategies For Bootstrapped Companies

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Kennet - Growth Strategies For Bootstrapped Companies

  1. 1. Confidential Growth S G h Strategies f i for Bootstrapped Companies Building Shareholder Value in Today’s Market g y Authorised & regulated by the Financial Services Authority
  2. 2. Confidential What do all these Companies p Have in Common?  Contrary to p p y popular p perception, many of today’s market p , y y leaders “bootstrapped” their initial business through “sweat equity”  They all raised growth equity capital after achieving run- rate revenues of between $4 million run (eBay) and $60 million (Dell) ©2009 Kennet Partners Authorised & regulated by the Financial Services Authority
  3. 3. Confidential Bootstrapping Often Creates pp g Stronger Businesses  Customer focus is baked into the company DNA • Forced to listen to the customer (very carefully) • Market test (will someone pay for it?)  Capital allocation is more rational, less speculative • Investments are more gradual • Sustainable burn rate • Avoid fund-raising time drain g • Avoid conflicting expectations of managers and investors  Managers tend to be more focussed and goals more aligned li d • Do or die nature of the business • Fewer distractions F di t ti • Too many projects / too few people • Problems cannot be g ossed o e with cap a ob e s ca o glossed over capital ©2009 Kennet Partners Authorised & regulated by the Financial Services Authority
  4. 4. Confidential Bootstrapped Companies Face pp p Challenges as they Mature  C t i d G th Constrained Growth • If market growth accelerates, bootstrapped businesses may not be able to fund initiatives required to keep pace  Weak Capital Base • Of leads to overly conservative risk profile d to Often l d l i i k fil due inability to fund new initiatives, which impacts management decision making  Management Recruiting • Recruiting top-flight senior management can be difficult if top flight funding is limited and/or founder’s objectives are not clear  Fewer Sources of Management Guidance g • Bootstrapped businesses often lack external board members, or advisors with a vested interest in maximizing shareholder value ©2009 Kennet Partners Authorised & regulated by the Financial Services Authority
  5. 5. Confidential Raising Capital at the Right Time g p g Can Transform Growth Stage g Development Growth G th + ed Externa funde – Sales acceleration ally Significantly higher unimpeded; baseline timing & execution business insulated risks from growth risks ng Fundin + F – rapped Less market timing Internally generated yg risk; B tt i k Better Boot-str cash flow may not assessment of keep pace with customer customer requirements i t requirements ©2009 Kennet Partners
  6. 6. Confidential Laying the Foundations for y g Managed, Sustainable Growth  Determine growth opportunities and develop the business plan to exploit the company’s strengths – avoid about-turns  Develop and validate a sales model that can scale predictably and profitably  D l relationships with strategic partners th t can Develop l ti hi ith t t i t that help reduce cost of sales and/or accelerate growth  Evaluate management strengths & weaknesses. Recruit weaknesses outside management talent to invest in key areas that can be improved  Evaluate the capital needs of the business – must fuel growth and insulate the baseline business from risk  Bring in an outside board for management guidance  Consider adjacent product areas and/or acquisitions that can build on the company’s organic success company s ©2009 Kennet Partners Authorised & regulated by the Financial Services Authority
  7. 7. Confidential For F more  www.kennet.com/ideas-and-resources  Contact Kennet: • Silicon Valley Kennet Partners LLC K tP t 950 Tower Lane Suite 1710 Foster City CA 94404 T: +1 (650) 573 6700 E: info@kennet com info@kennet.com • London Kennet Partners Ltd. Nuffield House N ffi ld H 41 – 46 Piccadilly London W1J 0DS T: +44 (0)20 7839 8020 E: info@kennet com info@kennet.com  Authorized and regulated by the Financial Services Authority Registered in England 3295094 ©2009 Kennet Partners

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