bootstrapping - an alternative to funding

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Bootstrapping An alternative to funding Author : Eva hukshorn, partner EFactor

Post on 13-Sep-2014

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Page 1: Bootstrapping - An Alternative to Funding

BootstrappingAn alternative to fundingAuthor : Eva hukshorn, partner EFactor

Page 2: Bootstrapping - An Alternative to Funding

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!

Page 3: Bootstrapping - An Alternative to Funding

Some Basic Ingredients To Start a Successful Company

• An average idea takes 9 - 12month from creation to business plan.• Most successful start-ups consist of 3 partners • You start with money. You end with money. And then there is money in between.

Page 4: Bootstrapping - An Alternative to Funding

Typical life cycle of a High Content Growth Startup

IDEA PROTO TYPE LAUNCH GROWTH

HIGHRISK

LOWRISK

PRE - SEED

SEED

EARLY & LATER-STAGE/ GROWTH

IPO/ EXIT

CAPITAL DEFINITIONS

Page 5: Bootstrapping - An Alternative to Funding

An Overview of Funding Providers Active in Each of the Stages

PRE-SEED & SEED CAPITAL

USD 0 – 1.5 mio

• Friend Family & Fools

• Grant Funding• University Loan• Angel Investors• Crowdfunding• Bootstapping• Competitions• Incubators

EARLY & LATER STAGE / GROWTH CAPITALUSD 1 – 20 mio

• (Syndicate of) Angel investors

• Venture Capital• Private Equity• Commercial Bank

IPO / EXIT

USD 25mio +

• Venture Capital• Private Equity• Commercial Banks• Hedge Funds• Public Market / Stock

Exchange

HIGH RISK LOW RISK

Page 6: Bootstrapping - An Alternative to Funding

What Kind of Funding do These Funding Providers Give?1. Debt/Loan

Funding external parties without ownership + fee:• Personal Loan• Bank Loan• Convertible debt• Mortgages• Et cetera

2. Equity

Funding external parties without ownership :• Common• Preferred• Mezzanine

3. Debt/Loan

Funding through own resources• Income• Savings• Revenue

• Friends, Family & Fools• Angel Investors • Peer 2 – Peer Crowd ‐funding• Commercial Banks

• Friends, Family & Fools• Incubators• Equity-Based Crowdfunding • Angel Investors• Venture Capital• Private Equity

• Income & Savings• Revenue • Friends, Family & Fools• Pre-Sale/ Donation• Crowdfunding• Grant Funding• University Funds• Competitions

Page 7: Bootstrapping - An Alternative to Funding

So Why Bootstrap?

• 85% of ideas do not start-up.• 50% of the startups are not alive after 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 times.• 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 meeting with Venture Capital gets funded.

Page 8: Bootstrapping - An Alternative to Funding

Bootstrapping : What is It?

Achieving as much as possible with as little money as possible

1. Funding from own funds & FFF. 2. Organic growth through revenue.3. Business type: services / consulting4. Lean & Mean5. Delays in Development

Page 9: Bootstrapping - An Alternative to Funding

Bootstrapping : Why do It?

1. Creating Value

2. Knowledge and asset ownership remains internal

3. Reducing risk

4. Remain in the drivers’ seat

5. How many options do you think you have?

Page 10: Bootstrapping - An Alternative to Funding

BOOTSTRAPPING - CASESTUDY

SYMBID:DUTCH EQUITY BASED CROWDFUNDING PLATFORM

• Total Value Platform Eur 2.046.000

USD 2.7 mio

• Cash Out Symbid Eur 176.000

USD 239k

• Total Bootstrapping Profit Eur 1.864.00

USD 2.4 mio

Page 11: Bootstrapping - An Alternative to Funding

BOOTSTRAPPING - CASESTUDY

SYMBID:DUTCH EQUITY BASED CROWDFUNDING PLATFORM

PARTNER WHAT VALUE SYMBID PAID:Accountant 500 hours of advice (280 EUR/hour) EUR 140.000 EUR0

Lawyer 175 hours of advice (280 EUR/hour) EUR 50.000 EUR 20.000

Technology ShareholderIndia mockup on western Standards

EUR 250.000 EUR 150.000

Marketing Affiliate Model, Social Media, Free Publicity

EUR 500.000 EUR 5.000

Team No Salary EUR 600.000 EUR 0

AdvisorsInvestors

Celebrities + Specialists @ discount if next investor at higher price

EUR 500.000 EUR 1.000(2 dinners)

Page 12: Bootstrapping - An Alternative to Funding

BOOTSTRAPPING - CASESTUDY

SYMBID:DUTCH EQUITY BASED CROWDFUNDING PLATFORM

• Total Value Platform Eur 2.046.000

USD 2.7 mio

• Cash Out Symbid Eur 176.000

USD 239k

• Total Bootstrapping Profit Eur 1.864.00

USD 2.4 mio

Page 13: Bootstrapping - An Alternative to Funding

Bootstrapping : Why do It?

1. Preparation is the key

2. Solid business model

3. Account smart

4. No cash out flow unless necessary 8

7

6

5 Low hanging fruits first

Leverage yourself

Leverage everything you know

Everyone & everything is marketing

Page 14: Bootstrapping - An Alternative to Funding

Visit Nowhttp://www.efactor.com/

https://www.facebook.com/efactorhttp://www.twitter.com/efactor

Page 15: Bootstrapping - An Alternative to Funding

This document was prepared by Eva Hukshorn. Several people and organizations have inspired her to write this presentation, amongst which are, but not limited to the Founders of EFactor, ABN AMRO/RBS, University of Groningen, Institute for Management

Accountants, Paul Grant Founder of the Funding Game

Thank You!