beyond bootstrapping: what to do when you can no longer go it alone
TRANSCRIPT
BEYOND BOOTSTRAPPING
WHAT TO DO WHEN YOU CAN NO LONGER GO IT ALONE.
© 2013, P2Binvestor Inc. All Rights Reserved.
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BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
BOOTSTRAPPING
PROS • Fundraising is time
consuming • Focus on the product • No equity dilution • Lean startup mentality • Profitability is key • No investor
management
CONS • Slower growth • Free is harder to
come by • Fewer staff, restricted
hiring options • All-consuming focus
on cash management • No investor support
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
BOOTSTRAPPING ISN’T ALWAYS POSSIBLE
• Lack skills to develop product • Large up front costs required • Idea requires expert or large team • Prototype or Beta not easy to achieve • First mover advantage is critical • Credibility of fundraising needed to land contracts
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
TYPES OF CAPITAL
• Equity / Convertible Debt
• Friends & Family • Incubators • Angels • Venture Firms
• Personal debt
• Private debt
• Commercial debt • Microloans • SBA Loans • Working Capital loans • Equipment financing
• Pre-selling product • Crowdfunding
• Grants
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
ANGEL EQUITY OR CONVERTIBLE DEBT
Angels Provide ~90% of Outside Equity for Startups Review approx. 30 deals per month out of 75K applications per year
http://www.sec.gov/info/smallbus/acsec/acsec-091713-verrill-hudson-slides.pdf
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
BE PREPARED. BE PROFESSIONAL.
Prepared 5-minute pitch (20 slides) One-minute demo video Have professional online profiles • AngelList • Gust • Crunchbase • FS6 • Website
Business plan (5-10 pgs) • Executive summary • Four-year financial
projections • FAQ • Team bios • Term sheet draft
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
DON’T FORGET A DILIGENCE FOLDER
A secure online space where you collect ALL relevant documents and materials for your company. • Business plans • Financial forecasts and actuals • Articles of incorporation and bylaws • Legal contracts, patents and NDA’s • Sales and marketing materials • Operational documents • Resumes and employment letters
It’s hard to find a lead investor because no one wants to lead diligence. Make it easy for them to say yes.
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
PITCH EVERYWHERE
• Find local angel groups and submit a request to pitch • Apply to pitch at local meet-ups • Seek out specialized angel groups if appropriate
• Women-focused • E-commerce-focused • Youth-focused • Impact-focused
• Present and speak at industry conferences to get connections
Investors like to buy into companies in industries that are familiar to them. Go where they are likely to be.
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
FOLLOW-UP & GET FEEDBACK
Keep potential investors informed about your wins as well as the struggles you have overcome.
• Send out a monthly newsletter to interested parties. • As you get requests from new investors, share your
responses with other potential investors
Angels like to invest with others they trust. Especially someone they see as expert in the industry. Listen to feedback. Seek it out. You can’t implement everything, but you need to be open to change especially if you hear the same thing all the time.
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
BE CLEAR ABOUT YOUR ASK
• Do you want a lead investor? • How much money do you want as a minimum? • Do you need an advisor? Board member? • What is your valuation? • What’s the minimum you need to move forward?
Always have a starting point, it’s easier to negotiate when your counterpart knows what you’re thinking.
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
IT’S ABOUT STAYING POWER
• Volunteer at local Angel groups and/or Startup events
• Keep moving forward on your business even while fundraising
• Find momentum!
• Have coffee with everyone
• Pay it forward when you can
BEYOND BOOTSTRAPPING WEBINAR MARCH 2014
QUESTIONS & ANSWERS
1. Click “Raise Hand” button to verbally ask a question
2. OR type your question into the chat box on the left. Still have questions? Contact us at [email protected] after the webinar. Interested in our business funding model or referral program? Learn more at P2Bi.com or contact us at [email protected].