Bootstrapping - An Alternative to Funding
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Transcript of Bootstrapping - An Alternative to Funding
Bootstrapping An alterna)ve to funding Author: Eva Hukshorn
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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…
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
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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
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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
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
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Some basic ingredients to start a successful company
An average idea takes 9-‐12month from creaPon to business plan
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Some basic ingredients to start a successful company
Most successful startups consist of 3 partners
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Some basic ingredients to start a successful company
You start with money. You end with money. And then there is money in between.
Typical life cycle of a High Content Growth Startup
IDEA PROTO TYPE LAUNCH GROWTH
PRE-‐SEED
SEED
EARLY & LATER-‐STAGE / GROWTH
IPO/EXIT
HIGH RISK
LOW RISK
CAPITAL DEFINITIONS 9
An overview of Funding Providers ac)ve in each of the stages
PRE-‐SEED & SEED CAPITAL
• Friend Family & Fools • Grant Funding, • University Funds, • Angel Investors,
Crowdfunding, • Bootstrapping • Compe))ons • Incubators
• (Syndicate of) Angel Investors
• Venture Capital • Private Equity • Commercial Bank
• Venture Capital • Private Equity • Commercial Banks • Hedge Funds • Public Market / Stock
Exchange
EARLY & LATER STAGE /GROWTH CAPITAL
IPO/EXIT
USD 0 – 1,5mio USD 1 – 20mio USD 25mio +
HIGH RISK LOW RISK 10
What kind of funding do these Funding Providers give?
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3. Bootstrapping 1. Debt/Loan 2. Equity
Funding through own resources: - Income - Savings - Revenue
Funding external parPes without ownership + fee: - Personal Loan - Bank loan - Conver)ble debt - Mortgages - Et cetera
Funding external parPes with ownership: - Common - Preferred - Mezzanine
What kind of funding do these Funding Providers give?
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3. Bootstrapping 1. Debt/Loan 2. Equity
Funding through own resources
Funding external par)es without ownership + fee
Funding external par)es with ownership • Income & savings
• Revenue • Friends, Family &
Fools • Pre-‐Sale/DonaPon
Crowdfunding, • Grant Funding • University Funds • CompePPons
• Friends, Family & Fools
• Angel Investors • Peer-‐2-‐Peer
Crowdfunding • Commercial Banks
• Friends, Family & Fools
• Incubators • Equity-‐Based
Crowdfunding • Angel Investors • Venture Capital • Private Equity
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• 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
So why bootstrap?
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1. Funding from own funds & FFF
2. Organic growth through revenue 3. Business type: services / consulPng
4. Lean & mean
5. Delays in development
Achieving as much as possible with
as ligle money as possible
Bootstrapping: What is it?
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?
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• 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
BOOTSTRAPPING – CASE STUDY
SYMBID: DUTCH EQUITY BASED CROWDFUNDING PLATFORM
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BOOTSTRAPPING – CASE STUDY SYMBID
PARTNER WHAT VALUE: SYMBID PAID:
Accountant 500 hours of advice (280 EUR/hour) EUR 140.000 EUR 0
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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
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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 India mockup on western standards
EUR 250.000 EUR 150.000
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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 India mockup on western standards
EUR 250.000 EUR 150.000
MarkePng Affiliate Model, Social Media, Free Publicity
EUR 500.000 EUR 5.000
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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 India mockup on western standards
EUR 250.000 EUR 150.000
MarkePng Affiliate Model, Social Media, Free Publicity
EUR 500.000 EUR 5.000
Team No Salary EUR 600.000 EUR 0
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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 India mockup on western standards
EUR 250.000 EUR 150.000
MarkePng Affiliate Model, Social Media, Free Publicity
EUR 500.000 EUR 5.000
Team No Salary EUR 600.000 EUR 0
Advisors Investors
Celebri)es + Specialists @ discount if next investor at higher price
EUR 500.000 EUR 1.000 (2 dinners)
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• 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
BOOTSTRAPPING – CASE STUDY
SYMBID: DUTCH EQUITY BASED CROWDFUNDING PLATFORM
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1 Prepara)on is key 2 Solid business model
3 Account smart
4 No cash out flow unless necessary
5 Low hanging fruits first
6 Leverage yourself
7 Leverage everyone & everything
you know
8 Everyone & everything is marke)ng
What to conclude from the case study?
DON’T FOR GET ABOUT YOUR OPPORTUNITY COSTS ARE KEY!
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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
Sugges)on 2: No cash ourlows unless necessary
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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
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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)
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Sugges)on 4: Crowdfunding
1. Pre-‐Sale crowdfunding
2. Reward based crowdfunding
3. Peer-‐2-‐Peer lending
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Sugges)on 5: The trick with patents & IP
Source: Paul Grant, The Funding Game
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
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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
Sugges)on 7: Power of Free Marke)ng
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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
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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
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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!
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1 Intense & increased compe))on
2 Strategic support
3 Partnerships, Network
4 Credibility
5 Increase product development
6 Marke)ng & sales ac)vi)es
7 Proven concept making money
8 Increase personnel
9 Governance
10 Organiza)onal infrastructure
From bootstrapping to investors: Timing
Conclusion: Your role models
35 BOOTSTRAPPING IS A MENTALITY!
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
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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
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HTTP://WWW.EFACTOR.COM/VIP
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