Venture Financing:

Step-by-step Guide

Bootstrapping

The Most Common Source of Initial Equity for Entrepreneurial Firms

 

Vadim Kotelnikov personal logo Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

  

 

Step-by-Step Guide To Venture Financing

Strategies for Successful Bootstrapping

Bootstrapping Options for Product Development

Bootstrapping Options for Business Development

Bootstrapping Options to Minimize the Need for Capital

Bootstrapping Options to Meet the Need for Capital

Venture Map To Financing

Venture Planning

Business Planning Chart

The Funding Round

Long Term Capitalization Planning

Business Finance, Administration, Marketing and Sales

Business Operations

Would-Be Entrepreneur

Reality Check

SWOT Analysis for a Start-Up Venture

Venture Planning Checklist

Customer Assessment

Venture Model

Financial Assessment

Overall Venture Evaluation and Reality Check

Startup Company

Venture Financing

Alternative Financing: VC Is Not The Only Way

Start-up Capital Formation Process

5 Tips for Internet Startups

Startup Company Intellectual Property (IP) Strategies

Protecting Your Business Name

Venture Management

5 Critical Success Factor for New Ventures

What Changes as Company Grows

Entrepreneurial Success

How To Succeed in Business

Seven Simple Steps to Small Business Success

What is Bootstrapping?

Bootstrapping is a means of financing a small firm through highly creative acquisition and use of resources without raising equity from traditional sources or borrowing money from a bank.

Venture Financing Funnel

Venture Financing: Key Documents

In short, "bootstrapping" means starting a new business without start-up capital. It is characterized by high reliance on any internally generated retained earnings, credit cards, second mortgages, and customer advances, to name but a few sources.

Why Bootstrapping?

Bootstrapping is the most likely source of initial equity for more than 90% of technology based firms. Venture capitalists are rarely able to fund small start-up firms (in US, seeking lees than $5 million), regardless of the quality of the venture, because of their very specific investment criteria and high costs of due diligence, negotiating, and monitoring. Bootstrapping offers many advantages for entrepreneurs and is probably the best method to get an entrepreneurial firm operating and well positioned to seek equity capital from outside investors at a later time.

Entrepreneur: 10 Action Roles

8 Key Entrepreneurial Questions

Bootstrapping Options

Bootstrapping options available to entrepreneurs can be divided into four categories:

  1. Product development

  2. Business development

  3. Minimization of capital needed, and

  4. Meeting the need for capital.

 

References:

1.    "Bootstrap Finance: The Art of Start-ups" by Bhide, A.

2.    "Who Bankrolls Software Entrepreneurs" by Freear, J., Sohl.J.E., and Wetzel, W.E.

3.    "Financial Bootstrapping in Small Businesses: A Resource-Based View on Small Business Finance", Winborg,J., and Landstrom.H.

4.    "Angel Investing", Osnabrugge,M.V., and Robinson, R.J.,