Bootstrapping

An alterna)ve to funding
Author: Eva Hukshorn




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Eva Hukshorn: An introduc)on

Work Experience
- Current:







- 2009 2010:
- 2007 2009:
- 2004 2009:
- 2003 2004:

Partner EFactor
Board of Advisory: TreFoil Energy / CleanDrinks /
Global Thinkers / ShowLinq
Coach Startup: Bootcamp Amsterdam / New Venture McKinsey
Dutch Bou)que Marktlink Mergers & Acquisi)ons, Amsterdam
Royal Bank of Scotland Corporate Finance, Amsterdam
ABN AMRO Corporate Finance New York, Amsterdam
Accenture Consul)ng London, Amsterdam

EducaPon
- 1997 2002:
- 2003:
- 2009 2011:


- 2009 2011:
- 2012:

MSc Economics, Finance University of Groningen, the Netherlands

Interna)onal & Asian Studies Na)onal Sun Yat-Sen University, Taiwan
Cer)ed Management Accoun)ng (CMA) Ins)tute of Management Accountants
(IMA), United States
Colloquium General & Modern Art Academy for History of Art, the Netherlands
Interna)onal Financial Report Standards (DipIFR) Associa)on of Chartered Cer)ed
Accountants (ACCA), United Kingdom

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
3. Finance & Funding related ar)cles on NOW feed
4. In the Finance & Funding GROUP on our website you will nd Q&As of the webinars under
NETWORK
5. In the KNOWLEDGE base you will nd 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:
July 3:
July 17:
July 31:
Aug 14:
Aug. 28:
Sept 11.:
Sept. 25:
Oct 9:
Oct. 23:
Nov 6:
Nov. 20:
Dec. 4:
Dec. 11:
Dec. 18:

Business Plan Wri)ng - A Roadmap to Success

Pitching & Presenta)on - 3 Minutes, 1 Impression
Strategy - A Vision for the Future, A Strategy for Gehng There
Budge)ng & Forecas)ng - Predic)ng the Outcome
Working Capital - An Unknown Key to Success
Capital Management - Playing with Risk
Funding & Investments - Some Sources are More Equal then Others
Valua)on - Art or Science
Exit Strategy - Nice to Have or Need to Have?
Bootstrapping - An AlternaPve Answer to Funding
Crowdfunding - The Power of Friends, Family and Fools
Networking - Nice You have 3000 Friends, I have 30 Relevant Connec)ons
Marke)ng & (Social) Media - Noise or Value?
No Sales, No Glory
Most Common Mistakes of Entrepreneurs

Some basic ingredients to start a successful company

An average idea takes 9-12month from creaPon to business plan

Some basic ingredients to start a successful company

Most successful startups consist of 3 partners

Some basic ingredients to start a successful company

You start with money. You end with money.

And then there is money in between.
8

Typical life cycle of a High Content Growth Startup

IDEA
HIGH
RISK







LOW
RISK

PROTO TYPE

LAUNCH

GROWTH

PRE-SEED
SEED
EARLY & LATER-STAGE / GROWTH
IPO/EXIT

CAPITAL DEFINITIONS

An overview of Funding Providers ac)ve in each of the stages

PRE-SEED & SEED CAPITAL

EARLY & LATER STAGE /

GROWTH CAPITAL

IPO/EXIT

USD 0 1,5mio

USD 1 20mio

USD 25mio +

Friend Family & Fools

Grant Funding,
University Funds,
Angel Investors,
Crowdfunding,
Bootstrapping
Compe))ons
Incubators

(Syndicate of) Angel

Investors
Venture Capital
Private Equity
Commercial Bank

HIGH RISK

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

LOW RISK
10

What kind of funding do these Funding Providers give?

1. Debt/Loan

2. Equity

Funding external parPes

without ownership + fee:

Funding external parPes

with ownership:

-
-
-
-

Personal Loan
Bank loan
Conver)ble debt
Mortgages

- Et cetera

3. Bootstrapping
Funding through own
resources:

- Common
- Preferred
- Mezzanine

- Income
- Savings
- Revenue

11

What kind of funding do these Funding Providers give?

1. Debt/Loan
Funding external par)es
without ownership + fee
Friends, Family &
Fools
Angel Investors
Peer-2-Peer
Crowdfunding
Commercial Banks

2. Equity
Funding external par)es
with ownership

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

3. Bootstrapping
Funding through own
resources
Income & savings
Revenue
Friends, Family &
Fools
Pre-Sale/DonaPon
Crowdfunding,
Grant Funding
University Funds
CompePPons
12

So why bootstrap?

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

13

Bootstrapping: What is it?

Achieving as much as possible with
as ligle money as possible
1. Funding from own funds & FFF
2. Organic growth through revenue
3. Business type: services / consulPng
4. Lean & mean
5. Delays in development

14

Bootstrapping: Why do it?

1

Crea)ng value

Knowledge and asset ownership remains internal

Reducing
risk

Remain
in the drivers seat

How many op)ons do you think you have?

BOOTSTRAPPING CASE STUDY

SYMBID: DUTCH EQUITY BASED CROWDFUNDING PLATFORM

TOTAL VALUE PLATFORM:

USD 2.7mio

CASH OUT SYMBID:

EUR 176.000

USD 230k

EUR 2.046.000

TOTAL BOOTSTRAPPING PROFIT:

EUR 1.864.00
USD 2.4mio
16

BOOTSTRAPPING CASE STUDY SYMBID

PARTNER

WHAT

Accountant

500 hours of advice (280 EUR/hour)

VALUE:

SYMBID PAID:

EUR 140.000

EUR 0

17

BOOTSTRAPPING CASE STUDY SYMBID

PARTNER

WHAT

Accountant
Lawyer

VALUE:

SYMBID PAID:

500 hours of advice (280 EUR/hour)

EUR 140.000

EUR 0

175 hours of advice (280 EUR/hour)

EUR 50.000

EUR 20.000

18

BOOTSTRAPPING CASE STUDY SYMBID

PARTNER

WHAT

Accountant

VALUE:

SYMBID PAID:

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

19

BOOTSTRAPPING CASE STUDY SYMBID

PARTNER

WHAT

Accountant

VALUE:

SYMBID PAID:

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

Aliate Model, Social Media, Free

Publicity

EUR 500.000

EUR 5.000

MarkePng

20

BOOTSTRAPPING CASE STUDY SYMBID

PARTNER

WHAT

Accountant

VALUE:

SYMBID PAID:

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

Aliate Model, Social Media, Free

Publicity

EUR 500.000

EUR 5.000

No Salary

EUR 600.000

EUR 0

MarkePng
Team

21

BOOTSTRAPPING CASE STUDY SYMBID

PARTNER

WHAT

Accountant

VALUE:

SYMBID PAID:

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

Aliate 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)

MarkePng

22

BOOTSTRAPPING CASE STUDY

SYMBID: DUTCH EQUITY BASED CROWDFUNDING PLATFORM

TOTAL VALUE PLATFORM:

USD 2.7mio

CASH OUT SYMBID:

EUR 176.000

USD 230k

EUR 2.046.000

TOTAL BOOTSTRAPPING PROFIT:

EUR 1.864.00
USD 2.4mio
23

What to conclude from the case study?

Prepara)on is key


Solid
business model

Low hanging fruits rst

Leverage yourself

Account smart

Leverage everyone & everything
you
know

No
cash out ow unless
necessary

1
2

Everyone & everything is

marke)ng

DONT FOR GET ABOUT YOUR OPPORTUNITY COSTS ARE KEY!

24

Sugges)on 1: Know your numbers!

1.

Cost per sale

2.

Prot per sale

3.

Pipeline

4.

Repeat orders

5.

Conversion rates

6.

Gross prot

7.

Fixed costs per month

8.

VAT return

9.

Budgets & Forecasts

10. Results compared to last year

25

Sugges)on 2: No cash ourlows unless necessary

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

26

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)

27

Sugges)on 4: Crowdfunding
1.

Pre-Sale crowdfunding

2.

Reward based crowdfunding

3.

Peer-2-Peer lending

28

Source: Paul Grant, The

Funding Game

Sugges)on 5: The trick with patents & IP

1.

Think before you spend

2.

Visuals of prototype

3.

No Kinder-berraschung eect

4.

Talk to tech advisors

5.

Research yourself

6.

Get 1 hour free meePng with IP lawyer

7.

Fixed Fee

8.

Patent pending

29

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 prole customers

6.

TesPmonials

7.

Use resources in your network:

Share housing, technology, contacts,

databases, distribu)on &
communica)on channels
30

Sugges)on 7: Power of Free Marke)ng

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

31

Sugges)on 8: Use everything that is for FREE, cheap or @ discount

Interns:

Employees:
Barter & Trade:
CRM for SME:
Intranet:

Events:





MarkePng:





Newslegers:
Research:





Funding:

www.interns.com / www.stageplaza.nl / www.enternships.com

www.elance.com / www.linkedin.com /
www.verr.com / www.tradekey.com / www.alibaba.com
www.highrisehq.com / www.marke)nvoice.com
www.dropbox.com / www.wetransfer.com
Local entrepreneurial communi)es / www.meetup.com /
www.opencoee.ning.com
Local & regional tradi)onal media (TV, Radio, papers,
magazines) / FB, LI, Twiter, Pinterest, Youtube, Google+/ blogs
www.mailchimp.com
Local Bank / Accountant / Lawyer / Chamber of Commerce /
Government Trade Ins)tu)ons / www.cia.gov / economist.com
www.RocketHub.com / efactor.symbid.com /
www.crowdcube.com /www.fundingcircle.com /
32
www.prosper.com / www.rsrunding.org

Sugges)on 9: Dont 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!

33

From bootstrapping to investors: Timing

1

Intense & increased compe))on

Marke)ng & sales ac)vi)es

Strategic support

Proven concept making money

Partnerships, Network

Credibility

Increase personnel

Governance

Increase product development

10

Organiza)onal infrastructure

34

Conclusion: Your role models

BOOTSTRAPPING IS A MENTALITY!

35

Webinar Program Overview 2012

June 19:
July 3:
July 17:
July 31:
Aug 14:
Aug. 28:
Sept 11.:
Sept. 25:
Oct 9:
Oct. 23:
Nov 6:
Nov. 20:
Dec. 4:
Dec. 11:
Dec. 18:

Business Plan Wri)ng - A Roadmap to Success

Pitching & Presenta)on - 3 Minutes, 1 Impression
Strategy - A Vision for the Future, A Strategy for Gehng There
Budge)ng & Forecas)ng - Predic)ng the Outcome
Working Capital - An Unknown Key to Success
Capital Management - Playing with Risk
Funding & Investments - Some Sources are More Equal then Others
Valua)on - Art or Science
Exit Strategy - Nice to Have or Need to Have?
Bootstrapping - An Alterna)ve Answer to Funding
Crowdfunding - The Power of Friends, Family and Fools
Networking - Nice You have 3000 Friends, I have 30 Relevant Connec)ons
Marke)ng & (Social) Media - Noise or Value?
No Sales, No Glory
Most Common Mistakes of Entrepreneurs

36

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7. Send me an email on: www.efactor.com/hukshorn
8. Follow me on: www.efactor.com/hukshorn


HTTP://WWW.EFACTOR.COM/VIP

37

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