What Is Bootstrapping? - Deepstash
What Is Bootstrapping?

What Is Bootstrapping?

  • Bootstrapping is founding and running a company using only personal finances or operating revenue.
  • This form of financing allows the entrepreneur to maintain more control, but it also can increase financial strain.

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Series A Financing
  • Series A financing follows initial seed capital, generally bringing in investments in the tens of millions of dollars.
  • A start-up will generally draw this level of financing only after it has demonstrated a viable business model with strong growth potential.
  • Series A financing enables a start-up that has potential but lacks needed cash to expand its operations through hiring, purchasing inventory and equipment, and pursuing long-term goals.
  • Series A financiers typically gain a large or controlling interest in the start-up company in exchange for their investment and the risk they are taking.

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Series B Funding
  • Series B financing is the second round of funding for a company that has met certain milestones and is past the initial startup stage.
  • Series B investors usually pay a higher share price for investing in the company than Series A investors.
  • Series B investors typically prefer convertible preferred stock vs. common stock due to the anti-dilution feature of preferred stock.
  • Series B funding can come from private equity investors, venture capitalists, crowdfunded equity, and credit investments.

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Seed Funding
  • Seed capital is the money raised to begin developing an idea for a business or a new product.
  • This funding generally covers only the costs of creating a proposal.
  • After securing seed financing, startups may approach venture capitalists to obtain additional financing.
  • Some seed capital may come from angel investors—professional investors who have a high-net-worth.

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Series C Funding
  • Businesses that make it to Series C funding sessions are already quite successful.
  • Companies look for additional funding to help them develop new products, expand into new markets, or even acquire other companies
  • Cycle C funding is focused on scaling the company, growing as quickly and as successfully as possible.

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From a venture capitalist’s point of view, the ideal entrepreneur:

  • delivers sales or technical advances such as FDA approval with reasonable probability,
  • tells a compelling story and is presentable to outside investors,
  • recognizes the need for speed to an IPO for liquidity,
  • has a good reputation and can provide references that show competence and skill,
  • understands the need for a team with a variety of skills and therefore sees why equity has to be allocated to other people,
  • works diligently toward a goal but maintains flexibility,
  • gets along with the investor group.

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60% Were Not First-Time Founders
  1. Among the founders of billion-dollar startups, almost 60% were not first-time founders.
  2. In a randomly selected group of startups that had raised a minimum of $3 million in venture capital funding but didn’t reach unicorn status — the typical picture for a seed-funded startup — about 40% were not first-time founders.
  3. The statistic shows that repeat founders were more likely to start a billion-dollar company.
  4. This is not to discourage first-time founders. It is rather to encourage those with a failed or those with a small outcome in the first attempt to go at it again.

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