Ch 10 & 11:
Entrepreneurial
Finance &
Bootstrapping, 3Fs,
Angels questions and
answers
What is Bootstrapping? - answer Relying on
resources other than external financing
3 Advantages of Bootstrapping - answer ♣Forces
founding team to be scrappy and cheap
♣Allow the founding team to keep more equity no
control given up
♣Keeps the focus on customers and revenue (not
fundraising)
4 Bootstrapping Strategies - answer ♣Personal
savings
♣Keep your day job
♣Find something to sell right now
, ♣Lower your lifestyle
Steps to Bootstrapping - answer 1. Divide "big
idea" into several smaller ideas
2. Focus on the "best" smaller idea to get into
revenue
3. Then activate the other ideas as company grows
What makes 2F money attractive? - answer Wont
drive hard on deal terms and easy to get
What makes 2F money unattractive? - answer
Awkward, no robust skill set/network
Friends, Family and Fool (3Fs) investors almost
never have the knowledge and skills to objectively
evaluate - answer Valuation, Structures, Market
Opportunities, Technology
(TOVS)
4 Strategies when raising money from the 2Fs -
answer ♣Treat them as strangers
♣Structure the investment as debt
♣Tie repayment to cash flows
♣If equity, make it non-voting
Entrepreneurial
Finance &
Bootstrapping, 3Fs,
Angels questions and
answers
What is Bootstrapping? - answer Relying on
resources other than external financing
3 Advantages of Bootstrapping - answer ♣Forces
founding team to be scrappy and cheap
♣Allow the founding team to keep more equity no
control given up
♣Keeps the focus on customers and revenue (not
fundraising)
4 Bootstrapping Strategies - answer ♣Personal
savings
♣Keep your day job
♣Find something to sell right now
, ♣Lower your lifestyle
Steps to Bootstrapping - answer 1. Divide "big
idea" into several smaller ideas
2. Focus on the "best" smaller idea to get into
revenue
3. Then activate the other ideas as company grows
What makes 2F money attractive? - answer Wont
drive hard on deal terms and easy to get
What makes 2F money unattractive? - answer
Awkward, no robust skill set/network
Friends, Family and Fool (3Fs) investors almost
never have the knowledge and skills to objectively
evaluate - answer Valuation, Structures, Market
Opportunities, Technology
(TOVS)
4 Strategies when raising money from the 2Fs -
answer ♣Treat them as strangers
♣Structure the investment as debt
♣Tie repayment to cash flows
♣If equity, make it non-voting
