Should You Bootstrap Your Business or Take on Investors?

Presenter: Holly HamannCo-founder, TapInfluence

@hollyhamann

“Entrepreneurship requires balancing unbridled optimism with delusional foolishness” TechCrunch

@hollyhamann

4 Ways To Fund

1. Self-fund2. Family and Friends3. Angel investors (and

incubators)4. Venture Capital

@hollyhamann

Investment is like dating

1. Develop pitch2. Target VCs3. Build relationship4. Negotiate terms5. Valuation6. Due diligence7. Seal the deal

@hollyhamann

If you take on formal investors, you are expected to sell the company or IPO.

@hollyhamann

1% of start-ups get funded

@hollyhamann

Bootstrapping

Pro’s• Control• Ownership• No pressure to exit• No BOD

Cons• Typically funded with job income• Harder to pivot • Alone in decision-making• Harder to attract talent• No lifeline

@hollyhamann

Angels

Pro’s• Industry expertise• Smaller rounds• They have skin in the game• Typically have been entrepreneurs

themselves• More tolerant of risks• Easier to find than VCs• May support smaller exits

Cons• Smaller rounds• Can be high-maintenance• Rarely make follow-on investments• Expect exit

@hollyhamann

Venture Capital

Pro’s• Help with decision-making• Larger rounds• Lifeline• More likely to do follow-on rounds• Hiring connections

Cons• More money = more problems• Better at negotiating than you • Loss of control• Lengthy process• Expect exit within 10 years

@hollyhamann

Angel / Incubators VCsMarket OK if market is unproven but

need to prove market within a few months

• Big returns ($100s of millions)• Rapidly growing user base

Team Typically includes someone they know

• Need to be “backable”• Seasoned executives

Technology Typically an area they are familiar with

• Non-trivial technology• Entry barrier (too hard for

others to do on their own)

Three Things Investors Look For

@hollyhamann

What’s Right For You?

• How much do you really need?• What is best case revenue scenario?• Are you in a rapidly-changing industry?• How many years do you want to invest?• How much $$ do your competitors have?• Can you motivate others without salaries

and equity?• Do you want to keep your company

forever?

@hollyhamann

Resources – Books and Blogs

Mark Suster, Both Sides of the TableBen Horowitz, Bens BlogPaul Graham EssaysFred Wilson, AVCBrad Feld, Feld ThoughtsNivi and Naval, Venture HacksFoundry Group, Ask The VC

@hollyhamann