So you have a big idea but very little money. The best way to bootstrap is to tap friends and family. There is an amazing amount of work that you can do with very little money. You can build prototypes, get angel employees, study the domain and the competition. In most cases you may be able to talk to potential customers and find your USP.
Lets say you have done all this and are prepared to work for free but still need that extra $20,000 for operating expenses before you can close an angel round. I thought there was no answer because you will need to give too much of your company away to a bootstrap investor which may then make it hard for you to build a big company.
DFJ ( Draper Fisher Jurvetson) have an interesting way of providing bootstrap money without taking too much of the equity. They issue convertibles which will convert at the same valuation as the next round of funding that the entrepreneur takes.
So bottom line is if you can find a bootstrap investor who is excited enough to give you the $20,000 with the same structure that DFJ uses then you may have a way out of the bootstrap dilemma without giving up too much equity.
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