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Continuing in Phase One of a four-part Funding Series:

Phase One - Structuring a Fundraise

• Part 1 - Startup Bootstrapping

• Part 2 - Debt as Startup Capital ( ←YOU ARE HERE 😀)

• Part 3 - Equity Funding for Startups

• Part 4 - Convertible Debt

Phase Two - Investor Selection

Phase Three - The Pitch

Phase Four - Investor Outreach

Let's dive in!

Debt is the most common form of outside capital for new small business owners. While angel investors and venture capitalists get all the big headlines for funding exciting companies, it’s the debt providers that are behind most of the investment dollars that go into the 99% of companies that aren’t splashed across magazine covers and business websites. SBA Loans, Personal Loans to the business owner, merchant cash ad...

Welcome to Phase One of a four-part Funding Series:

Phase One - Structuring a Fundraise

• Part 1 - Startup Bootstrapping ( ←YOU ARE HERE 😀)

• Part 2 - Debt as Startup Capital

• Part 3 - Equity Funding for Startups

• Part 4 - Convertible Debt

Phase Two - Investor Selection

Phase Three - The Pitch

Phase Four - Investor Outreach

We are excited to guide you on your funding journey. Let's dive in!

Bootstrapping involves all sorts of capital — friends and family, your personal savings, crowdfunding, and of course the ever-popular "sweat equity" (getting people to work for stock in your company).

Bootstrap Meaning

Contrary to what many believe, most businesses don't get started by way of a big investment from some deep-pocketed investor. Most businesses get started ...

Founder: The person who started the company. It is someone who has an idea and creates a business around that idea. They are the “Founding Father” or "Founding Mother" of the company, as the company would have never existed without them creating it. They are often focused on vision and big picture of the start up. They are generally the business owner, or at least one of them.

CEO: The head of the company, responsible for overseeing all aspects of it and making sure everything runs smoothly. The Chief Executive Officer runs it as a business, sets the long term plans and drives towards success. They also communicate directly to the board of directors. A Professional CEO will have the distinction of having risen through the ranks, and brings ...

“I became an investor because I understand how to build businesses. It excites me. I enjoy the startup phases of businesses and enjoy being involved in many at the same time.” says Joanne Wilson, Angel Investor with 95 investments under her belt, otherwise known as “Gotham Gal”. This matches here credo — “Work hard and play hard.” Living in New York City, she is a self-professed foodie who also loves to cook and host and is always up on the latest cultural and fashion trends her city has to offer.

Joanne primarily invests in consumer based products and that covers a wide range with an emphasis on women and minority founders. “I have focused my thesis on female entrepreneurs — a decision that is more practical than philanthropic. She also w...

Yes, there are Founders who take personal money off the table during funding rounds, and no, you probably won't be one of them.

For the unfamiliar, there is in fact a practice whereby investors are sometimes willing to directly purchase shares from existing stockholders (like the Founders) in order to create some liquidity for them personally. It's called a "Secondary Sale" and it simply means the proceeds go to the Founder, not to the company proper.

The problem is most Founders just hear "investors will give me money personally" and assume it's a regular practice. It's not, at all, but it's also not something that's very well explained to Founders either. So, here's how this actually works.

When to Ask

A few things have to happen for us t...

I grew up with zero choices. As a broke kid with a single mom, I never really understood what people were talking about when they said they could "choose" how life worked for them. I just got used to being stuck with zero choices and dealing with the outcomes.

"Oh, you want to pay me 'ones of dollars' to mow your lawn? OK! I guess that’s what I have to do, because I need money."

Later on in life, I got to live this all over again as a broke startup Founder. No one presented me with an abundance of choices, I just took what I could get because I was constantly leveraged. Unfortunately, that runs a bit counter to the popular narrative we're hearing in startup culture, where we somehow have all the choices in the world and we're simply not ma...

What's the least we need as Founders to be happy?

For as much time as we invest in building our startups to achieve our goals, we spend shockingly little time in identifying what those goals actually mean. The danger in not defining our minimum viable happiness goals is that we wind up hoping to "find happiness" but never really defining how to get there.

And that's a pretty big problem when we're in the early stages of building a startup when very little helps fill our "happiness meter."

It's easy to make big, lofty, far away goals, but frankly, that's pretty useless right now. What we need to do is identify the shortest term, minimum goals that will make us happy so that we do everything in our power to get there as quickly as possible.

What happens to funded startups that can't raise any more funding?

We enter the funding "No Man's Land" where startups go to linger and eventually die a very long, unceremonious death. No one talks about it — certainly not the Founders who are left with the breathing corpse that was their once-hot startup. Certainly not the investors who have written off their investment long before anyone else.

Yet everyone knows we're digesting in the Sarlacc pit for a thousand years without any idea what to do about it.

Having been in this fiery wasteland more times than I care to admit, I learned that at some point Founders have pretty much three options to escape, and "we'll just hold out for funding" isn't one of them.

Buy it Back

Let's start with per...

Startup culture has gone from glorifying victory to glorifying effort.

"Hustle Porn" has become more and more popular, particularly on social media, where would-be champions of entrepreneurship proclaim their insane personal sacrifices to the Gods of Startups. We're constantly wooed with tales of Founders putting in insane hours, risking it all, and coming away with the spoils of success to show for it.

How much of this is really a celebration of hard work and is how much is just the equivalent of giving ourselves a Participation Award for effort?

"I just put in 100 hours this week!"

Let's start by debunking the myth that working 100 hours in a week is somehow a victory to be lauded — it's not. The intention is that we're SO dedicated to ou...

Celebrating adding staff is like celebrating the cost of a wedding — it's the liability, not the achievement.

It seems like everyone loves to champion the importance of "scaling our staff," whether it's the media or our local government talking about job creation (when is the last time a startup was successful because it met a job creation metric?) Of course, we proudly announce we're hiring because it implies that our business is doing well, right?

While that may be true, the reality is adding staff still falls under the cost bucket of our income statement, and while those important hires may help us grow revenue, the important distinction is that they are not, in fact, revenue.

They are actually a massive cost, and in most startups, by fa...