Everything you need to find and deploy equity-free financing for your company.
Everyone wants capital to start or growth their business, but understanding the nuances of term sheets is incredibly difficult if you’ve never negotiated an investment previously. In this quick video, we review a term sheet that was open sourced by Bigfoot Capital.
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Bootstrapp’s team of experts are routinely questioned about how to grow a small business. This used to mean hitting the streets to drum up business, marketing yourself via word-of-mouth, and hiring the best employees in your area to run things. Today, the world has changed, and the majority of your business projects likely take place online. If you’re not already working with the internet to grow, it’s going to work for your competitors.
Things move at a much faster pace and considerably more anonymously today than they did just 20 years ago. Because of this, business owners must take greater care to understand the subtle nuances that go along with running a business online. Cybersecurity is one area where entrepreneurs as well as managers should pay close attention. Scams, data breaches, review attacks, and other unfortunate—yet preventable—events are commonplace, and hackers can enter a business via vulnerable networks or devices.
Although the internet makes it possible to grow quickly, business owners must still remember not to jump at full speed once they obtain growth capital. While a quick injection of money is an obvious benefit of having working capital, it always pays to keep some aside and to grow sustainably. This should include things like investing in marketing and ensuring that your company can keep up with demand and react to customer wants and needs.
The greatest tools business owners have in this day and age are all directly related to the way the internet has changed the way we function day to day. A great website is one example. Unfortunately, until you know exactly what you need and how many functions your site will serve, it’s difficult to determine your overall operational costs. As WebFX explains, a site launched can cost $12,000 or more on the low end with maintenance running the gamut from about $35 per month to $5000 per month.
Keeping with the mindset of prioritizing cybersecurity, the safety of your company’s assets are also crucial. As a business owner, you’ll want to hire someone to act as webmaster, which is an individual that will keep your site up, running, and functional. They may also handle some of your cybersecurity needs. However, you may also need to invest in someone that can handle digital security exclusively. This would include services like ensuring your antivirus and firewalls are up-to-date, monitoring any cloud services you utilize, and keeping a close watch on your networks.
Other digital tools for today’s business owner include:
This is just a small sampling of the types of digital help that a business owner may need. They are crucial, however, to success in an ever-changing digital age. The main takeaway here is to prioritize growth, but do so in a way that both keeps pace with the times but also gives you the room to make smart decisions at every benchmark. The internet and other tools can help you find the balance you need to do just that.
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Bootstrapp is building a community of founders interested in bringing more transparency to the early-stage investing + lending market. We believe that the capital markets that serve startups will become increasingly fragmented over time, and that owning the interface - where customer decisions are made - will create the most value for founders, Bootstrapp team members, and society.
We are a very early-stage startup that is working directly with other founders, non-dilutive financiers, and a small group of advisors
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Let’s get on the same page: The “capital stack” refers to the legal organization of all of the capital placed into a company or secured by an asset through investment or borrowing. The capital stack determines who has legal rights to certain assets and income, who receives priority of payment in the event of an uncured default, and in which order each party may be repaid or given authority to take over or liquidate assets in the event of a bankruptcy. (source)
Now, if you search “capital stack startup” you’ll see more than a few articles, nearly all of which have the baked-in assumption that the company in question is being financed with venture capital.
Certainly, a capital stack is extremely relevant during a venture raise. With the number of lawyers, investors, founders, lenders, and advisors potentially involved a founder must be sure that their cap table and capital stack is in check. However, what about a capital stack that exists to align the company to the desires of a founder, and not the preferences of institutional investors?
When considering what a Founder’s capital stack might look like, not surprisingly, it’s essentially in direct opposition to that of a traditional venture-funded capital stack. Here’s what a typical capital stack looks like, according to Chessboard Capital:
Note that revenue is king. If you can generate revenue and bootstrap to success, you’ve just eliminated 3 of the 4 sections within the above stack, and you’re all that’s left when payday comes.
Even if you have to take out debt from cash flow, you’ve now eliminated two of the sections, and two players who are going to get paid before you do. Your new capital stack emerges like this:
Now, as you pay off that debt, obviously you become increasingly in a better position as a founder. Understanding your company’s capital stack is critical for venture fundraising - but it also provides insight into the fact that you may want to avoid it entirely.