Raising Startup Capital, Boots-Strapping & Pitching

Question 1

What is capital?

Answer 1

This is wealth in the form of money or other assets owned by a person or firm available for the purpose of starting a business or investing.

Question 2

Mention the types of capital?

Answer 2

Debt Capital
Equity Captial

Question 3

Describe debt capital

Answer 3

This is in form of money that needs to be paid back over a set period of time, with interest and possibly other fees. i.e Loan.

However the enterperenuer maintains full control of the business.

Question 4

Describe equity capital

Answer 4

This is in form of funding provided by people or firms who wants to own a part of the business.

They reap the benefit when it becomes successful

Question 5

Tips to determine debt financing

Answer 5

Could my company qualify?
Will the lender give money if i need it?
Will i be able to make monthly payments to pay off the debts.

Question 6

Tips to determine equity financing?

Answer 6

Would invenstors even be intrested in my idea?
Am i a control freak
Am i gonna have a problem sharing my profits
Am i really okay with someone going through my confidential financial information

Question 7

Stages of business capital?

Answer 7

Seed captial
Startup capital
Mezzaine Capital
Bridge Capital

Question 8

Desribe seed captial

Answer 8

This is the money you need to do you initial research and planning for your business

Question 9

Describe Startup capital

Answer 9

This is the funding that will help to start up your business. it will help you pay for equipment, rent.

Question 10

Describe Mezzanine Capital

Answer 10

Also known as expansion capital. It is used to help you company grow to the next level

Question 11

Describe Bridge Capital

Answer 11

Help bridges between your current financing and the next level of financing.

Question 12

Sources of startup capital

Answer 12

Personal savings
Personal loan
Bank loan
Government loan
Crowdfunding
Borrow from fam

Question 13

What is boots-strapping

Answer 13

Starting a company with little resouces

Question 14

4 phases of boots- strapping

Answer 14

Start - What is my secret sauce
Validate - who likes my secret sauce
Optimize - How can i improve my sauce
Scale - How can i sell tons of sauce

Question 15

Types of boots- strapping

Answer 15

Owner financing
Delaying payment
Personal debt
Joint utilisation

Question 16

Examples of boots-strappping

Answer 16

The use of personal credit card
Factoring - selling recievables to a buyer to raise capital.
Use of home or virtual office instead of traditional office
Buying equipment from seller on installment repayment to conserve working capital.

Question 17

Benefits of Boots-strapping?

Answer 17

Entreperenuer is able to maintain control over all descision
Enable entreperenuer to focus on customer rather than lenders/investors
Encaurage enterperenuer to spend with discipline
Effective and inexpensive way to ensure a business creates a positive cash flow.

Question 18

Drawbacks of boots-strapping

Answer 18

Unnecessary financial burden is placed on the entrepereneur
Time consuming
Not enough capital to become sucessful at a reasonable rate.

Question 19

Steps to perfect pitch

Answer 19

Prepare yourself, not just the idea
Have a plan from day one
Capture the essentials
Research about the investor
Start lean
Start small and grow gradually
Negotiate a term sheet offer
Excite investors about the big idea, but be reasonable.