Bootstrapping, Seed Financing, & Series A Financing

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“You must spend money to make money.”

~ Titus Maccius Plautus

 

If there is one quote an entrepreneur should live by, it’s that.  You cannot build a business out of scratch without scratch (which, if you are not aware of its slang form, means money).

Here are three methods of collecting some scratch for your startup:

 

BOOTSTRAPPING:

According to Investopedia, Bootstrapping is “a situation in which an entrepreneur starts a company with little capital. An individual is said to be bootstrapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.”

(Source: http://www.investopedia.com/terms/b/bootstrapping.asp#axzz21iLpv5en)

 

Check out Guy Kawasaki’s blog on The Art of Bootstrapping:

http://blog.guykawasaki.com/2006/01/the_art_of_boot.html#axzz21lrIyaKj

 

And while you’re at it, Fred Wilson’s blog:

http://www.avc.com/a_vc/2012/05/bootstrapping.html

 

 

SEED FINANCING:

Seed financing is the financing of a business with seed capital, which, according to Investopedia, is “the initial capital used to start a business. Seed capital often comes from the company founders’ personal assets or from friends and family. The amount of money is usually relatively small because the business is still in the idea or conceptual stage. Such a venture is generally at a pre-revenue stage and seed capital is needed for research & development, to cover initial operating expenses until a product or service can start generating revenue, and to attract the attention of venture capitalists.

(Source: http://www.investopedia.com/terms/s/seedcapital.asp#axzz21iLpv5en)

 

Here are some tips from Bloomberg Business Week on how to raise seed capital:

http://www.businessweek.com/smallbiz/content/feb2011/sb20110218_509239.htm

 

 

SERIES A FINANCING:

According to Investopedia, Series A Financing is “the first round of financing undergone for a new business venture after seed capital. Generally, this is the first time that company ownership is offered to external investors. Series A financing, may be provided in the form of preferred stock, and may offer anti-dilution provisions in the event that further financing through preferred or common stock occurs in the future.

(Source: http://www.investopedia.com/terms/s/seriesa.asp#axzz21iLpv5en)

 

 

 

(Image by: Images_of_Money http://creativecommons.org/licenses/by/2.0/)