Getting First Funding to Take a Company From Nothing to Something: Non-VC Funding Sources and Bootstrap Strategies

Over 95% of companies fund without a VC or angel. I outline grants, customers, licensing and bootstrapping techniques to take your company from nothing to something without outside capital.

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Presentation for IEEE Boston Entrepreneurs’ Network

October 2, 2007

By Robert A. Adelson, Esq.

 

Non-VC Cash Funding I: Loans, Government & Institutions

•Bank Loans, Home equity

•Asset based lenders

•A/R, inventory, factors

•Equipment Financing

 

•SBIR & STTR Fed Grants

•Phase I: 75-100k; delays

•Competitive; Govt needs

•Leverage to commercialize

•MA Quasi Public Agency loans

•Local Job creation incentives

•University / incubators

•Private Foundations

 

 Non-VC Cash Funding  II: Commercial Partners & Licensing

 

•Customers / Suppliers

•Large sale order, advance pay

•Favorable supply terms to you

 

•Strategic Partners

•Manufacturing Rights

•Distribution rights

•Leverage scale, channels

•Pro: Valuation, possible exit

•Con: Reliance, captive risks

 

•Technology Licensing

•Restricted, product, application

•Escrow, IP rights, Upfront Payments

 

 

Non-Cash & Thrifty Techniques to Build Enterprise Value

 

•Management team

•Equity allocation

•Commissions

•Responsibilities shared

•Board of Advisors

•Strategic Advisors

•Experience, credibility, contacts

•Informal but involved & respected

•In-License of Technology

•University / Govt Laboratories

•Outsource/Offshore development

 

•IP on a Shoestring

•ITU Trademarks / Trade secrets

•Copyrights / Provisional Patents

 

 

Bootstrapping Strategies to Save Cash, Delay VC funding

 

•Manage cash flow

 

•Delay Payments of all kinds

•Good credit history/references

•You’re late but you pay

 

•Avoid fixed commitments

•Part-time, temp employees

•Consultants

•Subleased /shared space

•Virtual office

 

•Manage customer expectations

•Outsource where possible

 

Tending to Needs of Founders To Delay or Avoid VC funding

 

•Keeping the day job

•Salary & Access to business resources

•CAUTION: Clean careful departure!

 

•Using your severance

•Including COBRA benefits

•Paid window of opportunity

 

•Shadow management

•Ready to join when funding in place

 

•Keeping your sanity for long haul

•NOT necessary to bankrupt yourself

•Or divorce spouse & family

 

•Consulting for revenue

•Keeping cash positive is keeping the dream alive to succeed

 

 

Thank You!

 

Robert A. Adelson, Esq.

Engel & Schultz, LLP

265 Franklin Street, Suite 1801

Boston, MA 02110

617-951-9980 x 205

radelson@engelschultz.com

www.ExecutiveEmploymentAttorney.com

 

Author: radelson

Robert Adelson has been a corporate and tax attorney since 1977. He began as an associate at nationally prominent New York City “mega” law firms, first at the Wall Street firm Dewey Ballantine Bushby Palmer & Wood and later at the Park Avenue firm Weil Gotshal & Manges. In 1985, Adelson returned home, where he has since established himself as a respected Boston business attorney. He has attained partner at several small and midsize Boston law firms, most recently at Lawson & Weitzen LLP and then Zimble Brettler LLP, where he was a partner from 1994 to 2004 before becoming a partner at Engel & Schultz LLP.

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