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I'd like to start a thread discussing the type of funding different startups are using and why. I think that there are a lot of people here who would like to hear the general experiences, advantages, and pitfalls relating to each. Are you:

  • Bootstrapping, either from cash you have, credit cards, bank / SBA-backed loans, etc?
  • Funding from friends / family - also - are you financing with debt (convertible or not) or equity?
  • Angel funding (seed, initial rounds).
  • VC funding (Series A, B, etc).

Also - discuss why you went the route you did.

-e-

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I think a fair question and unfortunate that it didn't get traction earlier on. – John Bogrand Jun 8 '10 at 16:34
Thanks for the support. I think that the value here will be with people adding their experiences about what's worked for them and pitfalls they've encountered. -e- – Ev Conrad Jun 10 '10 at 15:31

2 Answers

up vote 3 down vote

We are bootstrapping, sort of. We opted for a service + product model. We offer development services that generate immediate income, then pump that money back into building products.

This is not an easy model to follow, however. I know of a few famous successful examples (37signals being the main one), but the difficulties are numerous. So I wouldn't necessarily recommend it to others, unless you have a very disciplined team & clear vision.

We went this route because 37signals was one of our role models. Also, realistically, we didn't have a lot of personal capital from which to start. We also shied away from outside capital because we wanted to retain control over our products - at least in the early stages. Outside funding may be considered later, once we've released a product and seen how well the market reacted to it.

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up vote 2 down vote

I'm bootstrapping, fully self funded. I fear screwing someone else’s money up but ok with losing my own. I'm still early and when the business proves itself out then I'll reassess but without having real metrics I just don't feel comfortable putting real money on it.

Also being very incremental in spending and methodical with most of my equity from sweat.

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