Bootstrapping a startup means growing your business with little or no venture capital or outside investment. It requires entrepreneurs to rely on their savings, sweat equity, lean operations, and, at times, the cash coming in from the first sales. Here are some rational (and a few off-the-wall) ways to bootstrap a startup:

Rational:

1. Self-funding: Use your savings to fund your business. It’s the most straightforward way, but it does come with personal financial risk.
2. Freelance or Consult: Use your expertise to offer consulting services or freelance work, funneling the income into your startup.
3. Pre-sales: If you have a product idea, consider selling it before it’s fully developed. This can provide you with the funds to develop it.  (Go back to one of my older posts about crowdfunding – Kickstarter and Indiegogo are great ways to get orders and payments for your product before it is built.)
4. Barter: Exchange your product or service for something you need. This can save costs and build relationships.
5. Hire Interns: Consider hiring interns from local universities. They bring fresh ideas and often work for experience or college credit.  (However, there are employment standards and you need to at least pay them minimum wage in Ontario … but check with your legal adviser to be sure of the requirements.)
6. Outsource: Use platforms like Upwork or Fiverr for tasks that don’t require full-time employees.  The work may be brilliant or terrible, but given enough time, you will be able to recognize the individuals with the best chance of getting you just what you need at an incredible price.
7. Lean Inventory: If you’re in a product-based business, keep your inventory lean and use just-in-time inventory practices.  Although economy of scale shows up in large purchases of your raw materials, you need to live with the higher costs at this stage just to keep the cash flow positive.
8. Open Source Software: Use free and open-source software to save on software licensing costs.  Given enough research you may be surprised at how much you can get done for free without springing for very costly licenses at this stage of your company.

Crazy:

1. Live with Parents: Move back in with your parents or in-laws to save on rent and utilities.
2. Sell Personal Items: Got a collection of vintage toys or an old guitar? Selling personal items can give you some quick cash.  (I have done this, and I have sold other people’s items by mistake as well.)
3. Participate in Game Shows: It might sound absurd, but winning a game show could give you the funds you need! (Cash Cab, The Price is Right, and Supermarket Sweep to name a few.)
4. Crowdfund with a Twist: Instead of traditional crowdfunding, offer quirky rewards or challenges to your backers.
5. Host Events: Organize themed parties or events and charge an entry fee. Use the proceeds for your startup.

Successful Bootstrapped Companies:

• MailChimp: An email marketing tool that started as a side project. It’s now worth over $4 billion and has never taken any outside funding.
• Basecamp: A project management tool that was funded with consulting revenues from its founders’ web design and development business.
• Shutterstock: Founded by Jon Oringer who shot 30,000 stock photos to start the platform. It went public in 2012 and is now worth over $2 billion.
• TechSmith: The creators of Snagit and Camtasia were bootstrapped with personal savings and have been profitable since its inception in 1987.
• Spanx: Sara Blakely started Spanx with $5,000 from her savings. She’s now a billionaire.

Bootstrapping is challenging, but it allows entrepreneurs to maintain control over their business and can be incredibly rewarding. Whether you choose the rational route, the crazy path, or a mix of both, the key is resourcefulness and determination.

You will be surprised how your dedication to bootstrapping may actually bring you head and shoulders above other founders who can’t start their dream because they can’t find an investor.

Walking into that sleek Bay Street office with the glass-walled conference room, I was a bundle of nerves and excitement. This was it – my first Angel Investment meeting.  I was meeting with an investment club that had formed in one of the fundraising teams in Toronto for the many mining startups looking for funds to develop their properties in Ontario.  The club called people all day selling them 100 shares in this resource company or 100 shares of that mining company, and they were out for tech companies now!  The pitch was the culmination of sleepless nights, endless planning, and the dream of seeing my startup take flight. Little did I know, I was about to receive a crash course in the importance of preparation and the weight of the moment.

The Illusion of Confidence:

As I set up my presentation (a box of transparencies with coloured charts that you would lay one after another on a projector with a very hot lamp and a crazy mirror), I felt a surge of confidence. After all, I believed in my product, and I had rehearsed my pitch multiple times. But as the investors filed in, their tired crumpled suits contrasting starkly with my 1980s polyester pant-suit monstrosity attire, reality began to set in. These weren’t just any people; they were seasoned investors who had seen hundreds, if not thousands, of pitches. Not only did they hear the pitch from the founder side, but they had to reshape in their heads for their own customers and pitch it properly from the other side.  They held the power to turn my dreams into reality or shatter them with a single decision.

The Uncomfortable Pauses:

The presentation started smoothly enough. I spoke passionately about my product, its potential market, and the problem it aimed to solve. But then came the Q&A session.

“Can you break down your sales funnel and costs for the next three years?” one investor asked. I hesitated, realizing I hadn’t delved that deep into my financial projections.

“How do you plan to tackle Abel Computers who has a similar product but a more extensive network?” another questioned. I paused, struggling to find an answer.

With each passing question, the room’s temperature seemed to drop a degree. The pauses grew longer, the silence deafening. I felt like a deer caught in headlights, painfully aware of my lack of preparation.

The Realization:

As the meeting concluded and the investors left with polite nods and non-committal promises to “be in touch,” the weight of the moment hit me. Those people across the table didn’t just hold my startup’s fate in their hands; they held my dreams, my hard work, and my future.

I realized that while passion is crucial, it’s not enough. Being an entrepreneur requires meticulous preparation, understanding every facet of your business, and anticipating questions before they’re asked.

Lessons Learned:

That day, I learned some invaluable lessons:

1. Know Your Numbers: It’s not enough to have a great idea. You need to understand the financials inside out.  What’s more, I have realized that from that day to today understanding unit costs, the cost to acquire a customer, their lifetime value, and the fully-maxed-out acquisition rate for a sales person was a necessity for every pitch going forward.
2. Research Your Investors: Understand who you’re pitching to. What are their interests? What other companies have they invested in?  How do they evaluate companies?  How do they tell others that you are a good investment?  When I was pitching to the mining crowd, I didn’t feel they would understand technology much, but the questions in my case where all about running a business properly.
3. Anticipate Questions: Try to predict the questions you’ll be asked and prepare answers in advance.  You can do that with ease now, but even back then I could have found interviews of some of these people at the library by reviewing business and mining papers.  I was really poor on this preparation.
4. Practice, Practice, Practice: Rehearse your pitch multiple times, ideally with someone who can provide honest feedback.  Understand what works for the investors you researched. (For us for example, try not to show videos.  We have a rule about videos at most of the clubs I have participated in.  Videos don’t start well in presentations, audio is off, or too low to hear.  Hard to stop, or too loud. etc.  Although it adds levity, maybe you want to keep a more serious tone to your presentation.)

In Conclusion:

While that first Angel Investment meeting was a wake-up call, it was also a blessing in disguise. It forced me to reevaluate, prepare better, and come back stronger. To all budding entrepreneurs out there, remember: passion is your starting point, but preparation is your path to success. Don’t learn it the hard way, like I did.  (Plus if you pitch to me, I will definitely give you a break.  I know what it is to be on your side.  But even if you are nervous and you stumble with presenting smoothly, being prepared with your financials and understanding of the business model will keep you shining brilliantly through the pitch!)

I’ll speak about the active Angel groups in Ontario, how to contact them and what you should expect to have before you do!  Stay tuned …

Navigating the world of government grants can be a daunting task for startups. However, both the Canadian federal government and the Ontario provincial government offer a range of grant programs designed to support and foster innovation among small businesses and startups. This guide aims to provide an overview of these programs, with a focus on eligibility, expected grant amounts, and the application process.

Federal Grant Programs:

The Canadian federal government offers several grant programs for businesses, including startups:

Canada Small Business Financing Program: This program helps startups and small businesses access loans from financial institutions by sharing the risk with lenders.
– Eligibility: Startups and small businesses with gross annual revenues of $10 million or less.
– Amount: Up to $1 million for real estate purchases and up to $350,000 for leasehold improvements and equipment.
– Application: Detailed business plan, financial projections, and other documentation.
– More Information: https://www.ic.gc.ca/eic/site/csbfp-pfpec.nsf/eng/Home

Industrial Research Assistance Program (IRAP): Provides financial support to qualified small and medium-sized enterprises to help them develop technologies and successfully commercialize them in a global marketplace.
– Eligibility: Incorporated Canadian SMEs with 500 or fewer full-time employees.
– Amount: Varies based on the project.
– Application: Detailed project proposal, financial statements, and other relevant documentation.
– More Information: https://nrc.canada.ca/en/support-technology-innovation/nrc-irap-advisory-services

IRAP is a great program and we have used it at the companies I have worked in.  It has gone trough many changes in the past 25 years of my experience and now it is being merged into a new Government investment corporation.  Stay tuned!

Ontario Provincial Grant Programs:

The Ontario government also provides a range of grant programs tailored to the needs of businesses in the province:

Ontario Innovation Tax Credit (OITC): A refundable tax credit for corporations that conduct scientific research and experimental development in Ontario.
– Eligibility: Corporations with a permanent establishment in Ontario.
– Amount: 8% of qualified expenditures, up to a maximum of $3 million annually.
– Application: Must be claimed within 18 months after the end of the tax year.
– More Information: https://www.fin.gov.on.ca/en/credit/oitc/

Ontario Research and Development Tax Credit (ORDTC): A non-refundable tax credit to support businesses undertaking research and development in Ontario.
– Eligibility: Corporations with R&D expenditures in Ontario.
– Amount: 3.5% of eligible R&D expenditures.
– Application: Must be claimed within 18 months after the end of the tax year.
– More Information: https://www.fin.gov.on.ca/en/credit/ordtc/

Tips for Startups:

1. Research Thoroughly: Ensure you meet all eligibility criteria before applying.
2. Prepare a Solid Business Plan: Many grant programs require a detailed business plan outlining your startup’s objectives, market analysis, financial projections, and more.
3. Seek Expert Advice: Consider consulting with a financial advisor or grant consultant to ensure your application is robust and meets all requirements.

### Important Caveat:

Startups should thoroughly review the terms and conditions of each grant program to ensure they meet all eligibility criteria. It’s also crucial to seek the advice of a lawyer or expert knowledgeable in the space to ensure compliance with all legal and regulatory requirements.

For a more comprehensive list of grants and resources, startups can visit the official pages:

• https://www.canada.ca/en/services/business/grants.html
• https://www.ontario.ca/page/available-funding-opportunities-ontario-government

By leveraging these grant programs, startups in Ontario have a unique opportunity to secure funding but may also require more than expected time for the preparation and application process (and the company may end up with excessive reporting on the use of funds).   However, if you can get the funds with basic strings attached with a reasonable amount of effort, it is worth it.