Monday, November 3, 2014
The cost of developing online products has dramatically decreased in the past 5 years with the advent of cloud computing and open-source code. Many of the resources available now to online entrepreneurs are the result of open-source projects with active participation from growing communities.
As mentioned in the book “Make It Big, Crossing the Entrepreneur’s gap, Contract Manufacturers are one of the most important partners for scaling a startup. Production levels increase as the entrepreneurial team begins to move past the start up phase and into scale up.
It is common for entrepreneurial teams to work with consultants to gain access to specialized skills and information. Early stage teams try and remain small with minimal employment commitments until the product and company reach a certain level of maturity and development.
We have covered a number of financing vehicles that are commonly used by startups at the seed stage; namely the convertible note, safe investment, and to a lesser extent promissory notes. Companies that have progressed beyond their seed investment and are ready to raise a venture round will do so by issuing preferred stock.
We get a lot of questions from entrepreneurs about how to create a simple financial loan instrument for friends and family. As mentioned in the Make It Big book, these are commonly done using Promissory Notes. This post discusses the basics and presents a template for use.
As mentioned in the book “Make It Big, Crossing the Entrepreneur’s Gap,” distribution partners are a major part of scaling up the startup. Entrepreneurs typically start on distribution in phases (local, regional, national, international) in whatever order makes sense. The distribution
Funding from startup to scale up happens in stages as noted in the book “Make It Big, Crossing the Entrepreneur’s Gap.” Different types of companies have different types of funding options. Hobby and lifestyle companies bootstrap and often use friends and family funding as noted in the related post on promissory notes. Those companies that have a view toward equity funding overtime often start with a convertible note.