Bootstraping

Revenue
Models and
Financing
Bootstrapping
Bootstrapping or self-funding is starting a
company with little or no capital, thus an
entrepreneur relies on money excluding outside
investments.
Look for seed
money
Three steps to Start with

bootstrap a minimum viable
company product (MVP)
Use customer ’s
money to grow
Look for seed
money
Personal savings and money from
relatives and friends could be a good
sources of the seed money.
Start with minimum
viable product (MVP)
It is easy and fast to start selling using
the MVP. Fast is better than perfect
product when bootstrapping
Use customer’s
money to grow
An entrepreneur may obtain money
from preorders and use this money to
start its operation.
CROWDSOURCING
•Crowdsourcing refers to
getting work, information, or
opinions from a big group of
people who give their data via
the Internet, social media, and
smartphone apps.
EQUITY FINANCING
•is the process of generating

capital through the sale of
shares.
Forms of Equity
Financing
1. Individual Private
Investors
Seeking assistance from individual investors
is one way to raise money for the business.
Such individuals investors may include the
entrepreneurs’s friends, family, and other
colleagues
2. Venture Capitalist
Venture capitalists or VCs are investors who
provide money for the business only after the
company has been operating successfully for
some years and they feel that it is already an
established one.
Here are some venture capitalist approaches
being practiced:
1. Early Stage Financing- An individual or venture capitalist company
provides the seed money to start the business and keeps it running
quickly.
2. Expansion Financing- The small company has a defi nite product

and/or service off ering to sell and it has an identifi ed target market. VCs
here may enjoy the full benefi ts of their investments with less thought of
risks.
3. Buy out Financing- The VCs provide money to buy out a
company or buy out branches of other companies. Not an easy
thing to do, but with the right amount of research this can be
done.
3. Angel Investors
Angel investors are those individuals or a
larger group that make available financial
backing at an early phase of the business at
advantageous terms and do not typically
participate in the management of the
venture.
Here are at the five angel investor
types:
1. The Family Investor- A supportive family member who knows the
entrepreneur well. Interested in backing up a family member or friend and trust
the owner very well.
2. The Relationship Investor- A colleague of the owner from his previous
employment who happened to know him well. Has a good working relationship
with the entrepreneur but does not necessarily understand the new company.
3. The Idea Investor - A person who can confi rm the soundness of the
entrepreneur’s idea being very familiar with the business. Has little emotion but
big concern on the idea of the startup.
4. The Once Removed Investor- A personal or professional connection with

either the relationship investor or the idea investor. Does not really know the
entrepreneur; hence the owner does not have any clue on the soundness of his
idea.
5. The “Archangel” Investor - Could be a relationship investor or idea
investor has been successful in making other angels and non-angels generate
money. Has his own company in the same industry or has strong connections
with other angel investors.
4. Crowdfunding
is raising money for an individual or company
by collecting donations from a large number
of individuals to fund a startup business.
In the Philippines, there are four types of
crowdfunding based from the Security and
Exchange Commission (SEC) approved rules:
1. Donation - based is where individuals group together their

resources to back up a benevolent cause.
2. Reward - based is where individuals provide money to a

company in exchange for a reward or something in return usually
a product made by the company
3. Lending - based is where individuals loan money to a company
and accept the company's legally-binding commitment to pay
back the loan at pre- determined time intervals and interest rate.
4. Equity - based is where individuals fi nance in shares sold by a

company and obtain a part of the profi ts in the form of a
dividend or distribution, based on the company's decision.
Initial Public Offering
In this type of fundraising, a company
can source out funds by off ering shares
of the company to the public. Typically,
rich individuals and institutional
investors with huge amounts of funds
invest in this type of fundraising activity.
Financial Statements
Represent a formal record of the
fi nancial activities of an entity. These
are written reports that quantify the
fi nancial strength, performance and
liquidity of a company. Refl ects the
fi nancial eff ects of business transactions
and events on the entity.
Kinds of Financial
Statements
1. Income
Statement
Also known as a Profi t and Loss
Statement, the income statement is a
summary of a company’s total
revenue and its operating expenses
for a given period such as per month,
per quarter of a year or for one year.
Here are the various individual components of
an income statement as explained briefly:
1. Sales - Represents the total amount of revenue produced by the
business. The fi gure recorded here is the total sales less any product
returns or sales discounts.
2. Cost of Goods Sold- Known also as Cost of Sales. This number

includes all of the costs and expenses directly related to the production
of goods and/or services. This amount includes the cost of the materials
and labor directly used to create the goods or services.
3. Gross Profi t - Profi t of the company after subtracting the expenses

related to manufacturing and selling its products, or the costs associated
with providing its services.
4. Operating Expenses -Includes expenses incurred every day in
the operation of a business. Divided into 2 categories which are
selling and marketing and general/administrative expenses.
a. Selling and Marketing Expenses
i. Sales salaries
ii . Collateral and Promotions
iii. Advertising
iv. Other sales cost

b. General/administrative expenses
i. Offi ce salaries
ii . Rent
iii . Utilities
iv. Depreciation
v. Other overhead cost

5. Total Expenses - Sum of all expenses acquired in business,
without yet the taxes or interest expense on interest income, if
there is any.
6. Net Income before Taxes- This fi gure is the amount of income

earned by a business before paying income taxes
7. Taxes - Amount of income taxes that an entrepreneur is

indebted to the government both local and national.
8. Net Income – Amount of money the business has produced

after paying income taxes.
Kinds of Financial
Statements
2. Balance Sheet
The Balance Sheet also known as
Statement of Financial Position,
presents the fi nancial position of an
organization at a specifi ed date.
It is composed of the following
three accounts:
1. Assets- An asset is something an entity owns or controls

so that a company can produce economic
benefi ts in its usage.
Assets are also categorized in the Balance Sheet on the
following basis:
a. Tangible and intangible
b. Inventories balance
c. Trade receivables
d. Cash and cash equivalents

three accounts:
2. Liabilities- A liability is an obligation that a business owes

to someone and its payment could be in cash or
other resources.
Liabilities also classifi ed as follows:
a. Trade and other payable
b. Short term borrowings
c. Long term borrowings
d. Current tax payable

three accounts:
3. Equity- Equity is primarily what the business owes to its

owner.
Equity is usually presented in the Balance Sheet under
the following basis:
a. Share capital
b. Retained earnings
Kinds of Financial
Statements
3. Cash Flow
Statement
A class fl ow statement is a
fi nancial report that describes the
source of a company’s cash and
how that cash was expended over
a specifi ed period.
1. Cash fl ow from operating activities - This is cash produced from the
daily business operations.
2. Cash fl ow from investing activities - This cash is used for investing in

assets, as well as the proceeds from the sale of other businesses,
equipment, or other long-term assets.
3. Cash fl ow from fi nancing activities - This cash is paid or received

from issuing and borrowing of funds.
4. Net Increase or Decrease in Cash - The increases in cash from

previous year will be written typically, and decreases in cash are usually
written in (brackets).
Thank you
very much!
Domino Gem
Fuentes

Bootstraping

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Revenue

Three steps to Start with

company product (MVP)

•is the process of generating

2. Expansion Financing- The small company has a defi nite product

4. The Once Removed Investor- A personal or professional connection with

1. Donation - based is where individuals group together their

2. Reward - based is where individuals provide money to a

4. Equity - based is where individuals fi nance in shares sold by a

2. Cost of Goods Sold- Known also as Cost of Sales. This number

3. Gross Profi t - Profi t of the company after subtracting the expenses

a. Selling and Marketing Expenses

ii . Collateral and Promotions

iv. Other sales cost

v. Other overhead cost

6. Net Income before Taxes- This fi gure is the amount of income

7. Taxes - Amount of income taxes that an entrepreneur is

8. Net Income – Amount of money the business has produced

1. Assets- An asset is something an entity owns or controls

a. Tangible and intangible

d. Cash and cash equivalents

2. Liabilities- A liability is an obligation that a business owes

a. Trade and other payable

b. Short term borrowings

c. Long term borrowings

d. Current tax payable

3. Equity- Equity is primarily what the business owes to its

2. Cash fl ow from investing activities - This cash is used for investing in

3. Cash fl ow from fi nancing activities - This cash is paid or received

4. Net Increase or Decrease in Cash - The increases in cash from

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