Founder of [Home Fair].

http://www.corante.com/bottomline/

http://www.arnoldkling.com/

Author of [Under The Radar] (Starting Your Net Business without Venture Capital)

"[Net Strapping]" (Boot Strapping) companies are in the category of "promising businesses", defined by [Amar Bhide] as those with low capital requirements and high ambiguity. By aiming for a relatively small Market Segment, you avoid competition from Venture Capital-funded businesses, since [VCs] only want potential home runs (which Kling defines as market cap over $1 billion).

He discusses the use of Angel Investing as a funding source, noting

• the goals of the angel investor matter

• market your company as an asset (your concept by itself is not a significant asset)

• do not take a salary

• angel investing is a contact sport (i.e. do lots of networking, esp in communities you are already a member of, like your industry or profession)

• do not send your executive summary

• create urgency for the investor

• markets determine value

• it's the people, not the terms

Instead of first writing a Business Plan, Kling recommends the following launch steps

• choose your initial team (this seems a bit weird, since you don't know the requirements of the business, but I suppose picking people with generally complementary skillsets might work, subject to the other points he raises)

• conduct a "no baggage exercise"

• identify trends

• Brain Storm ideas (then analyze, pick one)

• diagram your business (fundamental model/metaphor of the business helps identify [Critical Success Factors])

• create an organization chart (roles/responsibilities of founding team, gaps to fill)

• identify critical operating ratios (customer acquisition cost, revenue per pageview, average sale

• test-market your offering (goal: assess the significance of the problems in the eyes of the potential customer)

• identify operational milestones (no, t-shirts don't count) (and estimated company value at each one)

• develop a budget (revenue and expenses)

• develop your funding strategy (tied to both budget and milestones)

• find a coach (who will introduce you to investors, will take at most a tiny slice of equity - 0.5%, who will not want cash); write a Business Plan only if they tell you to!

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