Chapter 12: Bootstrapping

Question 1

Define bootstrapping.

Answer 1

Bootstrapping is finding ways to avoid the need for external financing or funding through creativity, ingenuity, thriftiness, cost cutting, or any means necessary.

Question 2

What is the difference between crowdsourcing and crowdfunding?

Answer 2

Crowdfunding involves raising funds from a large audience, typically through the internet.

Crowdsourcing involves using the internet to attract and manage low-cost or free labor and talent generated by enthusiasm for the product or service.

Question 3

What are the 4 types of crowdfunding?

Answer 3

1. Patronage Model: the financial support given by backers without any expectation of a direct return for their donations.
2. Lending Model: funds are offered as loans with the expectation that the money will be repaid.
3. Reward-Based Model: Rather than giving away precious equity or a large share of the profits, entrepreneurs give rewards to their backers, which can often take the form of more unique offerings.
4. Investor Model: involves giving backers an equity stake in the business in return for their funding.