Cataphora: A Conscious Decision to Bootstrap

Authors: Lee, Moses; Goldstein, Amy
Source: Center for Entrepreneurship at the University of Michigan
Year: 2011
Company Name: Cataphora
Number of pages: 16

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Abstract:

At the beginning of 2007, Cataphora, an entirely bootstrapped software company in Silicon Valley was at a crossroads. The Vice President of Sales, Jonathan Nystrom, had been struck by a family emergency that would force him to take an indefinite leave of absence. Consequently, cash flow dipped dramatically. Jim Burton, second in command of sales, filled in during Jonathan's absence, but it was unclear that he could close deals as well and at the same rate as Jonathan.

Elizabeth Charnock, founder and CEO of Cataphora, was forced to consider the possibility of taking outside funding to support the operations of the company. It was clear that bootstrapping had its advantages: it allowed the founders and employees to retain ownership and control. However, without cash flow from sales, Cataphora was at risk of not being able to meet its financial liabilities. Taking funding would allow Cataphora to bridge its financial gap and bring in additional senior salespeople with relationships that would quickly lead to revenue.

Elizabeth needed to make a decision soon as the next round of payroll was set to be disbursed.