due dilligence = investors getting enough information about the start-up before pouring money (can the team execute, is there a sufficient market, is there a good advantage for the company)
an interesting piece from Paul Graham about the stage, when a startup reaches the point, when it makes just the amount of money to buy it’s founders (and few employees) a ramen every day
meaning, the startup is not only burning money, but is able to make some profit after a short amount of time
this is typical for only some kinds of startups (e.g. software startups, not biotech)
this has a lot of benefits:
there is no need raising money now (we can wait for better terms from investors), investors can take advantage of us if they know we desperately need money
being able to be profitable is attractive to investors (even at the small scale)
investors know, that somebody is paying for the product/service, that we are serious about the startup and that we are determined to keep the expenses low
Bootstrapper’s Bible - how to bootstrap successfully, build relations with investors and keep your equity