Chapter 35 Exercises

Exercise 1 — The Capital Necessity Test (Individual, 30–45 minutes)

The most important question before seeking any outside capital is: "What specific thing do I want to do that revenue cannot fund quickly enough, and what is the specific ROI of funding it?" This exercise builds the analytical discipline to answer that question rigorously.

Part A — Identify potential capital needs. For your current or planned creator business, list three to five specific things you would want to do if you had access to $50,000, $200,000, and $500,000 in outside capital. Be specific: not "grow faster" but "manufacture 2,000 units of [specific product] at [specific cost per unit]."

Part B — Build the ROI case. For each item on your list, model the ROI: what revenue would the investment generate, over what timeframe, at what margin? Show your math explicitly. Which items have the most compelling ROI case? Which are hard to model because the revenue connection is unclear?

Part C — Revenue alternative analysis. For each item with a compelling ROI case, ask: could operational revenue fund this in 6 months? 12 months? 24 months? If the wait is less than 18 months and the ROI is not time-sensitive, the case for external capital weakens significantly.

Conclusion: Based on your analysis, do you have a genuine capital need right now, or does the analysis suggest bootstrapping is the right strategy at your current stage? Write a one-paragraph conclusion.

Exercise 2 — Grant Research Sprint (Individual, 45–60 minutes)

Many eligible grants go unclaimed because entrepreneurs do not search for them. This exercise develops the research practice that changes that.

Step 1: Open a blank document and search the following query combinations, recording any results: - "[Your state] small business grants 2025" - "[Your city] entrepreneur grants 2025" - "Creator economy grants BIPOC" (if applicable) - "Women entrepreneur grants digital business" (if applicable) - "Arts grants [your discipline]" (if applicable) - "[Your niche] industry grants" (e.g., "sustainable fashion industry grants")

Step 2: For each grant you find, record: grant name, administering organization, award amount range, eligibility requirements, application deadline, and a link to the application page.

Step 3: From your list, identify the three grants you are most eligible for and most interested in. Write a 150-word draft for the "project description" or "business description" section of one application.

Reflection: What surprised you about the grants that exist? Were there more or fewer options than you expected? What barriers would prevent a creator you know from accessing these grants?

Exercise 3 — Business Metrics Calculation (Individual, 45–60 minutes)

Investors speak the language of metrics: MRR, CAC, LTV, retention. This exercise builds fluency in that language applied to a creator business.

For a real or hypothetical creator business, calculate:

MRR (Monthly Recurring Revenue): Identify all recurring revenue sources (memberships, newsletter subscriptions, recurring sponsorships). Sum them. This is your MRR. What is your MRR growth rate month-over-month for the last 3 months?

Customer Acquisition Cost (CAC): Sum all marketing and promotional costs for the last 30 days (ad spend, creation costs for marketing-specific content, referral costs). Divide by the number of new customers acquired. This is your CAC.

Customer Lifetime Value (LTV): Identify the average customer journey through your product ecosystem. How long does a typical customer stay? What do they typically buy? Multiply average purchase value by purchase frequency by average customer lifespan. This is your LTV.

LTV:CAC Ratio: Divide LTV by CAC. A ratio above 3:1 is generally considered healthy; below 1:1 means you are spending more to acquire customers than you make from them.

Audience Ownership Percentage: What percentage of your total audience is in owned media (email, SMS, podcast) versus social platforms? Divide your email/SMS/podcast subscriber count by your total audience across all platforms.

Presentation: Present these metrics in the format an investor would expect to see them — clean, labeled, with brief commentary on trajectory (improving, declining, stable).

Exercise 4 — RBF Simulation (Individual or Pairs, 60 minutes)

This exercise builds intuition for revenue-based financing mechanics.

Scenario: You are launching a merchandise line. You need $80,000 to manufacture the first inventory run. You project the following monthly revenues from merchandise sales: - Month 1: $45,000 (launch surge) - Month 2: $28,000 (post-launch normalization) - Month 3: $32,000 - Month 4: $35,000 - Month 5: $38,000 - Month 6: $40,000

You receive an RBF offer: $80,000 at 8% of monthly revenue until $128,000 is repaid (1.6x cap).

Part A — Payment schedule: Build a table showing monthly revenue, monthly RBF payment (8% of revenue), cumulative repaid, and remaining balance for each month until the loan is repaid.

Part B — Annualized cost calculation: In what month is the loan fully repaid? What is the total cost of the capital (the difference between $128,000 and $80,000)? What is the annualized cost of capital as a percentage?

Part C — Alternatives comparison: Compare the total cost of the RBF to: (a) a business credit card at 24% annual interest, assuming you charge the $80,000 and make minimum payments; and (b) selling 10% equity and later selling the business for $2 million.

Part D — Decision analysis: Based on your numbers, does RBF make sense for this scenario? What would have to be true about the business for RBF to clearly not make sense?

Exercise 5 — Equity Crowdfunding Research and Evaluation (Individual, 45–60 minutes)

Equity crowdfunding is a funding mechanism your audience can participate in directly. This exercise builds practical knowledge.

Part A — Platform research: Research Republic, Wefunder, and StartEngine. For each platform, document: minimum raise amount, maximum raise amount (Regulation CF cap), investor requirements, platform fees, reporting requirements after the raise, and one example of a successful raise on the platform.

Part B — Creator business case study: Find one creator business, media company, or creator economy startup that has raised equity crowdfunding. (Republic and Wefunder both have searchable campaign directories.) What was the valuation? What percentage equity was offered? How much did they raise? What was the use of funds? Did they hit their target?

Part C — Hypothetical design: If the Meridian Collective (described in this chapter) decided to raise equity crowdfunding, design the basic offer: proposed valuation, percentage equity offered, amount sought, minimum investment, key use of funds (3–4 specific items), and the primary pitch to their Discord community. Justify each number.

Exercise 6 — The Pitch Deck (Advanced, 90–120 minutes)

Create an investor pitch deck for your creator business (real or hypothetical). The deck should be 10–12 slides.

Required slides: 1. Cover: company name, tagline, founder name 2. The audience: size, platform distribution, demographics, owned-media percentage, engagement metrics 3. The problem: what problem does your content or product solve for this audience? 4. The solution: how your products address the problem 5. Business model: how you make money, product ecosystem map 6. Traction: key metrics (MRR, CAC, LTV, retention) and trajectory 7. Market size: how large is the addressable market for your products? 8. Team: founder(s) and key team members, relevant experience 9. De-risking creator risk: specific ways you have reduced dependency on a single creator 10. Use of capital: specific, numbered list of how investment funds would be deployed 11. Ask: how much capital are you seeking, at what valuation, in what structure?

Peer review: Share your deck with one classmate. Their assignment: act as a skeptical but fair investor and identify the three most significant weaknesses in the pitch. Write responses to each weakness.

Exercise 7 — The Bootstrap vs. Fund Decision (Small Group, 60 minutes)

This exercise applies the decision framework from Section 35.6 to real creator business scenarios.

Scenario A: Maya Chen has 200K TikTok followers and a growing YouTube channel. A sustainable fashion brand has offered to invest $75,000 for 15% equity to help her launch a physical product line. She currently has no product revenue. Should she take the deal?

Scenario B: Marcus Webb has a $40K/month business with 85–90% margins and zero debt. A creator economy fund has offered $500,000 for 20% equity to help him build a financial education platform with courses, a podcast, and an events business. Should he take the deal?

Scenario C: The Meridian Collective has received a formal acquisition offer: $1.2 million for 60% of their LLC. The acquirer would provide resources but require them to produce content on a specific schedule. Their current revenue is approximately $170,000/year. Should they take the deal?

For each scenario, work through: - What does the capital do that revenue cannot? - What are the costs (financial, strategic, creative) of taking the deal? - What questions do they need answered before deciding? - What is your recommendation and the key reason for it?