inside venture: how to package your startup for fundraising
TRANSCRIPT
TheBasics:VentureLevel
• CreateaCcorporation,notanScorporation,orLLC• KillerTeam&OperatingAgreement• BigMarket:
• ProductMarketFit• ScalableBusiness Model• OperatingLeverage
• SecureYourIP:Patent’s,C’s&T’s,TradeSecrets• Equity:Agreebeforehand;basedonexperienceorcontribution• Finances:Friends&Family,ConvertibleNotes,Crowdfunding,Loans
• CleanUpMesses
Newbiesvs.ProvenEntities
• Ifyou’renotMarkSuster…..• CoreSkills
• PreviousSuccesses• Understandyourweaknesses• BeHonest• Lean&Mean• Chemistry• Board&Advisors
CapitalRequirements:Choices
• Micro-seed• $100korless - Accelerators,Grants,Angels, Crowdfunding
• Seed• $100k- $2M- Angels,AngelFunds,SeedFunds,Crowdfunding
• ConvertibleDebt• PromissoryNote:ConvertsatSeriesA,8-10%+warrants
• SeriesA• $2M-$10Msometimes upto$25M
• Consideralternativesources• Industrial Investors,Potential Acquirers,Philanthropic funds
Ideallyyouwantsmartmoney,butpassiveinvestorsaresecondbest.
AreYouReady? WhatInvestorsWanttoSee
• Pre-Seed&Angel:TheNewSeed• Founders,Vision,Story
• Seed:SeedInvestorsResetting&ImpactingValuations• Founders,EarlyTraction,Vision,Market
• SeriesA:Lessthan30%ofSeedCompaniesSecureSeriesA• RealTraction,ProductMarketFit,UnitEconomics• ReadytoScale,Demonstrated Viability ofGrowth
• SeriesB,C,etc….• Numbers,Growth,BillionDollarPotential
Momentum– TheNecessaryProofPoints
• People• Team• KeyHires• BoardofDirectors• AdvisoryBoard
• StrategicPartnersand/orBlueChipCustomers• Revenue
• Type,Cost,Scalability• Freemium/AdoptionModelsmusteventuallyproduce$$$
• Competition• YourStory:Documented
• ExecutiveSummary,OnePager,PitchDeck,Financials
PickingtheRightVC- DoYourHomework• Whatistheirinvestmentstrategy?
• Lookforestablished firmswithsuccess inyourtargetmarket• Areyouattheir Idealstage• Reviewtheirportfolio;pastandpresentandtrackrecord
• Bestcase/worstcasescenarios• Competitors/potentialpartnersintheirportfolio• Futurerounds
• Whopartnerswiththemondeals• Doyousharephilosophiesandgrowthstrategy?• Resourcesgained:
• Operatingexperience, network,support,services• Gettoknowtheleadpartnerinthedeal
• Thisisamarriage– ‘tildeathdouspart
IncreasingYourValuation
• Startupvaluationisanartratherthanscience• VC’shaverangesbasedoncompanystage• ThePool
• Expect a20%setasideorthestockoptionpoolduringyourSeriesA• Knowwhoyouneedtotohireandpushbackif20%isn’tneeded• Movingforwarddilution shouldbeequal
• Increaseyourvaluationbycreatingdograce• REALLYKNOWyourCompetition.• IfnotyoubetterhavearealliveUnicorn
VCMath&Timelines
• Projectyourspendforoneyear• Add30%- 50%
• Fundraisingtakes6-12months• Howwillyouusethemoney
VC’sTarget3xFundReturnOver7-10Years&20%+AnnualReturn
Pre&PostMoney
• Pre-moneyvaluation=sharepricexpre-moneyshares• Post-moneyvaluation=pre-moneyvaluation+investment• Percentageofownership=sharesissued/post-moneyshares
BePrepared
• YourStory:ConveyConfidenceNotArrogance• Strategic:Vision,Team,Market• Tactics: Business Model,COCA,CLTV
• BeHonest&Authentic• TheVCSide
• DoYouListen? AreYouCoachable?• Will itWork– WhataretheProofPoints?
• The2XRule• Rehearse,Rehearse,Rehearse
ClosingThoughts
• ChoosingtherightInvestorwillmakeorbreakyourstartup• Onceengagedfollowupandfollowthrough• Everyroundacceleratestheracetoprofitability&impactsfuturevaluation• Raiseasmuchaspossible• Runlikeyourbootstrapping• Writeanactualbusinessplan• Hireonly“A”players• Stayfocused