AIA2018 - Maher Hakim - Startup Fundraising

Startup FundraisingWhat do investors look for and why?

Maher Hakim, Ph.D.

[email protected]

www.maherhakim.com

Managing Director, Qatar Science and Technology Park

Professor of Entrepreneurship, Carnegie Mellon University

Serial Entrepreneur & Angel Investor

Agenda

Do you need to raise money? Why?

Multi-stage financing 101

Not all investors are created equal

So, what do investors look for?

Copyright @ 2017 Maher Hakim. All Rights Reserved

Types of “Startups”


Innovation Startup

Stages

Multistage Financing 101

Copyright @ 2016. Maher Hakim. All Rights Reserved

Yelp’s Story 2004

0 revenue

No Web site

No employees

2

FOUNDERS!

1 IDEA!

TODAY

$700M Annual

Revenue

150M Monthly

Visitors

Five Continents

~$2.6B Market

Cap


Simple Scenario$1M $4M

Founders: $4M EACH

A Investors: 10X

B Investors: 2X

Employees: Ferraris

Series A Price: $0.125

Series B Price: $0.57

Step-up: 4.5X

Year 0: 2 Founders 50/50 with 25% for employees

Year 1: Raised $1M for 50%

Year 3: Raised $4M for 30%

Year 5: $30M exit vs. $10M exit

Types of Investors

https://www.linkedin.com/pulse/startup-investors-good-bad-ugly-why-do-some-tech-

https://www.linkedin.com/pulse/startup-investors-good-bad-ugly-why-do-some-tech-startups-maher-hakim


Investors Types

VC/Private

FundsAngels

StrategicPublic

Incubators

The Crowd

So, what do they look

for?

ALL1.

2.

3.


Versus

ALL


ALL


ALL



VC/Private

FundsSuccess Rate


It’s About Big WinnersVC/Private

Funds


IRR, Multiples & Time

Years 2x 3x 4x 5x 6x 7x 8x 9x 10x

1 100% 200% 300% 400% 500% 600% 700% 800% 900%

2 41% 73% 100% 124 % 145% 165% 183% 200% 216%

3 26% 44% 59% 71% 82% 91% 100% 108% 115%

4 19% 32% 41% 50% 57% 63% 68% 73% 78%

5 15% 25% 32% 38% 43% 48% 52% 55% 58%

6 12% 20% 26% 31% 35% 38% 41% 44% 47%

7 10% 17% 22% 26% 29% 32% 35% 37% 39%

8 9% 15% 19% 22% 25% 28% 30% 32% 33%

9 8% 13% 17% 20% 22% 24% 26% 28% 29%

10 7% 12% 15% 17% 20% 21% 23% 25% 26%

VC/Private

Funds


The 10X RuleFund size $100M

15% IRR in 10 years 4X

Capital returned to investors $400M

Capital invested in companies $80M

25% Bust $20M

25% “Sideways” $20M

Expected invested in good deals $40M

Multiples of good investments ~10X

VC/Private

Funds


My Money?Angels

The Good The Bad The Ugly


Looking Good!!Public

Incubators

Rule 1 - Follow

the Rules

Rule 2 - Put On

A Show


What IF?Strategic

Fear #1

Fear #2


The Herd!The Crowd


Yelp’s ROI?We Paid $0.1 Per

Share in 2004

We Paid $0.45 Per

Share in 2005

We Paid $4 Per Share in

2008

Share

Price

Today =

$32

Q&A