Fundraising Hacks: Raise More Capital Faster for Your Company

© 2013 David Teten. More at ffvc.com and teten.com http://www.flickr.com/photos/roblee/133498854/

David Teten, Partner, ff Venture Capital ffvc.com // @ffvc teten.com // @dteten HBS Alumni Career and Professional Development / HBS Alumni Angels February 5, 2013

photo by Aaron Patterson, http://www.flickr.com/photos/40875537@N04/5659908590/

Intro Social Media Network Next Steps

© 2013 David Teten. More at ffvc.com and teten.com

Tradition

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Tradition

•  Introduction

•  Traditional Methods

•  Social Media

•  Capital Network

•  Next Steps



Tradition

The Butterfly and the Entrepreneur

Egg

http://www.mesc.usgs.gov/butterfly/butterfly-life-cycle.html

Caterpillar

Chrysalis Breakout

Butterfly



Tradition

ff Venture Capital (ffvc.com)

•  Early-stage technology venture capital fund •  160 investments in 60 companies since 1999 •  17 employees •  First investments typically $50-$400K at valuations of <$5m pre-money •  Follow on in later rounds for best-performing startups •  Prominent investments include:

Cornerstone OnDemand (IPO); Quigo Technologies (sold to AOL for reported $340m); Klout; 500px; Voxy; ThinkNear



Tradition

List of companies through June 30, 2012

ff Venture Capital: 160 investments in over 60 companies since 1999 (ffvc.com/companies)



Tradition

Selected ff Venture Capital Acceleration Resources

•  Entrepreneur Network •  Mentor Network •  Preferred Supplier Network •  Office Space •  Continuous Process Improvement •  Assistance in key startup functions: Finance and Accounting,

Fundraising, Recruiting, Development, Design, Media Outreach •  More at ffvc.com/resources



Tradition

Harvard Business School Angels of Greater New York (HBSAlumniAngels.com/NY) •  Members are Harvard affiliates from all industries. •  We invest in companies regardless of any Harvard affiliation. •  In last twelve months, $1.8m invested in 8 companies. •  $84K mean individual check size per company per round. •  Third largest angel group in NY tri-state area by number of paying

members (to our knowledge). •  Launched Venture Capital Access Program, focused on helping women

and minority investors raise capital from our network.



Tradition

Venture Capital Access Program

•  Program to help minority and women entrepreneurs meet members of the Harvard Business School Alumni Angels of Greater New York

•  Partnership with the Marathon Foundation, a subsidiary of the National Association of Investment Companies.

Introduction



Tradition

David Teten (teten.com)

•  Partner, ff Venture Capital, early-stage technology venture capital fund •  Founder and Chairman, Harvard Business School Alumni Angels of Greater New York .

Co-founded Venture Capital Access Program, introducing women and minority entrepreneurs to Harvard-affiliated angels

•  Lead author, The Virtual Handshake: Opening Doors and Closing Deals Online (TheVirtualHandshake.com)

•  Lead author of first-ever research study on best practices in private equity/venture capital deal origination

•  Lead author of first-ever research study on best practices of venture capitalists in increasing portfolio company value

•  Board Member, Social Fortress* •  Harvard MBA 1998, Yale BA •  @dteten

* ff VC portfolio company

Network Next Steps Intro Social Media Tradition


•  Introduction


•  Social Media


•  Next Steps



Traditional Capital-Raising Methods Personal networks of principals “Friends, family, and fools” Direct outreach Can work well, but only through

introduction Advisory board Be careful about paying a fee of any

kind Conferences/ industry associations Legal ways to market broadly Communications with existing relationships

Monthly mail with your metrics

Business relationships with potential investors

Existing/potential customers are the best



•  Introduction


•  Social Media


•  Next Steps


© 2013 David Teten. More at ffvc.com and teten.com http://www.flickr.com/photos/23439761@N03/3258313816/sizes/l/

Social media allows you to convert cold calls to warm calls.



“Social media is a communications

medium that relies on its audience to create, modify, or

distribute the medium’s content

- Nick Gonzalez, SocialMedia.com

http://www.flickr.com/photos/briansolis/2735401175/sizes/l/, http://blog.socialmedia.com/how-should-we-define-social-media/. /



Why should I care about social media for raising capital?

•  Because 3 out of 4 Americans use social technology. (Forrester, The Growth Of Social Technology Adoption, 2008)

•  2/3 of global internet population visit social networks (Nielsen, Global Faces & Networked Places, 2009)

•  Visiting social sites is now the 4th most popular online activity—ahead of personal email.

(Nielsen, Global Faces & Networked Places, 2009)

•  Visitors spend 5 million minutes per day on Facebook. (Facebook)

http://www.slideshare.net/mzkagan/what-is-social-media-2005829 . http://www.flickr.com/photos/sreejithk2000/2385193167/sizes/l/



But I don’t use social media, and neither do (some of) my targets! •  The reality: you and your target investors are in the social media matrix

whether you like it or not. •  Your candidates search for you on Google before doing business with you. •  You are already a member of gated online communities, which you may or

may not be fully leveraging: your alumni network, your local “Moms” or “Dads” mailing list, your church/synagogue/mosque

•  You can accelerate your sales process by leveraging potential candidates’ digital footprints. These help you to source leads, filter them, and then run a better educated sales process.

http://www.slideshare.net/mzkagan/what-is-social-media-2005829 . http://www.flickr.com/photos/sreejithk2000/2385193167/sizes/l/

Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity

Intro Social Media Tradition


•  Introduction


•  Social Media


•  Next Steps




Investor Network Valuation Formula

David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online (www.TheVirtualHandshake.com)

Ch = Character Co = Your Firm’s Competence R = Relevance of the contact S = Strength of your relationship I = Information N = Number of people D = Diversity

= D * ∑ (Chn*Con *Rn* Sn*In) N

n=1




Always Be Closing

Alec Baldwin in Glengarry Glen Ross

http://www.onlygoodmovies.com/blog/thoughts-on-film/glengarry-glen-ross-my-favorite-movie-scenes/




Balance Strength vs. Number

Average Strength = Minutes Available / Person Number = # People therefore…

Average Strength * Number = Total Minutes Available

vs.




Biography analysis software allows searches by common affinity and more effective subsequent outreach.

•  Boardex •  Data.com •  Klout* •  Pipl •  ZoomInfo

Leading Providers of Biography Analysis Data

*





• Daniel Zumino, founder of BCG Paris and angel investor, had made a small investment in a startup

• November 1999: He sent email to Stanford GSB alumni list seeking capital for the startup

• March 2000: Raised $8m through referral from alumni, via this listserv

David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online (www.TheVirtualHandshake.com)

Case study: Entrepreneur raised $8m from an alumni email list




•  CogMap •  Glassdoor •  TheFunded •  TheOfficialBoard

Corporate analysis software provides an insider view of the org chart, compensation, and customer views of a company.

Leading Providers of Corporate Analysis Data




Cash is a market signal


Interaxon* Campaign on Indiegogo*




•  Phone •  Email • Web conferencing •  Instant messaging •  Internet telephony

(e.g., Skype) •  SMS •  Twitter

Using multiple media channels promotes stronger trust-building

Caroline Haythornthwaite, “Strong, Weak, and Latent Ties and the Impact of New Media,” The Information Society, 18 ( 2002) 385–401. http://flickr.com/photos/re-ality/41676755/sizes/o/

Major Media Channels for Origination (descending order of importance)




You can identify potential startup investors through any of multiple online databases

Selected Searchable Databases of VC Funds

•  AngelList

•  BoogarLists

•  CB Insights

•  CrunchBase*

•  Galante’s

•  Grey House

•  LinkedIn*

* Has the most data for free

•  PWC MoneyTree

•  TheFunded*

•  VCProDatabase

•  VentureDeal

•  VentureXpert

•  vFinance

•  VCGate




Track VC Investing (a lagging indicator)

•  CB Insights •  Crunchbase •  Techcrunch •  Mashable •  Mercurynews.com/vc •  Venturebeat




Effective capital-raisers are data hounds

Tools for Assimilating Data into Your CRM System

Data source Selected technology for inserting data into CRM Business Cards

ScanBizCards, Cardscan, CardMunch, CardShark, IRIScan, Neatco, Plustek

Emails Writethat.name, Contact Capture, eGrabber, Gwabbit Cloud Plaxo, LinkedIn

CRM Salesforce, Act




Major Gated Communities for Investors

Early-Stage Private Late-Stage Private Public

AngelList Assoc. for Corporate Growth Albourne Village

Caplinked AxialMarket FT Alphaville Longroom FundersClub CapitalSphere Sum Zero Gust Comp & Carry Value Investors Club

PE-Nexus

Investors are connecting with one another via online gated communities; get in their door




•  Yahoo Groups

•  Google Groups

•  LinkedIn

Online Community Platforms •  Ning

•  Xing

Every special interest group has an online community




Senior executives prefer to interact online behind barriers, just as they do in face-to-face networks

Sample Gated Communities for Executives

•  INMobile

•  Sermo

•  Int’l Exec’s Resources Group

•  Executive Forum (CT)




Target investors who are one step removed from you

•  By geography •  By industry •  By personal

characteristics

http://flickr.com/photos/extranoise/169187125/sizes/l/



•  Introduction


•  Social Media


•  Next Steps



Step 1: Google Yourself



Step 2: Be a Data Hound

http://www.flickr.com/photos/sookie/94778946/



Step 3: Reduce Email Use



Step 4: Join the Right Club



Step 5: Find People to Meet Online



Any questions ?

Slides at ffvc.com/raise-capital

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@ffvc @dteten



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