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How Startups can Raise Money in Today's Climate

Oct 21, 2014

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Rose Lewis, one of the founders of startup accelerator Collider12, gave this presentation at Digital Shoreditch in May 2013. It covers the mistakes startups make when trying to raise funding, and how they can get access to money, even in today's tricky financial climate

Slide 1

Capital Day Raising Money in Todays Climate

24th May 2013

Rose Lewis, Partner @roselewis

1

Never been a better time to be an entrepreneur.

Global market opportunities. Tech is cheap(er), it works.Access to resources is high (not necessarily in this country). Support for start-ups is high.

Facebook $100b 8 years

Instagram - $1b 14 months est 2010

Pinterest $1.5b est 2008

Why Now ?

The Opportunities to scale globally quickly Cheap Tech Access to skills/resourceAccess to money

So it sounds easy

So why is it so hard?

2

More money available

AcceleratorsCrowdfunding SEIS/EISAngel investing better than a bank City meets Tech Grants tsbCorporate Venturing

You could also do this !

So it should be easy to raise moneyright.?

5

Only2%of those who submit business plans/applications get funded.

Why?

Business Plans are rejected because

Lack of skills/ credibility in the management team - No unfair advantages.No Market opportunity- reinvented the wheel.No proof of concept- Ali G pitch.Business Model Not scalable.Forecasts based on unproven assumptions.Business Model too complex to execute.Inadequate financial returns (10X within 3 years?)Lack of trust.No clear exit route.All solvable maybe?

You can whine all you like that.

Its easier in US, they have a bigger appetite to risk.They back business plans with million valuations.The UK is rubbish, there is no money, we dont take risks!

So, why do so many Start-ups find it too hard to raise ?

The number 1 reason why start-ups find it hardThey target the wrong sources of money at the wrong time

Sources of Money

Difficulty Level of Raising Investment

Sources of Money

Most of you start here

Scale Quickly with Capital to get to an Exit. To do this they look for:Technology BusinessesMarket Potential of $100 millionAbility to make 10 X returnAnd they want traction you need to have achieved several key milestones. Most start-ups just dont have that at the start.

VCs Have Big Ambitions

So Where Should You Start ?

Right at the bottom of the pyramid

Easier to raise investment from your Mum right?

Difficulty Level of Raising Investment

Facebook started this way: His college friend funded it first of all. Then Peter Thiel (angel investor).Only then did VC become interested and even at this stage, many of them passed.If they had tried at the top they would have failed.And we wouldnt have the biggest IPO in history.

So to Successfully Raise Money You Need to Start at the Bottom

Its easier you have to prove less. The early rounds validate your business which makes it easier when you get to the top (FB).

When should you raise money

www.growthaccelerator.com

CAPITAL NEEDS

TIME

SEED

Pre Revenue

EARLY GROWTH

SUSTAINED GROWTH

HIGH RISK

LOW RISK

Co-investment Funds

Business Angels

Formal Venture Capital

ExitIPO/Trade Sale

PRE-SEED

Friends, Family, Neighbours

When you have actually done something

We are not risk takers so we want you to have de-risked the proposition.

Team

Market

Product

Returns Potential

Milestones / De-risking

Team proven you have done it before, you have sector experience.

Product its built/mvp; trials with customers, contracts.

There are current exits in the sector that are similar.

How do You Find Your Investors Then?

21

PlanPlan Plan

Do your research. Plan your strategy sector, size.Profile your investor.Ask people to help.Network. And do something more than just write a plan.

Know what to do at networking events Practise, Practise and practise againAllow time to build solid relationships Diversity Maintain Give back Knowing when to ask for something

23

Tips for Success

Raise money at the right time Raise money from the right people Network Intelligently Seek Advice

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