Imperial College - Early Stage Investment

Matthew Stafford @mstafford

Fundraising for Startups

@mstafford

MiniBar

Mini MBA #10: Business Model Development---

Matthew Stafford

@mstafford

Never a better time• Global opportunities

• Cheap(er) teach

• Access to resources is high (global)

• Startup support is high

Some Failures..

Money!• Accelerators

• Crowdfunding

• SEIS/EIS

• Low interest rates (Start-Up Loans + Angels)

• ‘City meets tech’ Corporate venturing

You..?!You..?!

@mstafford#MiniBarCamp

So easy money?Easy Money...?

@mstafford#MiniBarCamp

@mstafford#MiniBarCamp

Why so tough?• Lack of skills/credible management team

• No unfair advantage

• Do not ‘do it’

• No proof of concept/No validation

• Poor business model

• Small market

• No clear exit

So do some complaining!Moan, Moan, Moan

@mstafford#MiniBarCamp

@mstafford#MiniBarCamp

Wrong money, wrong time• Big VC

• Small VC

• Business Angels

• Corporate Venturing

• Grants

• Accelerators

• FFF

Wrong money, wrong time• Big VC

• Small VC

• Business Angels

• Corporate Venturing

• Grants

• Accelerators

• FFF

Most start here

Difficulty level

Venture Capital• Scale & Exit

• Tech businesses

• Big markets

• 10x return

• Milestones

So where to start?

• At the bottom

• FFF

• Why should an investor back you if your own network hasn’t?

Wrong money, wrong time• Big VC

• Small VC

• Business Angels

• Corporate Venturing

• Grants

• Accelerators

• FFF

They all start this way

[to Eduardo back at the Carribbean Night party ] Mark Zuckerberg: “We're gonna need a little start- up cash to

rent the servers and get it online.”

What to raise & whenWhen to Raise, Where?

Pre-Seed Seed Pre-Revenue Early Growth Sustained Growth

FFF

Accelerators

Business Angels

Venture Capital

IPO/Trade Sale

@mstafford#MiniBarCamp

What do you need?• Team

• Market

• Product

• Traction

• Potential returns

Milestones

• Proven Team – have done it before in the sector?

• Product – MVP with proof?

• Exits in the sector?

Finding Investors• Do your research - right people, right time

• Know your investor

• Ask people to help

• Network

• And do something more than just write a plan - do it

Pitching Investors - the ‘Deck’ 1. Elevator pitch - “We solve [problem] by providing[advantage], to help [target] accomplish[target’s goal].”

2. The Problem - Too many startups create products that aren’t really solving any true problems - they’re looking for a ‘quick buck’. Tell a story - make it visual.

3. The Solution - How is your solution so much better than what’s currently being used? K.I.S.S. and make sure your demo works (with and without tech).

4. Market Size - Show the market is interesting for investors. Cite your sources.

5. Business Model - How are you going to make money? Recurring revenues or one time payment? Focus on one - the most profitable one.

Pitching Investors… 6. Competition - How are you solving the problem differently? If you’re the only ones doing it - well, you’re not!

7. Go-to-Market Plan - What have you done so far to capture new users and how will this evolve over time?

8. The Team - What relevant experience and skill sets does your team bring to the table?

9. Traction/Projections - What have you achieved so far? Are you generating revenue? User growth? Any top clients/partnerships that you can show off?

10. Needs - What do you need that you don’t currently have and why?

Success is…?• Not raising money?!

• Raise money at the right time

• Raise money from the right people

• Network Intelligently

• Seek Advice

Traits of successful entrepreneurs

1. Tenacity – the most important attribute of an entrepreneur is never being willing to give up.!

2. They’re smart and brave – Get out there and understand your customers is far more important than reading books or doing computer research.

3. Ability to ‘Pivot’ – You need to be sure you have a great product/market fit and that it is a big enough market to make money. The best entrepreneurs fine tune their product and their business model until they find this.

4. Resiliency – Being an entrepreneur is sexy - for those who haven’t done it. In reality it’s gritty, tough work where you will be filled with self doubt and the desire to give up.

5. Inspiration - You need to lead. You have to convince others to move mountains when they don’t believe they can.

Traits of successful entrepreneurs…6. Perspiration - It’s not just about giving a rousing speech or sounding great in front of others. Don’t do this for the limelight.

7. Willingness to accept risk – Starting a business is a leap of faith. Don’t wait on the sidelines forever doing “side projects” until the day when they’re ready to start a company - you’ll never ‘be ready’.

8. Attention to detail – If you’re going to lead a company you need to be on top of the detail. You need to know your product and your financial model. You need to be hands on with product, marketing, sales - everything.

9. Competitiveness - Hate losing - get pissed off. “Show me a good loser and I’ll show you a loser”

10. Make decisions - JFDI. This is what separates entrepreneurs from big company executives, consultants and investors. Everybody else has the luxury of “analysis” and back-up.

11. Domain experience – Domain experience is not an absolute requirement. Some people argue that the uber successful ventures come from people outside the industry willing to challenge the conventional wisdom. However having some domain experience and relationships gives you an unfair advantage. Better that you start with this than from scratch.

12. Integrity – Do the right thing. Integrity and honesty are very important to most venture capital investors - it’s a small world and you might have another business.

Read…

Watch… http://www.ted.com/talks/

richard_st_john_s_8_secrets_of_success

Ask me…

@mstafford !

[email protected] !

http://www.meetup.com/Last-Thursday-of-the-month-networking-party-UpstartsConnect/

Ask others…

@ImperialCollege