Inside Venture: How to Package Your Startup for Fundraising

InsideVenture:HowtoPackageYourStartupforFundraising

JoyRandels@joy_randels

WhyAreYouRaising?Thefirststepindeterminingwhen& howmuchtoraise.

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

AreYouSureRaisingVentureCapitalChangestheGame.

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

PitchingYourStartupThePitchDeckandBackupExecutiveSummary,OnePager,Financials,andBackup

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

InsideVenture:HowtoPackageYourStartupforFundraising

JoyRandels@[email protected]