Getting Your Idea Funded

by Alan E. HallAngel and Venture Capitalist

By PresenterMedia.com

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How will the money be spent?

Key Initial Questions for Entrepreneurs

How much money is needed?

Why is the money needed?

What will be the results?

Are you willing to give some ownership?

Can you pay back a loan?

What you should know.

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Crowd funding

Funding Sources

Self

Family and friends

Angels

Banks and credit union – SBA loans

Private Equity FundsStrategic partnerIPOs

Match needs and growth

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Funding amount

Investor Issues

Harvest –great return on investment

Ownership

Growth

Mitigated risks

Great companyValue add beyond money invested

Make money.

VALUE-ADDED INVESTMENT MODEL

HIGH GROWTH COMPANY EVOLUTIONCapitalization

SALESVALUE-ADD

Governance

Social capital

Strategic guidanceREV

EN

UE

Discovering new market segments

Expanding product distribution

Developing product extensions

TRADITIONAL INVESTOR VALUE-ADD

Improving sales execution

COMPANY GROWTH

Revenue Development Process

3

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Major Due Diligence Questions

Management

Financials

Customers

Competition

Sales

Processes

Culture

Products/services

Financing

Valuation

Ownership

Exit

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Questions

Management

1.Knowledge of industry2.Relevant experience3.Teachable

Financial

1.Revenues2.Margins3.Cost control4.Profits

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Questions

Customers

1.Size of market2.Buyers3.Sales cycle4.Adoption rate

Competition

1.Number of competitors2.Market penetration3.SWOT

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Questions

Sales

1.Routes to customers; direct, OEM or channel

2.Sales executive and team3.Experience and knowledge

Processes

1.Documented steps to follow?

2.Compliance3.Procedures, measurement

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Questions

Culture

1.Behaviors2.Values3.Known and followed

Products/technology

1.Meets and exceeds customers’ needs

2.Intellectual property3.Road map4.Innovation5.Competitive

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Questions

FINANCING 1. Sources of money, bank, investors, VCs2. Money needed for what, deficit, growth3. How much and when?

VALUATIONS1. Pre-money and post money2. Comparables3. Negotiation

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Questions

Ownership Percentages

1.Variations, minority or control

2.Stages of company growth1.Idea2.Prototype3.Pre-sale4.Sales5.Profitable

Exit/Harvest

1.When?2.Expected multiple and IRR3.Involvement4.M&A or IPO

1.Great ideas have no value until

commercialized.

2. Its all about revenue and profit.

3. Experienced management is critical

7. It takes twice as long and twice as much money.

8. Invest in lots of companies to play the odds.

Lessons Learned

4. There must be customers who will buy.

5. Execution is the key.

6. Deal with honest people.

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QUESTIONS AND ANSWERS

Thank you.