How to Raise StartupCapital in 6 Easy Steps

by Eric M. Jackson CEO of CapLinked; author of The PayPal Wars

6 Steps to Funding1. Structure Your Deal

2. Prepare Your Documents

3. Identify Your Leads

4. Make Your Pitch

5. Follow Up

6. Close the Deal

#1: Structure Your DealSize of the Deal

ValuationPre-Money vs. Post-Money20% Rule of Thumb

Equity or DebtStock: Common vs. PreferredConvertible Notes

When Do You Close?

Important: Work with an Attorney!

#2: Prepare Your Documents

Slide Deck vs. Business Plan

Capitalization Table

Financial Projections

Transaction Documents:Term SheetPurchase AgreementShareholder Rights

Agreement or Convertible Note

#3: Identify Your LeadsPut Your Network to Work

What Do You Mean You Don’t Know Anyone?!?

Ask for Referrals

Accredited InvestorsRegulation D + Subsequent Rounds

VCs vs. Angels vs. Super Angels

Other Investor Sources:Angel Groups (TCA, Pasadena, Maverick)3rd Party Sites: LinkedIn, AngelList, CapLinked

#4: Make Your PitchGet an Intro (don’t cold email)

Share Information w/ Them (slides, deal room)

Set up a Meeting or Call (only if interested)

Meeting Checklist: Elevator PitchProblem You’re SolvingMarket SizeBusiness ModelTractionListen!!!

#5: Follow UpSorry, You’re Not That Hot… (So Persistence

Will Be Required!!!)

Track Your Leads

Send Updates

Due DiligenceMake Sure Questions are Clear

Getting an AnswerAngels Don’t Like to Say No

#6: Close the DealFrom Slow to Fast

Let Prospects Know as Round Fills Up

Typical Closing Process:Collect Signed DocumentsConfirm WiresCounter-Sign Documents

Announce to Media

Start Working on Next Round

Good Luck!

www.caplinked.com

@ericmjackson