online startup camp #2 video 3: startup funding sources part 2 · startup funding sources part 2...

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Video 3:Startup Funding Sources Part 2Angel Funding

Online Startup Camp #2

How to Fund Your Startup

Startup Stages & Planning

About Angels

Individual Angels

Angel Groups

Angel Conferences

Online Angel Forums (AngelList)

Venture Capital Seed Funds

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Stages

• Idea

• Discovery

• Proof of concept

• Product Development & Beta Test

• Revenue

• Growth

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Stages & Sources of Funds

Discovery Proof-ofConcept

Product Development & Beta test Revenue

Idea

Idea

Founders

Growth

Friends & Family

SBIR/STTR

Customers/Partners

Micro Loans

Seed Fund

CrowdFunding

Keep you Day Job

AngelsAngel Groups

VC Seed Funds

AngelList

Angel Conferences

Milestones and Funding Needed

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$2,500K

$2,000K

$1,500K

$1,000K

$500K

$0

-$500K

-$1,000K

-$1,500K

-$2,000K

-$2,500K

-$3,00K 2013 2014 2015 2016

PrototypeBeta Production

Release;Roll-out

Revenue Ramp



About Angels

Individual Angels

Angel Groups

Angel Conferences



About Angels

• High net worth individuals

• Invest their own money (unlike VCs)

• VCs have no choice - they must make investments

• Angels do have a choice

• Accredited investor

• $1M net worth or $200K income in the last 2 years

Angels - Are You Ready?

• Typical requirements to get Angel funding:

• More than an idea

• More than an idea and a business plan

• You’re doing this full-time

• You have some market validation results

• You have a team

• You have a prototype

• Customer feedback

Angel Investment Options

• Convertible note

• A loan that converts to stock

• Usually a discount or warrants

• May have a cap on valuation

• Advantages to entrepreneur

• Lower legal fees

• No valuation required

Angel Investment Options

• Priced round

• The angel(s) purchase stock (usually preferred)

• Advantages to investor

• They know what they are paying

• Drawbacks

• Can be higher legal fees (unless pre-set docs)

• Valuation required

Preferred Stock

• Preferred share owners have special rights

• Typical examples:

• Vote as a class on company’s major financial decisions

• Get paid first if there is an acquisition

• Each new round of investors typically get a new class of preferred shares (with rights over previous classes)

Early-Stage Company Valuation

• Determines the price of your shares & the dilution required for a particular amount of money

• Simple definition: it’s what someone is willing to pay• Typically not done by analyzing projected profits,

revenues, etc.• It may depend on:

• How your company compares to others• How many $ you’re seeking• How good your relationship is with the investors• Milestones you’ve accomplished• The quality of your team• ...

Angel Investments - Size

• Typical round size:

• $200K to $2 million

• Typical individual angel investment:

• $20K to $100K

Investor Dollars are Costly

• You will spend many months of effort raising money

• You will have to “manage” your investors

• You will have investors on your Board

• You will give up equity

• You will give up considerable control

But Investors can Add Value

• Look for investors that can help

• Industry knowledge

• Domain expertise

• Introductions

• Help with follow-on rounds



About Angels

Individual Angels

Angel Groups

Angel Conferences



Individual Angels

• High net worth individuals

• The challenge: find/meet them

• The answer: network!

• They often collaborate

• Find a leader

Angel Groups

• Two basic types• Joint due diligence, but invest separately• Pool money and invest jointly

• Advantages:• Easy to find• Meetup multiple angels

• Drawbacks• There are usually application fees (large range)

Angel Groups

• In Oregon:• Gorge Angel Investment Network• Keiretsu Forum, Portland Chapter• Oregon Angel Fund• Oregon Sustainability Angels• Portland Angel Network• Portland Venture Group• Southern Oregon Angel Investment Network

Angel Groups

• In Washington• Alliance of Angels• Bellingham Angels• Puget Sound Venture Club• Seraph Capital Forum• Tacoma Angel Network• Zino Society

AngelList.com

• Online investment marketplace

• You pitch your company to qualified investors

• Mostly Silicon Valley based - but increasing number of other deals too

Angel Conferences

• Competitions• Investor group vote picks winner• Typically $100K - $200K to winner• Positives:

• Finalists get great exposure• Good networking opportunities

(even if you don’t pitch)• Attendees see some good pitches

• Drawbacks• There are fees (they vary a lot)

Angel Conferences

• Angel Oregon• Bend Venture Conference• Gorge Angel Conference• Southern Oregon Angel Conference• Willamette Angel Conference


• Venture Capital funds that invest early

• They invest other peoples money

• Many firms say they do seed investments

• ... not all of them do that many

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Stages & Sources of Funds

Discovery Proof-ofConcept

Product Development & Beta test Revenue

Idea

Idea

Founders

Growth

Friends & Family

SBIR/STTR

Customers/Partners

Micro Loans

Seed Fund

CrowdFunding

Keep you Day Job

AngelsAngel Groups

VC Seed Funds

AngelList

Angel Conferences

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Your Startup Camp Mission: Week 3

• Update your business model (lean canvas)

• Update your 2 year financial forecast (summer camp video 7)

• Identify fundable events for Angel funding

Fundable Events

Some for “Angel Fundable Events”

• Working prototype

• Positive customer feedback

• Beta release

• Adoption metrics

• Early revenue

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Resources

• otbc.org/tag_cloud:• funding, funding_strategy• angel• angellist• term_sheets

• Questions? Discussion forum: OnlineStartupCamp.com

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OTBCTagCloud

otbc.org/tag_cloud

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Week 2 Meetup: Thursday, Oct. 18

• 3pm - 5pm (+ networking) at OTBC

• Discuss angel funding

• Get/give feedback

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Video 3:Startup Funding Sources Part 2Angel Funding

Online Startup Camp #2

online startup camp #2 video 3: startup funding sources part 2 · startup funding sources part 2...

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