preparing your company for investment capital
DESCRIPTION
So you’re ready to take your startup to the next level with a capital infusion? Are you really ready? Join David Ehrenberg, Founder and CEO of Early Growth Financial Services, and Rob Belcher, VP at Lighter Capital, for a free webinar on preparing your company for funding. David and Rob will outline how to analyze your business model and its economics, the steps to creating your fundraising game plan, and the questions you need to ask to facilitate your next raise. Topics covered include: - The importance of milestone financing - How the fundraising options compare for each stage of the business life cycle - Creating meaningful financial projections - Analyzing your sales cycle and pipeline - Pitch deck essentials - Required due diligence documentation And more…! Bring your questions and get real-life advice for securing your next round of funding.TRANSCRIPT
LIGHTER CAPITAL LIGHTERCAPITAL.COM
Getting Your Ducks in a Row
Preparing Your Company for Investment Capital
David Ehrenberg Rob BelcherFounder and CEO Vice PresidentEarly Growth Financial Services Lighter Capital
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Who We Are: Lighter Capital
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Based in Seattle, WA› Serial entrepreneurs, technologists, angels and ex-VCs
Tech-enabled specialty finance company› Direct business lender› Not a bank, not a VC
Employs an innovative revenue-based finance model Uses technology to speed up and simplify loan
underwriting and servicing processes
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Who We Are: Early Growth Financial Services
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Outsourced financial services firm providing finance, accounting, valuation, and tax support to early-stage companies
Three different platforms of services and support Services include: transactional accounting, strategic
financial guidance, CFO services, 409a valuations, taxes, corporate governance, and compliance
Extensive experience working with companies at all stages of development
180+ successfully funded clients throughout CA, NYC, Boston, and Seattle
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Webinar Agenda
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Reflection: Analyzing the Business
Projection: Business / Fundraising Game Plan
Preparation: Pulling It All Together
Documentation: Required Documents and Information
Q&A
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Reflection: Analyzing the BusinessEssential questions for analyzing your business model and economics
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Projection: Business / Fundraising Game PlanWhen you’re ready to raise funds, clarity is key
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How much money do you need to raise?
What’s that money going to be used for?
At what cost and with what terms and conditions?
What type of capital is the best fit for your company, and why?
Where do you find the type of financing you need?
Milestone financing
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Funding Options and the Business Lifecycle
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Established
Ideation Launch & Traction
Growth & Scale
Breakout
Bootstrap/Self
Family & Friends
Angels
Operating : Customer and Vendor Terms
Revenue-Based Financing
VC (few seed funds, much more money at later stages)
Banks
Strategic Investors
Note: These are tendencies, NOT hard and fast rules. Many financings happen outside these bands!
Crowdfunding
$MMs$0 $0-$1M $1M-$5M $5M+
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How Do the Options Compare?
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Bank / Debt Revenue-Based Finance
Venture Capital
Guarantees &Controls
Financial CovenantsPersonal Guarantees
Limited Financial CovenantsNo Personal Guarantees
Board SeatProtective ProvisionsDrag-along
Added Value None Introductions & PR Introductions & Mentoring
DilutionNoneWarrants
Small Success Fee Moderate to Extreme
FlexibilityInflexibleFixed Payments
Highly FlexibleVariable Payments
Highly FlexibleNo Payments
Speed 4-8 months 2 weeks 3-6 months
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How Does it Work?
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Company revenueLoan payment
Loan payments are based on a percent of the company’s revenue.
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Preparation: Pulling It All TogetherWhat you need to impress potential investors
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Executive summary Financial model / budget Product demo Pitch deck
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Key Slides in Your Pitch DeckInclude elements that are most relevant for your company
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Who are you? Venture concept / problem to be
solved Market opportunity Market strategy Competitive advantages and risks Technology Manufacturing/Production Management team Financials Funding requirements
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Business Plan
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Current business plan Financial projections
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The Fundraising ProcessHow to tackle fundraising as a business development exercise
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Business development process Determine your funding round Build your value proposition Identify the right investors given
your stage, size, industry, and focus
Target key players Rely on your ecosystem
Recommended reading: Art of Start, Insider's Guide to Silicon Valley, Early Exit
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Documentation: Required DocumentsNecessary documentation and information for due diligence
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Corporate Records and Charter Documents
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Certificate of Incorporation Articles of Incorporation (and
amendments) Certificates of Designations,
Rights, etc. Bylaws Minutes of directors' and
shareholders' meetings Written consents of directors and
shareholders
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Security Issuances
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Company shareholders and option holders (showing vesting & security exemptions)
Outstanding options, warrants, rights Registration rights for company's
securities All voting trust instruments, buy-sell
agreements, voting proxies or other shareholder agreements
All permits and filings regarding securities issued by company
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Material Agreements
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Obligations / payments in excess of $10,000
Personal property leases Company liabilities Property / asset related
documents Loan or advance documents Employment agreements Insurance policies Employee benefit plans Any judgment by which company
is bound Form of Proprietary Information
and Invention Agreements
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Intellectual Property
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Foreign and domestic patents and patent applications Trademarks, trade names, service marks, domain names or copyrights Proprietary processes Licensing agreements (to and from)Third-party correspondence regarding potential infringement of IP rights
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Disputes and Litigation
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Pending action, suit, proceeding, investigationAllegations of company's infringement of proprietary rights of othersLabor agreements or actions
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Other Essential Documentation
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Securities or ownership interests in other companies
Certificates of qualification from all states or foreign countries in which company is qualified to do business
All licenses, permits or government authorization
Company’s bank accounts, lines of credit, etc.
Current or past officers, directors, or key employees who own direct beneficial interest in any competitor
Powers of attorney executed by company
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Q&A and Next Steps
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@lightercapital
@EarlyGrowthFS
›Learn More:› www.lightercapital.com
› www.earlygrowthfinancialservices.com
›Apply / Contact:› secure.lightercapital.com
› earlygrowthfinancialservices.com/contact-us/
›Questions:› [email protected]