raising capital (for startups)

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Post on 18-May-2015




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Covers raising capital for startup companies.


  • 1. A guide for First-Time Founders Raising Capital for Startups" Image: @TaxCredits

2. Hi. I am Bryan Starbuck Former CEO & Founder of TalentSpring (Acquired in 2010) Currently: CEO & Founder at SPARKON.com BryanStarbuck@hotmail.com 3. My talk 1st The Key to Pitching 2nd Managing the process 4. Your pitch will cover the common bases butThere is something critical to cover 5. Image: @5imon Investors start off pessimistic Interest Start Make this happen Low High 6. Image: @Theodore Scott This is what investors expect A company targeting a $40m to $80m year business model 7. Image: @Theodore Scott 95 of 100 companies go after too small of a market 8. Image: @Theodore Scott This is what they want Able to reach > $100m rev for Angels. VCs want > $400m or > $800m 9. They dont care about the rest of your business Until they TRULY BELIEVE the market size is big enough 10. Focus on WOWing these 4:" There is a REAL & signicant problem for the customer"1" 2" 3" 4" This company has a real solution. " No other solution exists in the market" People will pay " (this companys prices)" This is a HUGE market" 11. After that, demonstrate that the rest is rock solid 12. 2nd Part: Managing the fund raising process 13. Process with Angels" Pitch & Demo" They review Financials" Due Diligence (If angel group)"3 Get all of their questions answered"4 Rapport & trust"5 Sign legal docs & close, close, close"6 2 1 14. ! VCs: A single VC rm" ! Pitch & demo! ! Meeting #2 to #4. ! ! Sometimes with others at the rm! ! Present to Monday partner meeting! ! Get term sheet! ! Negotiate & sign term sheet! ! Sheppard details until big stack of legal docs signed! 15. ! Important (1 of 2)" ! Herd mentality:! ! If they see other investors moving and they might lose out, the investor will move! ! True for both Angels and VCs! ! You need to force enough demand from investors to get the deal closed! ! Have polished pitch deck, pitch and nancials! ! Angel groups are good outside of the bay area! ! Quote from the bay area, Pitching to a bay area angel group is a sign of a bad company! 16. ! Important (2 of 2)" ! Get a rent-a-CFO for Projected nancials:! ! $150 to $270 per hour! ! 3 to 7 hours to create very detailed projected nancials! ! Asked for a xed price project! ! Get a very high quality one. They dont cost very much more! 17. ! The process aka many VC " ! Progress in batches of ~6 VC rms! ! Hold rst meeting! ! See which progress! ! Start another batch as a smaller number progress to later stages! ! In 2 months, work to have several batches progress so more than one arrive to a term-sheet! ! More than one greatly improves chances of any funding and improving terms! ! After 4 months, VCs will have heard about you and likely think you are a stale deal. Then meeting with them will likely be ineffective! 18. ! Pre-Money Valuation" If raising under $2 million! If raising over $2 million from VCs:! ! Often valuation above PLUS capital raised! ! Investors get ~33% to 48% of round! 19. ! Lessons about funding" $1m to $2 round is often better than a $500k round! Funding goes hot and cold! ! Startups are cheap to run early, but! ! So it costs $50k to $70k per month! "Year 1! " " Fund raising is hard! Near impossible!" "Idea !Validate! !Alpha !Beta !Launch! !Traction Building! "Year 2! "Small traction !Medium Traction ! !Huge traction / Protable! Raising your series A after your Seen round closes! 20. THE END" " Backup slides" 21. Finding Investors" 22. Finding Angels" ! AngelList! ! BEST: Great advisors and your network! ! Top big law rms can make some intros! ! It is hard to scale, but doable. (Lots of work)! ! Requires tons of networking! ! Often with CEOs who have raised capital before! ! Move to the bay area for 5 months! ! Linked-In! ! Tons of scouting for people who t the prole! 23. Finding VCs" ! Research to nd WHICH ones you want to target rst! ! Very important: Pitching VCs who dont match will block raising capital! ! Find ones that work at your stage, industry, etc.! ! Easy to nd the list of VCs. TheFunded, AngelList, etc.! ! Top startup law rms can make intro, as a backup! ! Intro from CEO they funded is the best! ! Target the right partner. ! ! Start with Partner and above. Not associates! 24. ! Pitch-Deck" ! The Alliance of Angels pitch deck may be the best template! 25. THE END" " Q & A"