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Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
Startup Fund raising and raising capital
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Startup Fund raising and raising capital

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  • 1. Raising Capital! A guide for First-Time Founders Fo from ve r internet startu nture ca ps 
 pitalists and ang els"Bryan Starbuck Linkedin.com/in/bryanstarbuckFounder/CEO of Empower.me about.me/bryanstarbuckFormer Founder/CEO of TalentSpring (Acquired in 2010)
  • 2. Pitch-Deck!" The Alliance of Angels pitch deck may be the best template" " BLOG: bryanstarbuck.typepad.com!
  • 3. CRITICAL:! !Understand the pitch from the investor’s perspective!
  • 4. They can start off hesitant!A warm trusted introduction is important whenever possible" 95% of companies I see aren’t good enough. Let’s see about these guys" " BLOG: bryanstarbuck.typepad.com!
  • 5. Focus on WOWing with these 4:!1 2 This is a REAL & They have a real huge problem for solution. No solution in the market! the customer!3 4 People will pay 
 This is a HUGE (that amount)! market! " BLOG: bryanstarbuck.typepad.com!
  • 6. They switch to being impressed! After they see those 4 critical areas"They are in the top 5% of companies I see." " Now I focus on blockers" " BLOG: bryanstarbuck.typepad.com!
  • 7. Make sure these won’t kill the company!" Great team"" Customer acquisition plan"" Sales model"" Content or partnerships"" Able to get funding"" Exits are available"" This is a market I like" I think their plans in all of these areas will succeed. Why don’t I invest?"ANSWER: Rapport, trust, terms, team and finalizing details determine final answer." " BLOG: bryanstarbuck.typepad.com!
  • 8. Finding Investors!
  • 9. Finding Angels!" AngelList"" BEST: Great advisors and your network"" Top big law firms 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 fit the profile" " BLOG: bryanstarbuck.typepad.com!
  • 10. Finding VCs!" Research to find WHICH ones you want to target first" " Very important: Pitching VCs who don’t match will block raising capital" " Find ones that work at your stage, industry, etc."" Easy to find the list of VCs. TheFunded, AngelList, etc."" Top startup law firms 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" " BLOG: bryanstarbuck.typepad.com!
  • 11. Closing funding!
  • 12. Closing Angels!1 Pitch & Demo! 2 They review Financials! 3 Due Diligence (If angel group)! 4 Get all of their questions answered! 5 Rapport & trust! 6 Sign legal docs & close, close, close! " BLOG: bryanstarbuck.typepad.com!
  • 13. VCs!" Pitch & demo"" Meeting #2 to #4. " " Sometimes with others at the firm"" Present to Monday partner meeting"" Get term sheet"" Negotiate & sign term sheet"" Sheppard details until big stack of legal docs signed" " BLOG: bryanstarbuck.typepad.com!
  • 14. 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 financials"" 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”" " BLOG: bryanstarbuck.typepad.com!
  • 15. Important (2 of 2)!" Get a rent-a-CFO for Projected financials:" " $150 to $270 per hour" " 3 to 7 hours to create very detailed projected financials" " Asked for a fixed price project" " Get a very high quality one. They don’t cost very much more" " BLOG: bryanstarbuck.typepad.com!
  • 16. The VC process!" Progress in batches of ~6 VC firms" " Hold first 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" " BLOG: bryanstarbuck.typepad.com!
  • 17. 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" " BLOG: bryanstarbuck.typepad.com!
  • 18. Lessons about funding! $1m to $2 round is often better than a $500k round" " Startups are cheap to run early, but…" " So it costs $50k to $70k per month" Funding goes hot and cold"Year 1" Idea ! "Validate" "Alpha "Beta "Launch" "Traction Building" !Year 2" Small traction "Medium Traction ! ! " "Huge traction / Profitable" Raising your series A after your Seen round closes! ! Fund raising is hard" ! Near impossible" " BLOG: bryanstarbuck.typepad.com!
  • 19. Seattle Notes!" Using a convertible note is the best. The valley does that for seed rounds"" Almost all Seattle investors demand a priced round. By policy"" Watch valuation very closely in Seattle"" Many people are moving to the valley currently, purely because of funding challenges in Seattle in the last 2 years"" I HIGHLY RECOMMEND moving to the bay area for 5 months to raise capital there. Then return." " BLOG: bryanstarbuck.typepad.com!
  • 20. THE END! ! Q & A!
  • 21. Next Steps for Learning (1 of 3)!People often ask how to learn more. Here is the best way:" ABSOLUTE Must Read! Strategic Thinking or Execution! Venture Deals On Amazon" Innovator’s Dilemma On Amazon" By: Brad Feld" By: Clayton Christensen" " " " Crossing the Chasm On Amazon" Art of the Start On Amazon" By: Geoffrey Moore" By: Guy Kawasaki" " " Blue Ocean Strategy On Amazon" " By: W. Kim" " " The Lean Startup On Amazon" " By: Eric Ries" Good to Great On Amazon" " By: Jim Collins" " Maverick On Amazon" Other! By: Ricardo Semier" " " The Ten-Day MBA On Amazon" The Four Steps to the Epiphany On Amazon" By: Steven Silbiger" By: Steven Blank" " " Founders at Work On Amazon" Inspiring Excellence On Amazon" By: Jessica Livingston" By: Michael Schutzler" " " " ABSOLUTE Must Read" " BLOG: bryanstarbuck.typepad.com!
  • 22. Next Steps for Learning (2 of 3)!People often ask how to learn more. Here is the best way:" Marketing! Other! The 22 Immutable Laws of Branding On Amazon" Founders at Work On Amazon" By: Al Ries" By: Jessica Livingston" " " " " Full Frontal PR On Amazon" Startup Weekend On Amazon" By: Richard Laermer" By: Marc Nager" " " " Positioning: The Battle for your Mind On Amazon" Don’t Make Me Think On Amazon" By: Jack Trout" By: Steve Krug" " " The Strategy and Tactics of Pricing On Amazon" " By: John Hogan" " " Purple Cow On Amazon" By: Seth Godin" " " ABSOLUTE Must Read" " BLOG: bryanstarbuck.typepad.com!
  • 23. More Learning (3 of 3)! " (My) Bryan Starbuck’s Blog on Company Building:" " http://bit.ly/StarbuckBlog" " Dave McClure – Marketing Model for Startups: " " http://500hats.typepad.com/500blogs/2007/06/internet-market.html" " http://vimeo.com/26277733" " http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version" " http://www.slideshare.net/dmc500hats/startup-metrics-101-367863" " More from Dave McClure:" " http://www.slideshare.net/dmc500hats/why-not-to-do-a-startup" " http://www.slideshare.net/dmc500hats/do-marketing-its-not-evil" " Presenting to Investors:" " http://www.slideshare.net/dmc500hats/how-to-pitch-a-vc-aka-startup-viagra-how-to-give-a-vc-a-hardon" " Strategic economics of SaaS https://salesforce.adobeconnect.com/_a13852757/buildingasuccessfulsaasco/" " Startup Marketing: http://howtolaunchastartup.com/2011/06/20/21-must-read-resources-for-start-up-marketing/" " 57 Things I’ve Learned Founding 3 Tech Startups: http://betashop.com/post/1417413108/57-things-ive-learned-founding-3-tech-companies" ABSOLUTE Must Read" " BLOG: bryanstarbuck.typepad.com!
  • 24. The END!Next Steps:! !" Create your company and have a BLAST"" ! Join the “MicrosoftßàStartup Learning” mailing list" " Join here: http://groups.google.com/group/Knowledge-Startup-to-Microsoft"" Bryan Starbuck’s Blog: bryanstarbuck.typepad.com"

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