Making SaaS Businesses Work™.biz
Dave Key
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
.biz
Easy to do
Likely Commoditized
∂ Find Harder Problem
∂ Add sizzle
∂ Or sell the IP
MarketValue
Difficulty to Replicat...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Unique and Protectable IP
‫טּ‬ Early Mover Advantage
‫טּ‬ Larg...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ A Track Record of Success
Both the CEO and the Management Te...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ How Important is the Problem Solved?
‫טּ‬ How Good are the Al...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Time to Replicate Market Position
‫טּ‬ Time to Replicate Tech...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Limited Cash/High Cost of Capital
‫טּ‬ Limited Resources
‫טּ‬ ...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
Management Appropriate for the Stage
Advisors with Experience & ...
.biz
“I understand my market
and its needs, and my
competitors”
“I have an
idea” Angels,
Super Angels
Sweat equity, friend...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
Positive
Cash
Flow
Earnings
Revenue
Beta
Minimum Viable Product
...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
*businessmodelgeneration.com
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ The Model Quantizes Your Business
‫טּ‬ All Key Elements Addre...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ 100% of Startups “Pivot”
‫טּ‬ The “Coherency” of the Plan Sho...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
Investment Stage Investor Type Typical Amount Raised
Idea/Protot...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Typical Time to Close – 4 to 8 months
‫טּ‬ Often Follow-on fr...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
http://youtu.be/zngK13FMgXM
*Well a Parody…
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
Elevator
Pitch
Business
Summary
Investor
Pitch(es)
Business
Plan...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Your Company must be Differentiated
‫טּ‬ Totally Understand Y...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Who are You?
‫טּ‬ What is the Product or Service?
‫טּ‬ What is...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Plan on 15 to 30 Minutes plus Questions
‫טּ‬ Determine your a...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Presentation Excellence are “Table Stakes”
‫טּ‬ Passion is In...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ The Problem
‫טּ‬ Your Solution
‫טּ‬ Business Model
‫טּ‬ Underly...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Value of the Business
‫טּ‬ Your Market and Competition
‫טּ‬ Fi...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Help the Investor Meet their Goals
‫טּ‬ Show why You should b...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ The Lead Investor Selling the Deal Internally
‫טּ‬ The Term S...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
‫טּ‬ Founders Experience and Background Checks
‫טּ‬ Market Opportu...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
 Develop Idea
 Scope Total Addressable Market
 Develop Market...
.biz Making SaaS Businesses Work™cloudstrategies.biz
.biz
Dave Key
cloudstrategies.biz
cloudstrateiges.biz/blog
dave@cloud...
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How to Fund a Technology Business

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This presentation walks the Entrepreneur through the steps to raising Angel and Venture Capital. Topics include assessing the ability to raise capital, assessing the company's value, and a checklist for funding success.

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How to Fund a Technology Business

  1. 1. Making SaaS Businesses Work™.biz Dave Key
  2. 2. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz
  3. 3. .biz Easy to do Likely Commoditized ∂ Find Harder Problem ∂ Add sizzle ∂ Or sell the IP MarketValue Difficulty to Replicate Technology in Search of a Problem ∂ Expand Capabilities ∂ Partner to Create Value ∂ or Sell the IP Its All There ∂ Get Funding ∂ Go To Market ∂ Move Quickly Incomplete Ho-Hum Value ∂ Shelve It ∂ Reexamine Next Year ∂ or Sell the IP Keep Your Day Job
  4. 4. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Unique and Protectable IP ‫טּ‬ Early Mover Advantage ‫טּ‬ Large Time Requirement to Replicate ‫טּ‬ Strong Market Position ‫טּ‬ Strong Team with Unique Skills
  5. 5. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ A Track Record of Success Both the CEO and the Management Team ‫טּ‬ Friends with Money Super Angels each Investing $250K+ ‫טּ‬ A Superstar CTO Well Known in Technology Field or a World Class University Reputation
  6. 6. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz
  7. 7. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ How Important is the Problem Solved? ‫טּ‬ How Good are the Alternative Solutions? ‫טּ‬ How Passionate are the Customers? ‫טּ‬ How Willing are Customers to Pay? “The only thing that matters is finding product-market fit before you run out of cash” Marc Andreessen
  8. 8. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Time to Replicate Market Position ‫טּ‬ Time to Replicate Technology ‫טּ‬ Unique Team Skills ‫טּ‬ Fast Moving ‫טּ‬ No Concerns about Cannibalization ‫טּ‬ Slay the incumbent's cash cow ‫טּ‬ Manically Focused on a Single Problem ‫טּ‬ Unless you aren’t focused!
  9. 9. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Limited Cash/High Cost of Capital ‫טּ‬ Limited Resources ‫טּ‬ Hard to get Mind Share ‫טּ‬ No Viral Network Effect Initially ‫טּ‬ Lack of Access to Key Prospects ‫טּ‬ Investors can add value here
  10. 10. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz
  11. 11. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz Management Appropriate for the Stage Advisors with Experience & Credentials Complete Market Research Complete Business and Financial Model Blogosphere/Media Awareness Industry Analysts Accolades Enthusiastic Customers Strong Growth
  12. 12. .biz “I understand my market and its needs, and my competitors” “I have an idea” Angels, Super Angels Sweat equity, friends & family, existing business or consulting revenue “I’ve have my core team” “I have experienced advisors”“I can demonstrate its Value” Liquidity Event IPO, Acquisition “I have product delivery” VCs and Strategic Investors “I have revenue traction” “This venture is growing very rapidly”
  13. 13. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz Positive Cash Flow Earnings Revenue Beta Minimum Viable Product Prototype Concept
  14. 14. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz
  15. 15. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz *businessmodelgeneration.com
  16. 16. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ The Model Quantizes Your Business ‫טּ‬ All Key Elements Addressed ‫טּ‬ Revenue Sources, Use of Funds, Gross Margins of the Business ‫טּ‬ Cash Burn/Runway are Shown ‫טּ‬ Sensitivity to KPI Variations Shown ‫טּ‬ Gives You Credibility It will change, but your model shows you understand the guts of how the business could be run
  17. 17. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ 100% of Startups “Pivot” ‫טּ‬ The “Coherency” of the Plan Shows You Understand How the Business Could Work ‫טּ‬ Does each piece tie together logically and completely? ‫טּ‬ Investors want to See You Can Adapt * (but that’s ok)
  18. 18. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz
  19. 19. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz Investment Stage Investor Type Typical Amount Raised Idea/Prototype Ideation Principals’ Credit Cards $25K - $100K Product through Beta Friends and Family $50K - 200K First Revenue Angel/Super Angel $100K - $750K Early Traction – “A” Round Venture Capital $1M - $3M Market Development Venture Capital $3M - $10M Seek investors appropriate for your company stage
  20. 20. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Typical Time to Close – 4 to 8 months ‫טּ‬ Often Follow-on from Angel Financing ‫טּ‬ Find VCs whose Focus Matches Yours ‫טּ‬ Find the Partner who Knows Your Space ‫טּ‬ Get Referred by a Respected Associate ‫טּ‬ 2 to 4 Page Business Summary is Best Intro ‫טּ‬ Follow-up with the more Detailed Plan and Financial Model ‫טּ‬ Work to get Multiple Advocates in the Firm
  21. 21. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz http://youtu.be/zngK13FMgXM *Well a Parody…
  22. 22. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz
  23. 23. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz Elevator Pitch Business Summary Investor Pitch(es) Business Plan Term Sheet Due Diligence Deal Documents Closing Get to know investors before formally pitching to them…
  24. 24. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Your Company must be Differentiated ‫טּ‬ Totally Understand Your Business ‫טּ‬ The ability to answer hard questions is essential ‫טּ‬ Its OK to have a few Missing Pieces ‫טּ‬ As long as you know what’s missing ‫טּ‬ Don’t Sour Investors with a Mediocre Pitch ‫טּ‬ You won’t get a second chance
  25. 25. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Who are You? ‫טּ‬ What is the Product or Service? ‫טּ‬ What is Value Proposition? ‫טּ‬ Why Should I Care? ‫טּ‬ What is Your Market? ‫טּ‬ Who are Your Customers? ‫טּ‬ Differentiate – What is Unique! All in less than 60 seconds
  26. 26. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Plan on 15 to 30 Minutes plus Questions ‫טּ‬ Determine your actual time allocation before the meeting ‫טּ‬ Interaction is More Important than Your Pitch ‫טּ‬ If you are losing your audience, deviate from your pitch ‫טּ‬ You’ll Give the Pitch to the other Partners Later ‫טּ‬ (if you make the cut..)
  27. 27. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Presentation Excellence are “Table Stakes” ‫טּ‬ Passion is Indispensable ‫טּ‬ Include the Team (3 to 4 total) ‫טּ‬ Encourage Interactivity ‫טּ‬ Show you are “Coachable” ‫טּ‬ Make every presentation your best ‫טּ‬ Be Capable of Answering Any Question
  28. 28. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ The Problem ‫טּ‬ Your Solution ‫טּ‬ Business Model ‫טּ‬ Underlying Magic/Technology ‫טּ‬ Marketing and Sales ‫טּ‬ Competition ‫טּ‬ Team ‫טּ‬ Projections and Milestones ‫טּ‬ Status and Timeline * ‫טּ‬ Summary and Call-to-Action * blog.guykawasaki.com/2005/12/the_102030_rule.html
  29. 29. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Value of the Business ‫טּ‬ Your Market and Competition ‫טּ‬ Fit for Their Firm ‫טּ‬ Your Management Team ‫טּ‬ The Passion ‫טּ‬ Your Ability to Think-on-Your-Feet ‫טּ‬ The Mutual Chemistry ‫טּ‬ Risk Their Decision is if to Move to the Next Step
  30. 30. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Help the Investor Meet their Goals ‫טּ‬ Show why You should be in the “Funded 1%” ‫טּ‬ Make them Excited about You and Your Team ‫טּ‬ Show You can Answer all their Questions ‫טּ‬ Give them a Sense of Urgency to Proceed ‫טּ‬ Disclose Major Issues (showing your trustworthiness) ‫טּ‬ Secure the Next Meeting
  31. 31. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ The Lead Investor Selling the Deal Internally ‫טּ‬ The Term Sheet & Negotiation ‫טּ‬ The Due Diligence Process (next slide) ‫טּ‬ Creating and Finalizing Deal Documents ‫טּ‬ Two to six weeks despite what they say ‫טּ‬ You’ll pay all legal costs ‫טּ‬ The Close
  32. 32. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz ‫טּ‬ Founders Experience and Background Checks ‫טּ‬ Market Opportunity/Size Validation ‫טּ‬ Competitive Analysis – Current and Future ‫טּ‬ Barriers to Entry Assessment ‫טּ‬ Intellectual Property Assessment ‫טּ‬ Both advantages and risks ‫טּ‬ Customers and Industry Analyst Opinions ‫טּ‬ Financial Model and Cash Burn Credibility
  33. 33. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz  Develop Idea  Scope Total Addressable Market  Develop Market Positioning  Raise “Friends and Family” Cash  Build Team  Create legal entities  Get cap table right!  Build Minimal Viable Product  Get Advisors Prototype on Real Users Get Customer Traction Develop Elevator Pitch Create Business Plan Research Ideal Investors Build Business Model Create Pitch Deck Prepare for Due Diligence Raise investor capital
  34. 34. .biz Making SaaS Businesses Work™cloudstrategies.biz .biz Dave Key cloudstrategies.biz cloudstrateiges.biz/blog dave@cloudstrategies.biz +1 949/887-4401

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