Get Funded: Financing Your Startup
 

Get Funded: Financing Your Startup

on

  • 1,258 views

Financing your company is easier said than done. Fortunately, there are a number of options to raise money. Learn how from Dan Allred and Smith Anderson from SVB, and Chuck Goldman from Apperian. ...

Financing your company is easier said than done. Fortunately, there are a number of options to raise money. Learn how from Dan Allred and Smith Anderson from SVB, and Chuck Goldman from Apperian. Learn more from the experts by visiting http://intelligent.ly/learn

Statistics

Views

Total Views
1,258
Views on SlideShare
1,253
Embed Views
5

Actions

Likes
2
Downloads
38
Comments
0

1 Embed 5

https://twitter.com 5

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Get Funded: Financing Your Startup Get Funded: Financing Your Startup Presentation Transcript

  • presents Back to Basics: Financial Fundamentals For Startups
  • Get Funded: Financing your Startup August 13, 2013 Smith Anderson Silicon Valley Bank (617) 796-6958 Smanderson@svb.com Twitter: @SmithTown561 Dan Allred Silicon Valley Bank (617) 796-6904 dallred@svb.com Twitter: @dgallred http://danallred.tumblr.com
  • Chuck Goldman Apperian CEO and Co-Founder cgoldman@apperian.com Arye Barnehama Melon Co-Founder arye@usemelon.com
  • Why We’re Here Sources of Financing Overview Crowdfunding: A Kickstarter case study. Equity: What you need to know. Debt: When is it right for you.
  • Financing partners take risk
  • Bootstrapping   • Vendor  financing    Trade  credit    Stretching  payables • Customer  financing    Prepayments,  deferred  revenue • Self  financing    Working  without  pay    Ge>ng  others  to  do  the  same    Personal  credit,  credit  cards,  etc.
  • Bootstrapping   • Amount  of  capital    RelaAvely  small  amounts • Use  of  capital    Working  capital  (brings  future  cash  inflow    forward  OR  delays  current  cash  ouElow)   • Stage  of  company    Useful  at  all  stages,  especially  startup. • Who  bears  the  risk  &  what  type    Personal  risk  early,  bankruptcy  risk  later    Working  capital  risk  (risk  of  insolvency)
  • Crowdfunding deep dive
  • Crowdfunding  Then..
  • Crowdfunding  Then.. • 1884  this  project  ran  out  of   money.  
  • Crowdfunding  Then.. • 1884  this  project  ran  out  of   money.   • Joseph  Pulitzer  wrote  an   arAcle  asking  for  donaAons   to  fund  project.  
  • Crowdfunding  Then.. • 1884  this  project  ran  out  of   money.   • Joseph  Pulitzer  wrote  an   arAcle  asking  for  donaAons   to  fund  project.   • $100K  raised  to  finish  this   project  in  just  under  6   months
  • Crowdfunding  Then.. • 1884  this  project  ran  out  of   money.   • Joseph  Pulitzer  wrote  an   arAcle  asking  for  donaAons   to  fund  project.   • $100K  raised  to  finish  this   project  in  just  under  6   months • 125K  people  donated  to  this   fund.  
  • Crowdfunding  Then.. • 1884  this  project  ran  out  of   money.   • Joseph  Pulitzer  wrote  an   arAcle  asking  for  donaAons   to  fund  project.   • $100K  raised  to  finish  this   project  in  just  under  6   months • 125K  people  donated  to  this   fund.   • GiU  from  France
  • Crowdfunding  Then.. • 1884  this  project  ran  out  of   money.   • Joseph  Pulitzer  wrote  an   arAcle  asking  for  donaAons   to  fund  project.   • $100K  raised  to  finish  this   project  in  just  under  6   months • 125K  people  donated  to  this   fund.   • GiU  from  France
  • Crowdfunding:  Today  and  Beyond Product/Project • Currently  thriving – Pledgie  (2006) – Sellaband  (2006) – IndieGoGo  (2008) – GiveForward  (2008) – Kickstarter  (2009) – RocketHub  (2009) – Fundly  (2009) – GoFundMe  (2010) – Appsplit  (2010)   – Microventures  (2010) – Fundageek  (2011) • Incredibly  powerful  momentum  in  the   last  few  years.     Equity   • Not  legal…yet • JOBS  Act  passed  July  10th • Accredited  vs.  non-­‐accredited.      
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   Not  to  Kickstart? • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     Not  to  Kickstart? • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   Not  to  Kickstart? • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. Not  to  Kickstart? • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. • Almost  immediate  access  to   cash Not  to  Kickstart? • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. • Almost  immediate  access  to   cash Not  to  Kickstart? Ø No  secrets  to  hide  from   compeAAon.   • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. • Almost  immediate  access  to   cash Not  to  Kickstart? Ø No  secrets  to  hide  from   compeAAon.   Ø Price  point • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. • Almost  immediate  access  to   cash Not  to  Kickstart? Ø No  secrets  to  hide  from   compeAAon.   Ø Price  point Ø Go  to  Market  Strategy   • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. • Almost  immediate  access  to   cash Not  to  Kickstart? Ø No  secrets  to  hide  from   compeAAon.   Ø Price  point Ø Go  to  Market  Strategy   Ø Runway   • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. • Almost  immediate  access  to   cash Not  to  Kickstart? Ø No  secrets  to  hide  from   compeAAon.   Ø Price  point Ø Go  to  Market  Strategy   Ø Runway   Ø Timing • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Crowdfunding:  A  Kickstarter  story   To  Kickstart?   • Demand/market  validaAon   done  before  you  go  to   market.     • Almost  zero  risk  if  market   • MarkeAng  story  done  for   you. • Almost  immediate  access  to   cash Not  to  Kickstart? Ø No  secrets  to  hide  from   compeAAon.   Ø Price  point Ø Go  to  Market  Strategy   Ø Runway   Ø Timing Ø Funding  Commitments   • Kickstarter    -­‐  Launched  in  2009 • $750MM  funding  46,000  projects. • 4K  currently  in  progress,  110,000  total • Melon  Kickstarter
  • Is  it  right  for  you? Probably • Hardware  with  a  specific   cost  for  prototype. • Consumer  facing  projects • Micro-­‐market  products • Market  unknown  products.   • One-­‐off  garage  projects • ArAsts • Philanthropists Probably  Not • Large  companies • Complex  products  with   intricate  sales  cycles • Infrastructure  or  enterprise   products  that  are  unlikely  to   touch  consumers.
  • Angel Investors
  • Angels • Class  of  capital    Equity  (ownership  in  company) • Structure/organizaAon    High  net  worth  (HNW)  individuals    Some  groups  and  clubs    Some  “super  angel”  funds • MoAvaAon/incenAves    Upside  –  stock  appreciaAon    Most  look  for  an  “exit”  (i.e.  liquidity  event
  • Angels • Amount  of  capital    $100k  to  $2mm • Use  of  capital    Growth  capital  (i.e.  new  cash  for  growth) • Stage  of  company    Early-­‐stage,  product/market  development • Who  bears  the  risk  &  what  type    Angel  investor  bears  risk    Product/market  risk,  execuAon  risk
  • Angels • Structure  of  investment    Purchase  of  common  or  preferred  stock    SomeAmes  converAble  debt  iniAally • Price  of  investment    25-­‐50%  of  company’s  stock    ConverAble  debt  ~25%  min  ownership • Monitoring  the  investment    ReporAng    Some  angels  (or  groups)  want  BOD  seat • Value  add    $$$,  industry  experAse,  connecAons
  • Venture Capital
  • Venture  Capital   • Class  of  capital    Equity  (ownership  in  company) • Structure/organizaAon    Limited  partnership    10  year  funds  (invest,  grow  &  harvest) • MoAvaAon/incenAves    Upside  (30%  IRR  and  3x  overall  for  fund)    Looking  for  an  “exit”  (i.e.  liquidity  event)
  • Venture  Capital • Amount  of  capital    $1mm-­‐20mm      Some  seed  acAvity  as  well • Use  of  capital    Extreme  growth  capital • Stage  of  company    Early-­‐stage  and  growth  stage • Who  bears  the  risk  &  what  type    Limited  partners  and  general  partners    Product,  market,  tech  &  execuAon  risk
  • Venture  Capital • Structure  of  investment    Purchase  of  preferred  stock    SomeAmes  converAble  debt  iniAally • Price  of  investment    20-­‐40%  of  company’s  stock • Monitoring  the  investment    ReporAng    BOD  seats    RedempAon  rights,  registraAon  rights • Value  add    $$$,  industry  experAse,  capital  markets
  • Debt
  • Debt • Class  of  capital    Debt  (senior  debt  as  discussed  here) • Structure/organizaAon    Banks  (regulated  to  accept  deposits)    Finance  companies  (corporaAons)    Debt  funds  (limited  partnerships) • MoAvaAon/incenAves    Banks  –  interest  &  fee  income    Finance  companies,  funds  –  interest    Venture  debt  –  warrant  income
  • Debt • Amount  of  capital    $1mm-­‐100mm • Use  of  capital    Working  capital    Growth  capital    AcquisiAon  capital • Stage  of  company    All  stages • Who  bears  the  risk  &  what  type    The  lender
  • Debt • Structure  of  investment    Senior  secured  credit • Price  of  investment    Interest  and  fees  for  established  co’s    Plus  warrants  for  pre-­‐profit  co’s • Monitoring  the  investment    ReporAng    Financial  covenants    AffirmaAve  &  negaAve  covenants • Value  add    $$$,  connecAons,  patern  recogniAon
  • Case study
  • • The  early  days…  -­‐Chuck  –  director  of  enterprise  at  Apple  -­‐Launches  Apperian  in  January  2009  -­‐App  development  for  enterprise  clients  -­‐Fee  for  service  work     • How  did  I  finance  the  business?
  • • The  early  days…  -­‐Bootstrapping  -­‐Self-­‐financing  (and  sacrifice)  -­‐Vendor  relaAonships  -­‐Customer  financing  
  • • Six  months  later…  -­‐The  dogs  are  eaAng  the  dog  food  -­‐iPhone  is  exploding  in  the  enterprise  -­‐Recurring  service  revenues  -­‐Vision  for  EASE  (Enterprise  ApplicaAon   Services  Environment)  plaEorm How  did  I  finance  the  business?
  • • Six  months  later…  -­‐$1mm  seed  round  -­‐Common  Angels  &  Launch  Capital  -­‐AddiAonal  $500k  in  Q1-­‐10
  • • Q1-­‐10:  the  one  year  old  startup…  -­‐Begin  developing  EASE  plaEorm  -­‐Acquihire  a  small  development  shop  -­‐Focus  solely  on  enterprise  app  clients  -­‐Begin  transiAoning  from  services  to  products   How  did  I  finance  the  business?
  • • Q1-­‐10:  the  one  year  old  startup…  -­‐$500k  SVB  line  of  credit  -­‐Leverage  A/R  with  enterprise  clients  -­‐Smooth  out  cash-­‐flow  as  R&D  expense  ramps  -­‐Bridge  between  payrolls  –  when  flush  with  A/ R  but  low  on  cash,  uAlize  line  of  credit  for   payroll,  expenses,  etc.
  • • Q1-­‐11:  the  two  year  old  startup…  -­‐Enterprise  mobility  is  hot!  -­‐BYOD,  iPad  in  Xmas  2010  -­‐Apperian  building  out  management  team  -­‐Customers  converAng  from  service  contracts  to   EASE  plaEorm    -­‐  Key  move:  move  to  recurring  SaaS  Product How  did  I  finance  the  business?
  • • Q1-­‐11:  the  two  year  old  startup…  -­‐$9.5mm  series  A  -­‐NorthBridge,  Bessemer,  Kleiner  Perkins  -­‐1st  enterprise  investment  from  KP  iFund  -­‐Over  2  years  of  cash  runway
  • • The  past  two  years…  -­‐ConAnued  market  expansion  -­‐MDM,  MAM,  BYOD,  etc.  -­‐Enterprise  security,  compliance,  etc.  -­‐DistribuAon  partnerships • Personnel  growth – 5-­‐20  year  one,  40  by  year  three  and  70  year  four   How  did  I  finance  the  business?
  • • The  past  two  years…  -­‐$12.4mm  preempAve  series  B  in  Mar  ‘12  -­‐$4.6mm  series  B  extension  in  Jan  ’13  with   Intel  Capital  -­‐ConAnued  expansion  of  SVB  credit   relaAonship  each  year • Exit  Scenario  at  10x  revenue  –  Looking  at   market  trends…
  • Questions?
  • presents INSTRUCTOR Course Name Learn the skills you need to win, from people who’ve done it before visit