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  • 1.  "AN ENTREPRENEUR’S PERSPECTIVE: LAUNCHING A SCALABLE STARTUP” ------- A FOUR PART SERIES Tom Nora@tomnora | tomnora2020 @ gmail.com | 310-855-2199  
  • 2. THREE PART SERIES•  Part  1  –  First  Mee)ng  to  Launch  • Part  2  –  First  Funding,  Funding  Lifecycle  •  Part  3  –  Idea  to  Product,  Produc)za)on  •  Part  4  –  The  Turnaround  –  Fixing  your  Revenues  
  • 3. TABLE OF CONTENTSII  -­‐  First  Funding  –  Funding  Lifecycles   1.  Assump9ons  &  Caveats   2.  Funding  Cycles  >  The  Seed  Cycle   3.  Goals  Alignment   4.  Necessary  Ingredients   5.  The  “Pitch”  
  • 4. MY BACKGROUND•  Educated  as  an  Engineer   Ö  Electrical,  BioMedical,  Computer  Science   Ö  USC,  Stanford,  NASA  •  Involved  in  Tech  Startups  past  20+  years   •  mostly  as  a  Business  Execu@ve  –  Sales,  Marke@ng,  CEO   •  Also  some  Non-­‐Tech  •  Deep  Understanding  of  SoQware  and  Systems  Architectures   Ö  Internet,  Real-­‐@me,  Social  Graph,  Seman@c,  Data  Mining,   AI,  Machine  Learning   Ö  App  Dev  Tools  Design  -­‐  C++/Java/OOP,  Simula@on,  Network   Ö  3D  Graphics,  Semiconductor,  MP  
  • 5. STARTUP EXECUTIVE MGMT EXPERIENCE•  Have  led  5  Startups  as  CEO,  3  as  VP  Sales/Marke9ng   •  2  IPOs,  20+  Acquisi@ons,  2  Liquida@ons  •  Have  worked  in…   •  Silicon  Valley  -­‐  Palo  Alto,  Mountain  View,  San  Jose,  San  Francisco,   Berkeley,  Pleasanton   •  Other  –  L.A.,  Portland,  Corvallis,  Boulder,  New  Mexico,  Aus@n,  Salt   Lake  City,  Cambridge,  NYC,  Europe  •  Currently  Startup  Consultant  in  Launch,  Funding,  Organic   Growth,  M&A,  IPO,  Board  Development  
  • 6. CURRENT WORKÖ  Consul9ng  –  1  project,  looking  for  1  more  Ö  Non-­‐Profit  work   Ö  Get  Good  Karma  Now  –  plaYorm  for  NPOs   •  getgoodkarmanow.com   Ö  Helping  build  the  So  Cal  Startup  world   •  This  group,  Advisor,  Incubators,  SW  Engineer  Club   •  Launch  Co-­‐Working  /  Incubator  space  ?    2013?  Ö  Stealth  Project  =  future  of  Job  Seeking   Ö  Looking  for  partners  
  • 7. ASSUMPTIONS•  Up  and  Running  •  Building  for  Growth  •  “Investor-­‐Ready”   Ö  Strategy,  Presenta@ons,  Financials,  Early  Fans,   Demos   Ö  You’re  Ac9vely  Looking  for  Ini9al  Funding   •  The  Seed  Round,  First  Money,  Post  F&F  •  More  Than  1  Person,  “2+”  is  best  •  You  Truly  Believe   Ö  That  you  have  an  amazing  idea  &  path  to   success  •  L.A.  Startup  Scene  will  get  more  like  Silicon  Valley   Ö  More  Real  Companies!  (Tech  and  Non-­‐Tech)  
  • 8. CAVEATS This  Talk  is  Oversimplified,  Idealized   My  Opinions,  Experiences  Hopefully  Foster  Conversa9on,  New  Cos.  Here  This  Is  A  Very  Small  Part  of  the  Whole  Puzzle  
  • 9. SO HERE WE GO…
  • 10. HOW FUNDING CYCLES WORK•  Usually  Mul9ple  Rounds   Ö  Seed  -­‐  then  Round  1  or  A  …  Round  2  or  B  …   Ö  Loans,  Mezzanine,  IPO,  Sale,  (Liquida@on)   Ö  The  Dream  is  One  Round  then  Profitable  Growth   Ö  Every  One  Is  Different,  Some  Ain’t  Preey  •  Forcing  Factors  =  Valua9on  vs.  Cash  on  Hand  •  Can  Go  Several  Years  Between  Rounds  
  • 11. WHAT INVESTORS DESIRE •  Strong  Revenue  Growth   •  Exponen9al  Valua9on  Growth   Valua9on  Revenue   Seed   A   B  
  • 12. MORE TYPICAL •  S@ll  Fundable  Revenue   Valua9on  
  • 13. SEED = THE FIRST MONEY IN…•  =  Seed  Round,  Angel  Round,  Friends  &  Family,  etc.  •  Usually  Pre-­‐Revenue  •  The  Cleanest  round  •  Most  Expensive  Round  (Equity)  •  Anywhere  from  ~$250K  to  $5  Million  in  Tech   Ö  In  L.A.  $250K  to  ~$2  Million   Ö  many  deals  currently  in  L.A.  •  Some  Pre-­‐Seed  these  days  -­‐  low  $$  (not  usually  good)  •  Your  First  Major  Milestone   Ö  We’re  a  Real  Company  Now   Ö  Credibility,  In  The  Club  
  • 14. PURPOSE OF SEED ROUND•  Catalyst  -­‐  Get  Things  Started,  Accelerate  •  Get  an  Office  •  Travel  •  Pay  Consultants,  Contractors  •  Build  Out  Prototype,  Proof  of  Concept  •  Market  Launch  •  (Maybe)  Pay  Salaries          Boiom  Line  Goal  =              Get  it  to  Next  Level,  Next  Round  
  • 15. SOURCES OF SEED FUNDING•  Friends  &  Family,  Customer  •  Ins9tu9onal,  Government  •  Angel  •  Super  Angels   Ö  Facebook  –  Peter  Thiel  +  Reid  Hoffman  -­‐  $500K  •  New!  -­‐  Crowdfunding   •  Kickstarter,  indiegogo,  crowdfunder  (L.A.  based)  The  Big  Leagues  •  Venture  Funds     Ö  Wide  Range  Here  –  Tier  I,  II,  III   Ö  “Baby  Seed  Funds”  inside  VC  Funds  
  • 16. NECESSARY INGREDIENTS•  BIG  Market  •  Convincing  Scalability  Story   Ö  VCs  and  Angels  need  High  Growth   Ö  10x  ROI  Opportunity  –  very  important  •  Charter,  Goals,  Objec9ves  •  Market  Understanding   Ö  Ready  to  Answer  Most  Ques@ons  •  Support  System   •  Experienced  Advisors,  Fans,  Friends,  This  Group   •  Most  Common  Missing  Piece  •  Readiness  +  Enthusiasm  of  all  Founders   Ö  Timing  Is  Everything   Ö  The  “Day”  Job(s)?  
  • 17. MORE NECESSARY INGREDIENTS•  Technology  Roadmap  •  Understanding  your  Valua9on     Ö  Need  to  Research,  Discuss,  Be  Comfortable  •  Adaptability   Ö  Funding  Sources  will  have  other  op@ons   Ö  Things  Change  OQen  around  you   Ö  They  will  call  you  on  what  you  said  6  months  ago  •  Tough  Skin   Ö  VCs  and  Angels  can  be  Brutal   Ö  Many  Great  Startups  were  Discouraged  •  Timing,  Orchestra9on  
  • 18. CALCULATING & NEGOTIATING VALUATION(Startups  Almost  Always  undervalued  first  @me  out)  •  Get  Help  Here  –  Support  System,  Experts  •  Cover  All  The  Bases  •  Respect  PR,  Marke9ng  •  Leverage  SM  •  Passion  •  Don’t  Lose  Control  of  the  Room  
  • 19. HOW TO MAXIMIZE VALUATION•  Always  Strive  for  Uniqueness   Unproven   You’re   Uniqueness, Amazingness - - - > Get  Trac9on  Soon!   Gold   (Google,  Apple)   X Hard  To  Con9nue   Growth,     Lifestyle  Co.   (Zynga,  Groupon,  Yahoo,  LI)   Traction, Revenue - - - >
  • 20. THE “PITCH”•  Control  The  Environment  •  Cover  The  Usual   Ö  Market  Size  >  Specific  Opportunity   Ö  Product,  Service,  Other   Ö  Corporate  Growth  Plan,  Exper9se   Ö  Specific  Funding  Needed  •  Team   Ö  Sprinkle  these  people  all  over  the  pitch   Ö  Support  System/“Family”  
  • 21. THE “PITCH”•  Keep  it  Real  •  Less  Slides,  More  Discussion   Ö  Move  on  to  Conversa9on  Quickly   Ö  May  Never  Get  to  your  Slides  1st  Mee@ng  •  Can  Take  Many  Forms   Ö  Oqen  not  usually  an  actual  Pitch  •  Show  Intensity/Focus  for  what  you’re  doing  •  Be  ready  to  get  “swung  at”  •  Most  Important  -­‐  -­‐  Chillax  
  • 22. WHY INVESTORS SAY NO•  The  Team   Ö  Weak  Team  Members,  Incomplete   Ö  Spooked,  Lack  Confidence  •  Lack  of  Uniqueness,  Boring  Story   Ö  Any  story  can  be  exci9ng  •  Start  and  Stop,  lose  momentum   Ö  Not  a  Real  Deal  •  No  Support  System,  Valida9on  
  • 23. EXAMPLE - FACEBOOK 1 4 FUNDING ROUNDS ST
  • 24. PERSONAL EXAMPLE – ACTUAL REVENUE EXPONENTIAL REVENUE GROWTH
  • 25. PERSONAL EXAMPLE – ACTUALS EXPONENTIAL REVENUE GROWTH $8  M  Mezz   (Debt)   $100  M  val   4X,  20X     $4.2  M     A  Round   $25  M  val   $1.5  M   5X     SEED  $5  M  val    
  • 26. CONCLUSIONS•  Raising  a  Seed  Round  is  a  Sales  Job   Ö  Respect  it  as  such   Ö  Don’t  Duck  from  Nega9ve  Feedback,  but  know   when  not  to  follow  it  •  Use  your  Support  Structure   Ö  Validate  your  story  with  Experts,  Friends,   Associates  •  Make  a  Schedule  and  Move  Fast  •  Best  of  Luck  
  • 27. SEED MONEY
  • 28. THANKS TO OUR SPONSORS & FRIENDS Buchalter  Nemer   Mai  Seror,  Judith  Gordon,  others   buchalter.com   SignNow                Kleverdog              SilBeach.com   Blue  Pecos  Consul9ng            Trojan  Entrepreneur   USC  Dept  of  Computer  Science  
  • 29. CONTACT INFO: TOM NORA -  - - -Email: tomnora2020@gmail.com Phone: 310.855.2199 Connect with me on:Facebook Linkedin Pinterest Google+ Twitter: @tomnora @cowlow