Crowdfunding Made Easy Conference, May 31, 2012, SLC
Getting Your Idea Funded by Alan E. Hall Angel and Venture Capitalist By PresenterMedia.com
ON TARGET Key Initial Questions for Entrepreneurs What you should know. How much money is needed? Why is the money needed? How will the money be spent? What will be the results? Are you willing to give some ownership? Can you pay back a loan?
ON TARGET Funding Sources Match needs and growth Self Family and friends Crowd funding Angels Banks and credit union – SBA loans Private Equity Funds Strategic partner IPOs
ON TARGET Investor Issues Make money. Harvest –great return on investment Ownership Funding amount Growth Mitigated risks Great company Value add beyond money invested
VALUE-ADDED INVESTMENT MODEL Revenue Development Process Developing product extensions Expanding product SALES distribution VALUE-ADDREVENUE Discovering new Social capital market segments Strategic guidance Improving sales Capitalization HIGH GROWTH COMPANY EVOLUTION execution TRADITIONAL INVESTOR Governance VALUE-ADD COMPANY GROWTH 3
ON TARGET Major Due Diligence Questions Management Culture Financials Products/services Customers Financing Competition Valuation Sales Ownership Processes Exit
ON TARGET Questions Management Financial 1.Knowledge of industry 1.Revenues 2.Relevant experience 2.Margins 3.Teachable 3.Cost control 4.Profits
ON TARGET Questions Customers Competition 1.Size of market 1.Number of competitors 2.Buyers 2.Market penetration 3.Sales cycle 3.SWOT 4.Adoption rate
ON TARGET Questions Sales Processes 1.Routes to customers; direct, 1.Documented steps to follow? OEM or channel 2.Compliance 2.Sales executive and team 3.Procedures, measurement 3.Experience and knowledge
ON TARGET Questions Culture Products/technology 1.Behaviors 1.Meets and exceeds 2.Values customers’ needs 3.Known and followed 2.Intellectual property 3.Road map 4.Innovation 5.Competitive
ON TARGET Questions FINANCING VALUATIONS 1. Sources of money, bank, investors, 1. Pre-money and post money VCs 2. Comparables 2. Money needed for what, deficit, 3. Negotiation growth 3. How much and when?
ON TARGET Questions Ownership Percentages Exit/Harvest 1.Variations, minority or control 1.When? 2.Stages of company growth 2.Expected multiple and IRR 1.Idea 3.Involvement 2.Prototype 4.M&A or IPO 3.Pre-sale 4.Sales 5.Profitable
Lessons Learned1.Great ideas have 4. There must be 7. It takes twice no value until customers who as long and will buy. twice as muchcommercialized. money.2. Its all about 5. Execution is the 8. Invest in lots revenue and key. of companies to profit. play the odds.3. Experienced 6. Deal with management is honest people. critical