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Getting Your Venture "Game Ready" for Funding
 

Getting Your Venture "Game Ready" for Funding

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Triple bottom line efforts need capital. But securing this capital is often challenging, despite impactful value propositions and promising ROIs. Meanwhile, options for funding are expanding, creating ...

Triple bottom line efforts need capital. But securing this capital is often challenging, despite impactful value propositions and promising ROIs. Meanwhile, options for funding are expanding, creating a dizzying array of options for the entrepreneur. In this workshop, you’ll work with two experienced social enterprise funding advisors to get your efforts “game ready” for funding. You’ll learn how to package your venture to successfully raise the funds you need… and from the right type of capital source.

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  • Drew to update with national and international Examples <br />
  • Come back to this later – shows up in slide 13 <br />
  • Image Credit: http://www.bls.gov/ooh/Business-and-Financial/Accountants-and-auditors.htm <br />
  • Image Credit: http://www.stsci.edu/institute/org/do/futureworkplace/ <br />
  • Image Credit: http://paulgreci.wordpress.com/2010/08/09/keep-moving-forward/ <br />
  • Image Credit: http://www.bls.gov/ooh/Business-and-Financial/Accountants-and-auditors.htm <br />

Getting Your Venture "Game Ready" for Funding Getting Your Venture "Game Ready" for Funding Presentation Transcript

  • Getting Your Venture “Game Ready” for Funding Jenny Kassan CEO Cutting Edge Capital Drew Tulchin Managing Partner Social Enterprise Associates Net Impact Conference, Silicon Valley October 25, 2013
  • Workshop Outline I. Introduction & Background II. What does it mean to be “Game Ready” Foundational Elements to raise money Traditional Capital Alternative Forms of Capital I. Pros / Cons of Each Capital Type II. Fundraising Role Play III. Discussion: Steps to Readiness
  • I. Introduction & Background
  • About You! Who’s is in the room & interests Why are you here? What questions do you want answered today?*** ***Ask questions as you have them anytime
  • About Social Enterprise Associates Impact Investing Focused Consulting Firm Network of experts offering consulting & capital raising to triple bottom line efforts- for people, profits, planet Registered ‘B Corporation’, recognized: 2011 'One of the Best for the World' small businesses 2012 Honoree Sustainable Business of the Year Drew Tulchin, Managing Partner, MBA • • • • Written >100 business / strategic plans Efforts raised >$100 mil. in capital Biz plan winner - Global Social Venture Comp; raised $1.2 mil. in social investment Judge in national social enterprise & social business competitions
  • “Game Ready” Consulting Examples Solar Energy Loan Fund: Wrote business plan, financial projections and located investors that led to $400 K in funding SW Native Green Loan Fund: Structured term sheet that recruited $1 million in impact investment World Food Program: Devised five year plan for $400 million private sector engagement strategy Sea to Table: Coached entrepreneurs and orchestrated $1 million funding package from multiple sources Restore the Earth Foundation: Developed investor pitch that quantified social value of 10,000 acre wetland reforestation
  • Get Us Started Group Brainstorm New, creative capital raising forms?
  • II. What does it mean to be “Game Ready”?
  • Need Your House in Order • Accounting: Accurate financial statements - updated at least ¼, taxes tracked, vendors paid • Legal: Incorporation, ownership, IP, employees • Systems & IT: Be organized, show it! Email, accounting, CRM, database, info management, online tools, etc. • Branding & Mktg: Logo, website Identity, materials
  • People You Need for Success Direct Management Team You - CEO? CFO CIO / CTO Biz Dev / Sales Indirect Advisors Board Members Key Vendors Banker Lawyer Bookkeeper/CPA IT PR
  • Baseline Documents 1. Business Plan Feasibility Market Analysis   1. Financial Projections & Scenarios Fundraising – what goes here? 1. 2. 3. 4. 5. Pitch packet Brochure / Exec Sum / 2 pager E-mail intro Website Social media
  • The Pitch Deck What is in a pitch deck? How many slides? Your 10 slides should be: • Nice / clean • Easy to read. Few words. Tell a story (use visuals) • Very much you • A bit different, but not too much I believe in Guy Kawasaki’s Art of the Start http://blog.guykawasaki.com/2012/01/how-to-create-an-enchanting-pitch-officeandguy http://bestpitchdecks.com
  • The Hand Off
  • Strategy and compliance for creative capital raising Software tools for capital raising Full-service law firm for social enterprise
  • Entity choice has an effect on capital raising choices
  • Entity Options 1. Corporation (taxed Subchapter S or C) 2. Benefit Corporation / Flexible Purpose Corp 3. LLC (taxed under Subchapter S, C, or K) 4. Non-profit (many kinds! 501c3, c6, etc.) 5. Cooperative (many kinds!) Or a combination…
  • Traditional Forms of Capital
  • Types of Investments • • • • • • • • Common stock Preferred stock LLC membership interests (units) Loans (aka notes, debt) Revenue share/royalty – equity or debt-like Co-op memberships “Memberships” Presales
  • Capital: Traditional Ways to Raise It Banks Angels & VCs – Accredited investors only • Rule 506, Regulation D • Allowed to have up to 35 unaccredited investors under Rule 506? • New Rule 506(c) - allows public solicitation • Usually convertible notes or preferred stock • Exit via acquisition, IPO
  • TOTAL US ECONOMY: Two equal halves Employees: 56 million Employees: 56 million Production: $7 trillion Production: $7 trillion Giant Multinational Publicly Traded Companies Small Independent Businesses Almost 100% of Americans’ investments are in only one-half of the economy – Wall Street companies
  • Source: http://earnmbadegree.com/jobs-act-crowdfunding-infographic/
  • So, you can go to the 1% (OK…the 7%) But, money from VCs, Angels is scarce and comes with strings attached. OR . . .
  • Alternative Forms of Capital
  • Direct Public Offerings
  • What is a DPO? • Made to the public • Made to unlimited # of accredited AND unaccredited investors • Directly to investors (no middleman) LEGAL NOW!
  • Legal How? 1. Federal exemptions 2. State level registrations 3. Any kind of security can be offered 4. How does this relate to Title III of JOBS Act (crowdfunding exemption)?
  • DPO Examples Farm Power Northwest
  • • Interest paid in credits toward product • Raising funds from California residents – multi-year offering • Have raised over $300,000 so far
  • • Massachusetts Worker Cooperative (conversion from sole proprietorship) • Offered non-voting preferred stock • Raised $500,000 from VT & Mass residents in 2 months
  • • Offering common stock • Open to Washington residents • $100 minimum
  • People’s Community Market $800,000 + so far! • Offering non-voting preferred stock, discount AND gift cards • Raising up to $1,000,000 from California residents
  • • Offered 5-year revenue sharing agreements • Raised over $150,000 from California residents
  • III. Pros / Cons of Each Capital Type
  • Activity: List Pros / Cons of Each Consider time, complexity, cost, paperwork needed, who funding is for, etc. Traditional • Debenture • Private placement • Grant Others? Newer • DPO • Crowdfunding • Memberships • Pre-sales & more…
  • Activity: Funding Match Match the type of funding to the appropriate audience Audience Type • Friends & Family • Bank • Angels • Foundations • Impact Investors Which others? Traditional • Debenture • Private placement • Grant Newer • DPO • Crowdfunding • Membership • Pre-sales
  • VI. Fundraising Role Play
  • Activity: Fundraising Pitch Form groups of 3 / 4 • Pick a venture (your own, or one example) • Choose a target market to pitch • Identify form of capital for that group • Develop pitch What is the hook? What kind of funding & why? How much, for what? What questions would potential investors ask?
  • Recap: Financing 2 Cents Foundational thoughts: • YOU must be credit-worthy • Organization needs to document why worth investment • If you don’t put skin in game, why should an investor? • Be realistic; know market based risk costs Options: • Go to outsiders earlier than later • Self finance: bootstrap, leverage assets, watch credit card debt • Friends, Family, Fools - put in writing with real docs • Peer to Peer Lending, Crowdfunding - caveat emptor
  • Recap • What have we learned? • What questions do we still have?
  • Thank you! Questions? Answers? Jenny Kassan Cutting Edge Capital Drew Tulchin Social Enterprise Associates www.cuttingedgecapital.com jenny@cuttingedgecaptial.com www.socialenterprise.net drew@socialenterprise.net