Getting Your Venture
“Game Ready”
for Funding
Jenny Kassan
CEO
Cutting Edge Capital

Drew Tulchin
Managing Partner
Social ...
Workshop Outline
I. Introduction & Background
II. What does it mean to be “Game Ready”
Foundational Elements to raise mone...
I. Introduction & Background
About You!
Who’s is in the room & interests
Why are you here?
What questions do you want answered today?***
***Ask questio...
About Social Enterprise Associates
Impact Investing Focused Consulting Firm

Network of experts offering consulting & capi...
“Game Ready” Consulting Examples
Solar Energy Loan Fund: Wrote business plan, financial
projections and located investors ...
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

• ...
People You Need for Success
Direct
Management
Team
You - CEO?
CFO
CIO / CTO
Biz Dev / Sales

Indirect
Advisors
Board Membe...
Baseline Documents
1. Business Plan
Feasibility
Market Analysis




1. Financial Projections &
Scenarios
Fundraising – w...
The Pitch Deck
What is in a pitch deck? How many slides?
Your 10 slides should be:
• Nice / clean
• Easy to read. Few word...
The Hand Off
Strategy and
compliance for
creative capital
raising

Software tools for
capital raising

Full-service law
firm for social...
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...
Traditional Forms of Capital
Types of Investments
•
•
•
•
•
•
•
•

Common stock
Preferred stock
LLC membership interests (units)
Loans (aka notes, debt...
Capital: Traditional Ways to Raise
It
Banks
Angels & VCs – Accredited investors only
• Rule 506, Regulation D
• Allowed to...
TOTAL US
ECONOMY:
Two equal halves
Employees:
56 million

Employees:
56 million

Production:
$7 trillion

Production:
$7 t...
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...
Legal How?
1. Federal exemptions
2. State level registrations
3. Any kind of security can be offered
4. How does this rela...
DPO Examples

Farm Power Northwest
• Interest paid in credits
toward product
• Raising funds from
California residents –
multi-year offering
• Have raised ov...
• Massachusetts Worker
Cooperative
(conversion from sole
proprietorship)
• Offered non-voting
preferred stock
• Raised $50...
• 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...
• 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.

Traditiona...
Activity: Funding Match
Match the type of funding to the appropriate audience
Audience Type
• Friends & Family
• Bank
• An...
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 p...
Recap: Financing 2 Cents
Foundational thoughts:
• YOU must be credit-worthy
• Organization needs to document why worth inv...
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.cuttinged...
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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 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
  • Come back to this later – shows up in slide 13
  • Image Credit: http://www.bls.gov/ooh/Business-and-Financial/Accountants-and-auditors.htm
  • Image Credit: http://www.stsci.edu/institute/org/do/futureworkplace/
  • Image Credit: http://paulgreci.wordpress.com/2010/08/09/keep-moving-forward/
  • Image Credit: http://www.bls.gov/ooh/Business-and-Financial/Accountants-and-auditors.htm
  • Getting Your Venture "Game Ready" for Funding

    1. 1. 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
    2. 2. 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
    3. 3. I. Introduction & Background
    4. 4. 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
    5. 5. 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
    6. 6. “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
    7. 7. Get Us Started Group Brainstorm New, creative capital raising forms?
    8. 8. II. What does it mean to be “Game Ready”?
    9. 9. 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
    10. 10. 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
    11. 11. 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
    12. 12. 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
    13. 13. The Hand Off
    14. 14. Strategy and compliance for creative capital raising Software tools for capital raising Full-service law firm for social enterprise
    15. 15. Entity choice has an effect on capital raising choices
    16. 16. 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…
    17. 17. Traditional Forms of Capital
    18. 18. 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
    19. 19. 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
    20. 20. 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
    21. 21. Source: http://earnmbadegree.com/jobs-act-crowdfunding-infographic/
    22. 22. So, you can go to the 1% (OK…the 7%) But, money from VCs, Angels is scarce and comes with strings attached. OR . . .
    23. 23. Alternative Forms of Capital
    24. 24. Direct Public Offerings
    25. 25. What is a DPO? • Made to the public • Made to unlimited # of accredited AND unaccredited investors • Directly to investors (no middleman) LEGAL NOW!
    26. 26. 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)?
    27. 27. DPO Examples Farm Power Northwest
    28. 28. • Interest paid in credits toward product • Raising funds from California residents – multi-year offering • Have raised over $300,000 so far
    29. 29. • Massachusetts Worker Cooperative (conversion from sole proprietorship) • Offered non-voting preferred stock • Raised $500,000 from VT & Mass residents in 2 months
    30. 30. • Offering common stock • Open to Washington residents • $100 minimum
    31. 31. 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
    32. 32. • Offered 5-year revenue sharing agreements • Raised over $150,000 from California residents
    33. 33. III. Pros / Cons of Each Capital Type
    34. 34. 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…
    35. 35. 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
    36. 36. VI. Fundraising Role Play
    37. 37. 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?
    38. 38. 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
    39. 39. Recap • What have we learned? • What questions do we still have?
    40. 40. 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
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