Founders Meeting Funders

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A practical approach with concrete suggestions to aid your business plan development, streamline your monetization model, deliver a successful pitch to grab the funder's attention, and get familiar with what to expect during the first meeting to the term sheet.

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Founders Meeting Funders

  1. 1. Alexander M Orlando, DBA
  2. 2. The life of many start-up
  3. 3. Your Profile: You think “Out of the Box”
  4. 4. The four S of Innovation Individuals that inspire through Seeders their wishes innovation Inventors or innovators that seek to Sellers to sell, license, or fund their inventions. Professionals that utilize their skills Solvers and knowledge to propose innovative solutions for a prize. Entrepreneurs, organizations, and investors that are looking for new Seekers ideas, solutions, or inventions.InnovaHub
  5. 5. VC Teaser Image Goes Here1. Elevator Pitch 6. Proprietary Tech2. The Problem 7. Competition3. Your Solution Money Shot 8. Marketing Plan Goes Here4. Market Size 9. Team / Hires5. Business Model 10. Money / Milestones
  6. 6. picture your idea an effective elevatorpitch is illustrative and tangible.
  7. 7. 90 seconds
  8. 8. IMPOSSIBLE?
  9. 9. 3 keywordsand your name
  10. 10. ….. tell me more…
  11. 11. MAKE YOUR IDEAUNDERSTANDABLE
  12. 12. YOUR ATTITUDEbe confidenthave funshow passionshow integrity
  13. 13. keep your eyes shut whilesomeone reads your text out loud
  14. 14. Business Model (How Do You Plan to Make Money?)• Describe Top 1-3 Revenue Sources – Prioritize by Size, Growth, and/or Potential – Cite current market activity / customer behavior as proof• Show How You Get to Break-even (or Profitable) – Ideally, on the current round of funding you’re raising• Common Revenue Models – Direct: ecommerce, subscription, digital goods, brands – Indirect: advertising, lead gen, affiliate / CPA
  15. 15. What do VC’s wantTeam • Domain expertise with core technical strength and knowledge of given market opportunity • History of collaboration and success • A willingness to allow VC’s to help build the teamMarket • Emerging and fast growing market • Bad markets make for bad companiesBusiness model • How will you make money, how will you sellTechnology • Defensible technology/IP that can be protected to form competitive barriers over time
  16. 16. The Executive Summary • Stimulate and motivate the investor to learn more. • Hook them on the first page. Most investors are inundated with business plans. Your first page must make them want to keep reading. • Keep it simple. After reading the first page, investors often do not understand the business. If your business is truly complex, you can dive into the details later on. • Be brief. The executive summary should be 2 to 4 pages in length.
  17. 17. Why VC Is Helpful?Low High Friends & Angels/De Venture Family mons Capitalists Capital Advice Connections 23
  18. 18. Are You Ready For VC? Great Huge Product in Team Market Market Seed ($50K - $1M)   X Series A (>$1M – 5M)    24
  19. 19. Economics of VC Firm• Management Fees (typically 2-2.5% of AUM) – Charge a management fee to cover the costs of managing the committed capital.• Carried Interest (typically 20-25%) – "Carried interest" is the term used to denote the profit split of proceeds to the general partner.• Example $100m fund – 4x return and 2 and 20% – $2m per year in management fee – (($100m x 4) - $100m) * 20% = $60m in carried interest
  20. 20. What to Expect• 12-16 week process • Investors will seek: – First meeting to close – 20-50% of the company – 1st mtg  diligence  partner – Valuation function of targeted raise, meeting  TS negotiation  close ownership, and stage,• Prepare Investor Package – Preferred Equity securities, with key – Presentation terms: • BoD seat – Financial Plan • Liquidation Preference – Personal references • Anti-dilution Protection – Customer references • Participation – Market references • Pro Rata rights – Cap Table • Protective Provisions – Market research • Vesting terms for founders and employees – Product documentation – Competitive Analysis
  21. 21. What to Consider• Is the idea sufficiently baked? – Optimal time is 6 months of iteration• Pick your co-founders very carefully• Test fit with VC – Personality, values, knowledge of market• Optimize for best deal not best price• Consider the downstream effects of the financing – High-post moneys can by Pyrrhic victories if company misfires – Angel financing can be a mixed blessing – be careful
  22. 22. Approaching VC’s• Investing is a people business, and getting a meeting is all about “who you know”• Best way to approach a VC is some form of introduction – If you don’t know a VC, find someone who knows you and get them to introduce you – Entrepreneur, professor, attorney… (Linkedin…) – Sending a plan to info@vcfirmname.com is a waste of time

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