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Startups for Hackers - Murat Aktihanoglu - ERA
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A presentation and workshop by ERA managing director Murat Aktihanoglu on how to start a company for hackers, technologists, developers and computer science students. ...

A presentation and workshop by ERA managing director Murat Aktihanoglu on how to start a company for hackers, technologists, developers and computer science students.

You have an idea, how to start
Skillsets required
Fundraising Process
Required documents/stage
Building Investor Relationships
Pitching
Convertible Notes/Equity Rounds
What to watch out for on a Term Sheet
Customer Acquisition
Growing the Company

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  • I collect entrepreneurs. 
  • <$100K, $50K-$500K, $500K-$5MM, $5MM-$50MM

Startups for Hackers - Murat Aktihanoglu - ERA Presentation Transcript

  • 1. STARTUPS FOR HACKERS Murat Aktihanoglu ERA http://eranyc.com murat@eranyc.com
  • 2. BACKGROUND EE Undergrad CS Grad
  • 3. ERA 3 • 2 sessions a year • 10 companies per session • $40,000 with follow-on investment ($50,000 to $200,000) • 4 month program • Free collaborative 10,000sf office space (includes other ERA alumni companies) • 250+ mentors (investors, domain experts, successful entrepreneurs and industry executives) • Free legal services, free software services, free hosting, five free flights from AA • Demo Day in New York and California – 50 alumni companies • Strong online alumni network (ERA Bot)
  • 4. ERA BOT
  • 5. Super Angels Super AngelsAngelsAngels VCsVCs STAGE OF INVESTMENT AMOUNTOFHELP Help Needed by Startup ERA ERA IN THE STARTUP ECOSYSTEM 5
  • 6. STARTUP TIMELINE
  • 7. Hacking Not Hacking HACKERS’ DILEMMA
  • 8. STARTUP SKILLSET PERSONALITY •Getting stuff done FOUNDER •Networking •Building high-quality things •Recruiting •Fundraising FOUNDER+CEO •Marketing / branding / PR / communications •Sales CEO •Customer management •Company management •Communicating with investors and employees •Financial and legal control
  • 9. YOU HAVE AN IDEA, NOW WHAT? • PASSIONATE? • DOMAIN EXPERTISE? • CO-FOUNDERS?
  • 10. YOU HAVE AN IDEA, NOW WHAT? • Solving a problem? • Who else? • Is your solution better? • Potential paying customers? • Investors?
  • 11. TESTING THE MARKET AND THE IDEA • Research – market size, competitors • Find the experts and incumbents and ask for their opinion and experiences • Get out of the building – talk to potential customers / partners • Create an investor deck for yourself
  • 12. MVP, PMF, ETC.
  • 13. FUNDRAISING Investors back people, not deals ‘Building Relationships' is the only way to fundraise.
  • 14. Friends & Family Accelerator Angel VC Mezzanine Investment Criteria Relationshi p, Compelling idea Strong team, big market, compelling idea Strong entrepren eur/team, signs of customer traction Definite customer traction, repeatable revenue Significant revenue, profitability (or on cusp) Investment Size ~$50K $15K-$50K $50K- 500K $500K-$5M $5M-$50M+ TYPES OF STARTUP FUNDING
  • 15. • Build investor relationships, research and get introductions • Prepare investor materials • Pitch • Follow-up meetings, Partner meetings • Term sheet/Due Diligence • Closing – Forming Delaware C-Corp FUNDRAISING PROCESS
  • 16. • Convertible notes • Priced equity rounds WAYS TO RAISE MONEY FOR A STARTUP
  • 17. • A short-term loan • Not paid back as cash, but with preferred equity on the next raise • No price, but cap and discount • Much cheaper and faster • Ideal for small raises • Maturation date CONVERTIBLE NOTES
  • 18. • 20% discount • 6% interest • A cap ($2M - $10M+ depending on the business) • 12-24 months maturation CONVERTIBLE NOTES: TYPICAL TERMS
  • 19. • Selling shares of the company to an investor at a certain price per share • Valuation negotiation • Board seat/other control terms • High legal cost, takes longer • Usually with a lead and a closing date • For bigger raises (~>$500K) EQUITY ROUND
  • 20. • A pre-money valuation: $2M-… • Preferred stock • Board seat • Usually a lead investor with other participating investors • Liquidation preferences EQUITY ROUND: TYPICAL TERMS
  • 21. • Get warm introductions, research • Keep a database of investors • Update them with short informational emails once every 1-2 months ( no asks, just information) BUILDING INVESTOR RELATIONSHIPS
  • 22. • One-page executive summary • Pitch deck • Email deck FUNDRAISING MATERIALS:
  • 23. ONE-PAGE EXECUTIVE SUMMARY One-page executive summary
  • 24. 1. Problem 2. Your solution 3. Business model/market size 4. Underlying magic/technology 5. Marketing and sales strategy/plan 6. Competition 7. Team 8. Current status/milestones 9. Summary / Call to action PITCH DECK
  • 25. Pitch deck with much more information and appendices, for reading and reference EMAIL DECK
  • 26. • Emphasize your biggest assets – Team – Previous successes – Traction – Technology/IP • Do not generalize: “We improve how business is done” • Know your numbers: Market size, market growth, your revenue, etc. • Show commitment PITCHING
  • 27. • Be Confident and well-rehearsed • But humble and open to advice. • Confidence comes from knowledge about your business and the know-how to execute it. PITCHING
  • 28. • Not listening • Refusing to acknowledge that competitors have done anything right. • Implicit and explicit assumptions regarding the knowledge level of the audience. THREE BIG MISTAKES WHILE PITCHING:
  • 29. • Product/Market Risk • Technology Risk • Execution/Team Risk • Timing Risk IDENTIFY AND MINIMIZE YOUR SPECIFIC RISKS
  • 30. UNDERSTAND HOW STARTUPS ARE VALUED
  • 31. KEY MILESTONE: CUSTOMER TRACTION
  • 32. KEY: REPEATABLE, SCALABLE SALES MODEL
  • 33. •Understand how investors think •Minimize risk for them •Real success is NOT raising money •Real success is building a product/service that customers cannot live without and pay for FINAL THOUGHTS
  • 34. SAMPLE CASE STUDY
  • 35. Murat Aktihanoglu murat@eranyc.com http://eranyc.com Blog: http://muratak.com