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.

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

    1. 1. STARTUPS FOR HACKERS Murat Aktihanoglu ERA http://eranyc.com murat@eranyc.com
    2. 2. BACKGROUND EE Undergrad CS Grad
    3. 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. 4. ERA BOT
    5. 5. Super Angels Super AngelsAngelsAngels VCsVCs STAGE OF INVESTMENT AMOUNTOFHELP Help Needed by Startup ERA ERA IN THE STARTUP ECOSYSTEM 5
    6. 6. STARTUP TIMELINE
    7. 7. Hacking Not Hacking HACKERS’ DILEMMA
    8. 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. 9. YOU HAVE AN IDEA, NOW WHAT? • PASSIONATE? • DOMAIN EXPERTISE? • CO-FOUNDERS?
    10. 10. YOU HAVE AN IDEA, NOW WHAT? • Solving a problem? • Who else? • Is your solution better? • Potential paying customers? • Investors?
    11. 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. 12. MVP, PMF, ETC.
    13. 13. FUNDRAISING Investors back people, not deals ‘Building Relationships' is the only way to fundraise.
    14. 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. 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. 16. • Convertible notes • Priced equity rounds WAYS TO RAISE MONEY FOR A STARTUP
    17. 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. 18. • 20% discount • 6% interest • A cap ($2M - $10M+ depending on the business) • 12-24 months maturation CONVERTIBLE NOTES: TYPICAL TERMS
    19. 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. 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. 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. 22. • One-page executive summary • Pitch deck • Email deck FUNDRAISING MATERIALS:
    23. 23. ONE-PAGE EXECUTIVE SUMMARY One-page executive summary
    24. 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. 25. Pitch deck with much more information and appendices, for reading and reference EMAIL DECK
    26. 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. 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. 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. 29. • Product/Market Risk • Technology Risk • Execution/Team Risk • Timing Risk IDENTIFY AND MINIMIZE YOUR SPECIFIC RISKS
    30. 30. UNDERSTAND HOW STARTUPS ARE VALUED
    31. 31. KEY MILESTONE: CUSTOMER TRACTION
    32. 32. KEY: REPEATABLE, SCALABLE SALES MODEL
    33. 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. 34. SAMPLE CASE STUDY
    35. 35. Murat Aktihanoglu murat@eranyc.com http://eranyc.com Blog: http://muratak.com

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