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Philip Stehlik at TechTalks.ph - Fundraising in Silicon Valley
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Philip Stehlik at TechTalks.ph - Fundraising in Silicon Valley

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  • 1. FUNDRAISINGIN SILICON VALLEY2012-07-10 for TechTalks.phPhilip Stehlik
  • 2. About•  Entrepreneur living in San Francisco•  Startups – joined one @19 started first @22•  Money from friends and ‘angels’•  Failed with a couple of ideas and projects•  One company got acquired•  Helping out a couple of startups•  CTO Co-Founder Taulia in 2009 (Ser.A & B)•  Serving Fortune 2000 companies with financial SaaS + SAP add-on
  • 3. Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startupcompanies.The venture capital fund makes money by owning equityin the companies it invests in, which usually have a noveltechnology or business model in high technologyindustries, such as biotechnology, IT, software, etc.The typical venture capital investment occurs after the seedfunding round as growth funding round (also referred to asSeries A round) in the interest of generating a returnthrough an eventual realization event, such as an IPO ortrade sale of the company.source wikipedia
  • 4. Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startupcompanies.The venture capital fund makes money by owning equityin the companies it invests in, which usually have a noveltechnology or business model in high technologyindustries, such as biotechnology, IT, software, etc.The typical venture capital investment occurs after the seedfunding round as growth funding round (also referred to asSeries A round) in the interest of generating a returnthrough an eventual realization event, such as an IPO ortrade sale of the company.source wikipedia
  • 5. Good
  • 6. Raising money?!•  Grow and accelerate a business•  Having a novel idea or approach•  Software, Hardware, Medicine, Space travel, ...•  Giving away parts of your company•  Investors need to make money•  Eventual sale or IPO of the company
  • 7. Raising money is not for•  Lifestyle business•  Low-growth•  Low-potential (VCs want high return)
  • 8. After raising - You will not just get•  High salary•  More customers•  More traction•  Less work•  Less pressure•  Money ≠ The solution to everything
  • 9. After raising you might get•  New hires to compliment your teams skillset•  Marketing exposure and marketing $$•  A chance to iterate a few times on your product (before making or running out of money)•  VCs who take calls of your customers•  Intros•  Resources (advice, hiring, marketing, ...)
  • 10. Some hints•  Can you do it without raising?•  Bootstrap as long as possible•  Traction is key•  Choose your investors to assure a good fit•  Try to stay in control - it is still your company•  Usually your investors are on your side. They WANT you to succeed.
  • 11. How much money to raise•  Roughly (Series A):•  12-18 months run-rate•  Trying to give away 10%-20% of company max•  Fundraising is full-time job - you dont want to do it every couple of months•  Dont give away too much of your company or you wont have anything left at the end•  Raising a bit more than you need will allow you to survive smaller issues along the way
  • 12. Different funding providers•  Angels – wealthy individuals•  Angel groups – multiple Angels•  Super Angels – very wealthy individuals•  Incubators/Accelerators – Institutions providing funding, space, connections,...•  Venture Capital firms – Full-time professional investors, usually after ‘seed’
  • 13. Fundraising flow part 1•  Decision to raise money•  Build story•  Build pitch•  Build deck•  Research investors•  Intros•  Pitch•  Iterate
  • 14. Pitching•  Elevator pitch o  60 seconds to fame (verbally & e-mail) o  Get somebody who doesn’t know you excited enough to hear more of your story•  Intros o  The most important piece to get good meetings•  Pitch deck o  Usually 10 slides, telling your story•  Segment before pitching – try your pitch out o  Harder to turn around a ‘no’ than pitching fresh•  Product demo
  • 15. Tools you have•  Marketing•  AngelList (your fundraising profile and distribution)•  Dealflow/traction•  Social Proof•  Intros•  Being in a hot market•  The right team’•  Not needing the money
  • 16. Fundraising flow part 2•  Have interested investor(s)•  Determine which investor(s) would be best•  Agree on baseline terms•  Sign term-sheet•  Figure out details and sign lots of paper•  Get money•  Pay lawyers•  Get back to building your business
  • 17. Stock options•  Way to compensate your employees o  Retain employees o  Vesting over four years o  One year cliff•  These are not shares – but options to buy (common) stock•  Option pool usually set at founding and rounds of funding•  Different tax implications (at least in US) for different kinds of options – ask tax expert!
  • 18. Different types of stock•  Common stock o  The most basic stock there is•  Preferred stock o  Stock with special conditions attached to it o  E.g. Preferred participation in liquidity event o  Details about conditions are in funding contracts o  Usually 1 time participating preferred
  • 19. Having multiple investors•  Angel Group•  Multiple Angels•  Multiple VCs•  Lead investor•  More investors = more people to communicate with and to ‘manage’
  • 20. Watch out for•  Location o  For fundraising you need to go to where the money is•  Over-valuation o  If you can’t deliver and raise a down-round it will hurt!•  I say once more: o  Traction o  Team o  Social proof o  Do your due-diligence
  • 21. Thanks!Say hi when you are in San Francisco!p@pstehlik.com@pstehlikhttp://pstehlik.com
  • 22. Img: Scrooge MC Duck Graph