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How to Attract Venture Capital   10 24 09
 

How to Attract Venture Capital 10 24 09

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How to Attract Venture Capital: What Every Start-up Should Know

How to Attract Venture Capital: What Every Start-up Should Know

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    How to Attract Venture Capital   10 24 09 How to Attract Venture Capital 10 24 09 Presentation Transcript

    •  
    • how to attract venture capital
      • Draft a business plan with detailed supporting information
        • Executive Summary
        • Power Point Presentation
        • Full Business Plan
      • Understand how much money you need, why you need it and what you will accomplish with it before you need to raise more capital (milestones)
      • Have a realistic understanding of valuation and customary terms & conditions
      • Know where you are on the funding continuum and seek capital from those investors who fund companies at your point of development
      • Identify investors who have a knowledge of your value proposition and/or your target markets
      • Enhance your credibility with a good board and outside advisors
      • Be prepared to demonstrate your own commitment to your company by being persistent – funding is a full-time job
      • Understand that you are not the company and the company is not you (be selfless)
      • Be open-minded
      Proprietary and Confidential - ©2005 Glengary LLC
    • funding phases Friends, Family, Angels & Validation Funds Liquidity Event Later-Stage Institutional Investors Early-Stage Funds Funding Void Existing Environment Proprietary and Confidential - ©2005 Glengary LLC Validation Risk Execution Risk (Including Financing Risk) Financial Risk
    • tips on your business plan
      • Answer Three Questions:
            • 1) What do you do?
              • This defines your “value proposition” of your product and/or service from your customers’ perspective
              • for example: “We allow our customers to save money on their electric bills.”
              • Clearly describe why your customer will “need” to have what you are offering
              • Ideally, have an “early-adopter” who will validate the value proposition
            • 2) Why do you do it?
              • This describes the market
              • for example: “Total annual commercial, industrial and residential electric bills total $$$$$ per year, or $$$$$ per unit.
              • Be clear on the addressable market
              • Understand the market dynamics that work for or against
              • Have a very good understanding of your competitors, direct/known or potential
              • This describes your solution to the above and specifically
              • for example: “We provide a patented product that …………resulting in a three-month payback to the customer.”
      Proprietary and Confidential - ©2005 Glengary LLC
    • tips on your business plan
        • How do you do it?
        • Discuss how you enable your customer to gain its value proposition
          • For example, do you offer a product, software, a system, a process, etc.
        • Clearly identify how you will protect yourself from others
          • Intellectual property (patents)
          • Trade secrets
          • First mover advantage/brand value
        • Discuss your operations, including:
          • Marketing & Sales
          • Pricing model & margins
          • Staffing requirements
          • Cash Burn: operating budget, working capital and timing and amounts of additional funding
      Proprietary and Confidential - ©2005 Glengary LLC
    • what to expect after vc funding
      • FOCUS on achieving milestones
      • Make presentations/reports and updates in a highly credible manner
      • Build a high level of trust with your investors and board members
      • Be open-minded, expose strengths and weaknesses and ask for help
      • Expose other members of your team to the board
      • Know the answers to questions or, if you do not, follow-up quickly
      • Be prepared to provide a great deal of information to your board and investors
      • Engage your board and investors to build a “team” effort NOT a “we vs. them” dynamic
      Proprietary and Confidential - ©2005 Glengary LLC
    •