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Preparing to seek funding

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Issues to consider when seeking funding.

Published in: Business, Economy & Finance

Preparing to seek funding

  1. 1. Preparing for Funding
  2. 2. The Fundraising Process Face Biological Imperative? Monk/ Nun Prostitution No Yes Date Or Auction? Courtship Engage Wedding Matchmaker ? Bus Plan Road Show Term Sheet Negotiation Closing Flip the Deal Banker <ul><li>Key objectives: </li></ul><ul><li>Minimize the courtship time </li></ul><ul><li>Maximizing value </li></ul><ul><li>Get to the alter </li></ul>
  3. 3. Review – the Business Plan <ul><li>Proprietary Advantage </li></ul><ul><li>Massive Market </li></ul><ul><ul><li>Large enough market to absorb multiple rounds of investment </li></ul></ul><ul><ul><li>Likely exit strategy </li></ul></ul><ul><li>Management team to make it happen </li></ul>
  4. 4. Courtship - Beyond a Business Plan <ul><li>Shore up your intellectual property </li></ul><ul><li>Get your elevator pitch down </li></ul><ul><li>Identify Sales & Marketing Experience in the Relevant Market </li></ul><ul><li>Clean up the equity portion of your balance sheet </li></ul><ul><li>Decide on whether to use an intermediary to raise funding </li></ul>
  5. 5. Inventory the IP <ul><li>Ability to Exclude Others </li></ul><ul><ul><li>Patents </li></ul></ul><ul><ul><li>Trademarks </li></ul></ul><ul><ul><li>License </li></ul></ul><ul><ul><li>Distributorship </li></ul></ul><ul><ul><li>Franchise </li></ul></ul><ul><ul><li>Know-How </li></ul></ul><ul><ul><li>Customer Lock-up </li></ul></ul><ul><li>Freedom to Practice Technology </li></ul><ul><ul><li>No Infringement </li></ul></ul><ul><ul><li>No conflicting employment / agreements </li></ul></ul><ul><ul><li>No sanctions </li></ul></ul>Have a qualified lawyer on board.
  6. 6. The “Line” <ul><li>You have the passion or you wouldn’t have gotten to this point </li></ul><ul><li>Learn how to articulate it </li></ul><ul><ul><li>Brevity </li></ul></ul><ul><ul><ul><li>Verbally and written </li></ul></ul></ul><ul><ul><li>Balance hype with professionalism </li></ul></ul><ul><ul><ul><li>VC’s are salespeople </li></ul></ul></ul><ul><li>Hire a coach </li></ul><ul><li>Remember – the delivery of the pitch frames the investor’s impression of your marketing skills </li></ul>
  7. 7. Sales, sales, sales! (it really isn’t about the technology) <ul><li>Revenue drives business today </li></ul><ul><li>Does team have proven performers? </li></ul><ul><li>Have they performed in targeted market? </li></ul><ul><li>Are sales to any significant customers in process? How far along? </li></ul>
  8. 8. Equity – What’s in the closet? <ul><li>Minimize the enterprise baggage </li></ul><ul><ul><li>NDA’s with former employees? </li></ul></ul><ul><ul><li>Unfulfilled promises? </li></ul></ul><ul><ul><ul><li>Unexercised options or warrants? </li></ul></ul></ul><ul><ul><ul><li>Buy backs not funded? </li></ul></ul></ul><ul><ul><ul><li>Royalties granted? </li></ul></ul></ul><ul><ul><li>Employment suits? </li></ul></ul><ul><ul><ul><li>Compensation and benefits unpaid? </li></ul></ul></ul><ul><ul><li>Loan covenants block the marriage </li></ul></ul>
  9. 9. Matchmaker, matchmaker? <ul><li>Love at first sight vs. playing the field </li></ul><ul><li>Advantages of using an intermediary </li></ul><ul><ul><li>Closer to market </li></ul></ul><ul><ul><li>Sense of competition can be created </li></ul></ul><ul><ul><li>Opens more doors </li></ul></ul><ul><li>Does premium created exceed the transaction fee? </li></ul>
  10. 10. Courtship hasn’t changed <ul><li>The beauties get to engagement fast </li></ul><ul><ul><li>Wardrobe and make-up counts </li></ul></ul><ul><ul><li>Nobody chases a wallflower very hard </li></ul></ul><ul><li>Due diligence follows the first date </li></ul><ul><ul><li>First impressions count but the lipstick comes off the pig at this stage </li></ul></ul><ul><ul><li>Communication is a glimpse of the marriage – lasting relationships are built on mutual trust </li></ul></ul><ul><li>The real challenges come after the nuptials </li></ul>
  11. 11. Next Steps <ul><li>For more information or to contact the author: </li></ul>Andy Forbes [email_address]

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