The Art of Raising Capital for Technology Startup Leaders

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Oct 7, 2012
Delivered at Silicon Valley Code Camp

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  • How many of you have ideas for a new venture?\nHow many are executing on the idea?\nHow many are full time on the new venture?\nWorking day job while executing in off hours?\nStarted raising money already? - already met investors?\n
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  • Do you need outside funding\n
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  • Any guess what the investors are thinking?\n
  • Any guess what the investors are thinking?\n
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  • How many of you are engineers as a primary role in whatever venture?\n\n\n\n
  • How many of you are engineers as a primary role in whatever venture?\n\n\n\n
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  • Please, please... go Google it.\nYou wont remember what I said here, but you’ll have this permanent reference...\n
  • Please, please... go Google it.\nYou wont remember what I said here, but you’ll have this permanent reference...\n
  • Please, please... go Google it.\nYou wont remember what I said here, but you’ll have this permanent reference...\n
  • Please, please... go Google it.\nYou wont remember what I said here, but you’ll have this permanent reference...\n
  • You are accustomed to internal, corporate, operational presentations.\nEveryone knows the background and lingo.\nAn investor presentation is NOT that.\nI’ve literally had VCs advise founders: “make it so my mother will understand it”\n
  • Take time to watch a couple of Steve’s product/keynotes!\n
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  • The Art of Raising Capital for Technology Startup Leaders

    1. 1. The Art of Raising Capitalfor Technology Startup Leaders Bruce Schechter Oct 7, 2012
    2. 2. Heres to the crazy ones, the misfits, the rebels, thetroublemakers, the round pegs in the square holes. The ones whosee things differently. Theyre not fond of rules. And they have no respect for the status quo.... While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do. - Steve Jobs
    3. 3. Enough about You, Let’s talk about Me
    4. 4. Enough about You, Let’s talk about Me
    5. 5. Enough about You, Let’s talk about Me
    6. 6. Enough about You, Let’s talk about Me
    7. 7. Enough about You, Let’s talk about Me
    8. 8. Your Mileage May Vary
    9. 9. In Order to change the world,you have to first get your head together
    10. 10. In Order to change the world,you have to first get your head together - Jimi Hendrix
    11. 11. Funding Rounds“Friends & Family” Angels VC - Series A VC - Series B 0 2 4 6 8 $M
    12. 12. Early Funding Sources• “Bootstrapping”• “Friends and Family”• Corporate, “Strategic”... (Intel Capital..)• Government Grants, Research Grants...• Debt Financing... i.e., a loan• Angels• VC• Or....
    13. 13. Incubators (...we are so lucky to be here in SV!)• Plug & Play Tech Center(s)• Y Combinator• i/o Ventures, DogPatch, RocketSpace...• Silicon Valley Bank Accelerator• Founders Institute• Cleantech Open• Stanford StartX• US Market Access Center (International)
    14. 14. Fundraising ToolsElevator Pitch
    15. 15. Fundraising ToolsElevator Executive Pitch Summary
    16. 16. Fundraising ToolsElevator Executive PPT Pitch Summary Deck
    17. 17. Fundraising Tools DetailedElevator Executive PPT Financials Pitch Summary Deck & DD
    18. 18. First, a few words about....The Art of Fundraising
    19. 19. Awesome Product! Amazing Tech!
    20. 20. Will I Achieve a Vast Return? Is She Capable ofAwesome Product! Growing a Business? Amazing Tech!
    21. 21. “The Curse of Knowledge”
    22. 22. “I saw the angel in the marbleand carved until I set him free” - Michelangelo
    23. 23. The Art of the Elevator Pitch DetailedElevator Executive PPT Financials Pitch Summary Deck & DD
    24. 24. Example Elevator Pitch From: Bruce Schechter (bruce@schechter.com) Date: Mon, 8 Nov 2012 8:23am To: Ted Fellows (ted@prodigiousVC.com) Subject: Intriguing Company in Life SciencesHi Ted,Hope you are doing well, and that the golf game is looking good.Please allow me to introduce to you a company called FlextroTechSciences, which is currently starting human trials on a newdevice which promises to cut the cost of knee replacementsurgery by 60% and increase resulting ambulatory responsivenessby 30%. They have several medical supply distribution partnersalready prepared to ink deals, upon completion of trials. TheirCEO previously ran sales at Medtronic and their CTO is a U Penntrained MD.Might I follow up with an Executive Summary, or better yet giveyou a verbal update by phone?Cheers, BruceBruce Schechter, (m)408.219.0342, www.schechter.com
    25. 25. The Art of the Executive Summary DetailedElevator Executive PPT Financials Pitch Summary Deck & DD
    26. 26. 1. TLDR“Too Long; Didn’t Read”Any over-wordy thread that peopledont read, but reply to anyway.
    27. 27. I would have written a shorter letter, but I didn’t have the time. - Blaise Pascal
    28. 28. Executive Summary = One Page
    29. 29. Executive Summary = One Page• Longer than one page ➛ “I’ll read this later”
    30. 30. Executive Summary = One Page• Longer than one page ➛ “I’ll read this later”• “People don’t buy what they don’t understand”
    31. 31. Executive Summary = One Page• Longer than one page ➛ “I’ll read this later”• “People don’t buy what they don’t understand”• “Investors don’t fund products, they fund businesses”
    32. 32. Executive Summary = One Page• Longer than one page ➛ “I’ll read this later”• “People don’t buy what they don’t understand”• “Investors don’t fund products, they fund businesses”• Maximize repeatability
    33. 33. Bruce’s Hot Button Do not... Tell me all that’s good about your company before you.... Fundamentally explain what you do = “foundation”
    34. 34. Executive Summary• Problem Statement• Solution• Market Opportunity• Competition• Business Model• Go to Market Strategy• Progress to Date, Milestones• Revenue• Team
    35. 35. Problem/Solution Overview
    36. 36. Problem/Solution Overview• Clarity of Pain: credibility
    37. 37. Problem/Solution Overview• Clarity of Pain: credibility • Investors seek “must-have” not “like to have”, in the eyes of customers
    38. 38. Problem/Solution Overview• Clarity of Pain: credibility • Investors seek “must-have” not “like to have”, in the eyes of customers • Site tangible evidence
    39. 39. Problem/Solution Overview• Clarity of Pain: credibility • Investors seek “must-have” not “like to have”, in the eyes of customers • Site tangible evidence• Tie Solution back to Pain
    40. 40. Problem/Solution Overview• Clarity of Pain: credibility • Investors seek “must-have” not “like to have”, in the eyes of customers • Site tangible evidence• Tie Solution back to Pain• Goal: memorable and repeatable !! Can the reader repeat to colleagues?
    41. 41. Market Opportunity
    42. 42. Market Opportunity• Total Market and Available Market
    43. 43. Market Opportunity• Total Market and Available Market• Ideal: Reference third-party data
    44. 44. Market Opportunity• Total Market and Available Market• Ideal: Reference third-party data• Proof points or analogous products
    45. 45. Market Opportunity• Total Market and Available Market• Ideal: Reference third-party data• Proof points or analogous products• Aim for a repeatable narrative
    46. 46. Market Opportunity• Total Market and Available Market• Ideal: Reference third-party data• Proof points or analogous products• Aim for a repeatable narrative• Nice to have: Narrative “equation” (if we sell X to Y at $Z we’ll achieve $N)
    47. 47. Competition
    48. 48. Competition• Be honest and open
    49. 49. Competition• Be honest and open• Worst possible wording: “We dont really have competition”
    50. 50. Competition• Be honest and open• Worst possible wording: “We dont really have competition”• Focus more on your advantage than on competitor strengths !
    51. 51. Business Model
    52. 52. Business Model• Be clear who buys what from whom, for what price, how often, etc
    53. 53. Business Model• Be clear who buys what from whom, for what price, how often, etc• Define the unit economics, individual transaction cost
    54. 54. Business Model• Be clear who buys what from whom, for what price, how often, etc• Define the unit economics, individual transaction cost• If there are other players/partners, be sure to be clear where you fit into the picture
    55. 55. “Go To Market” Strategy
    56. 56. “Go To Market” Strategy“The Bi g D og!”
    57. 57. “Go To Market” Strategy • Customer Acquisition: Direct Sales? Channels? Word of Mouth?....“The Bi g D og!”
    58. 58. “Go To Market” Strategy • Customer Acquisition: Direct Sales? Channels? Word of Mouth?.... • Key Marketing Tactics: PR? SEO/ SEM? Advertising? Social“The Bi g Networking?.... D og!”
    59. 59. “Go To Market” Strategy • Customer Acquisition: Direct Sales? Channels? Word of Mouth?.... • Key Marketing Tactics: PR? SEO/ SEM? Advertising? Social“The Bi g Networking?.... og!” D • Put strong focus on near-term, ~6-12 months, granular steps
    60. 60. Progress, Milestones
    61. 61. Progress, Milestones• Brag about accomplishments up to now
    62. 62. Progress, Milestones• Brag about accomplishments up to now• Be clear that you know your next steps, particularly in next 6-12 months
    63. 63. Progress, Milestones• Brag about accomplishments up to now• Be clear that you know your next steps, particularly in next 6-12 months• Overwhelmingly, focus on customer- oriented milestones more-so than product
    64. 64. Progress, Milestones• Brag about accomplishments up to now• Be clear that you know your next steps, particularly in next 6-12 months• Overwhelmingly, focus on customer- oriented milestones more-so than product• Traction is the watchword
    65. 65. Team
    66. 66. Team• Give everyone a title
    67. 67. Team• Give everyone a title• Evidence of “done it before”
    68. 68. Team• Give everyone a title• Evidence of “done it before”• List advisors with credibility or “brand”
    69. 69. Team• Give everyone a title• Evidence of “done it before”• List advisors with credibility or “brand”• The game is credibility... save details for later
    70. 70. Executive Summary - What NOT to do...
    71. 71. Executive Summary - What NOT to do...• Cosmetic graphics, drop shadows, etc... “Just the facts, ma’am”
    72. 72. Executive Summary - What NOT to do...• Cosmetic graphics, drop shadows, etc... “Just the facts, ma’am”• Domain-specific language
    73. 73. Executive Summary - What NOT to do...• Cosmetic graphics, drop shadows, etc... “Just the facts, ma’am”• Domain-specific language• Unstated assumptions
    74. 74. Executive Summary - What NOT to do...• Cosmetic graphics, drop shadows, etc... “Just the facts, ma’am”• Domain-specific language• Unstated assumptions• Tiny fonts
    75. 75. Executive Summary - What NOT to do...• Cosmetic graphics, drop shadows, etc... “Just the facts, ma’am”• Domain-specific language• Unstated assumptions• Tiny fonts• “Year 1,Year 2,....”
    76. 76. Executive Summary - What NOT to do...• Cosmetic graphics, drop shadows, etc... “Just the facts, ma’am”• Domain-specific language• Unstated assumptions• Tiny fonts• “Year 1,Year 2,....”• “We hope...”, “We aim to...”
    77. 77. Test, Refine, Test, Refine, Test, Refine, Test, Refine....
    78. 78. Test, Refine, Test, Refine, Test, Refine, Test, Refine....• Your team (who needs to be able to repeat)
    79. 79. Test, Refine, Test, Refine, Test, Refine, Test, Refine....• Your team (who needs to be able to repeat)• Your mother. ☺
    80. 80. Test, Refine, Test, Refine, Test, Refine, Test, Refine....• Your team (who needs to be able to repeat)• Your mother. ☺• Friends
    81. 81. Test, Refine, Test, Refine, Test, Refine, Test, Refine....• Your team (who needs to be able to repeat)• Your mother. ☺• Friends• Advisors
    82. 82. Test, Refine, Test, Refine, Test, Refine, Test, Refine....• Your team (who needs to be able to repeat)• Your mother. ☺• Friends• Advisors• Investors (who are not so important)
    83. 83. Test, Refine, Test, Refine, Test, Refine, Test, Refine....• Your team (who needs to be able to repeat)• Your mother. ☺• Friends• Advisors• Investors (who are not so important)• Investors (“FTW”)
    84. 84. The Art of the Pitch DetailedElevator Executive PPT Financials Pitch Summary Deck & DD
    85. 85. The Pitch DeckFollows Exec Summary Outline
    86. 86. The Pitch DeckFollows Exec Summary Outline
    87. 87. The Pitch DeckFollows Exec Summary Outline
    88. 88. Simplicity is the ultimate sophistication.  - Leonardo da Vinci
    89. 89. Guy KawasakiThe 10-20-30 Rule
    90. 90. Guy Kawasaki The 10-20-30 Rule• 10 Slides
    91. 91. Guy Kawasaki The 10-20-30 Rule• 10 Slides• 20 Minutes
    92. 92. Guy Kawasaki The 10-20-30 Rule• 10 Slides• 20 Minutes• No Font < 30pts ( This is 42pt, BTW )
    93. 93. Guy Kawasaki The 10-20-30 Rule• 10 Slides• 20 Minutes• No Font < 30pts ( This is 42pt, BTW )
    94. 94. In Review...
    95. 95. In Review...• Tell ‘em how they’ll make a fortune
    96. 96. In Review...• Tell ‘em how they’ll make a fortune• Investors fund companies, not products
    97. 97. In Review...• Tell ‘em how they’ll make a fortune• Investors fund companies, not products• They don’t fund what they don’t understand
    98. 98. In Review...• Tell ‘em how they’ll make a fortune• Investors fund companies, not products• They don’t fund what they don’t understand• Watch Steve Jobs videos
    99. 99. Bruce SchechterThe Schechter Company, LLC www.schechter.com

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