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The Art of Raising Capital for Technology Startup Leaders

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Oct 7, 2012
Delivered at Silicon Valley Code Camp

Published in: Business
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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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