Startup Fund raising and raising capital

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Startup Fund raising and raising capital

  1. 1. Raising Capital! A guide for First-Time Founders Fo from ve r internet startu nture ca ps 
 pitalists and ang els"Bryan Starbuck Linkedin.com/in/bryanstarbuckFounder/CEO of Empower.me about.me/bryanstarbuckFormer Founder/CEO of TalentSpring (Acquired in 2010)
  2. 2. Pitch-Deck!" The Alliance of Angels pitch deck may be the best template" " BLOG: bryanstarbuck.typepad.com!
  3. 3. CRITICAL:! !Understand the pitch from the investor’s perspective!
  4. 4. They can start off hesitant!A warm trusted introduction is important whenever possible" 95% of companies I see aren’t good enough. Let’s see about these guys" " BLOG: bryanstarbuck.typepad.com!
  5. 5. Focus on WOWing with these 4:!1 2 This is a REAL & They have a real huge problem for solution. No solution in the market! the customer!3 4 People will pay 
 This is a HUGE (that amount)! market! " BLOG: bryanstarbuck.typepad.com!
  6. 6. They switch to being impressed! After they see those 4 critical areas"They are in the top 5% of companies I see." " Now I focus on blockers" " BLOG: bryanstarbuck.typepad.com!
  7. 7. Make sure these won’t kill the company!" Great team"" Customer acquisition plan"" Sales model"" Content or partnerships"" Able to get funding"" Exits are available"" This is a market I like" I think their plans in all of these areas will succeed. Why don’t I invest?"ANSWER: Rapport, trust, terms, team and finalizing details determine final answer." " BLOG: bryanstarbuck.typepad.com!
  8. 8. Finding Investors!
  9. 9. Finding Angels!" AngelList"" BEST: Great advisors and your network"" Top big law firms can make some intros"" It is hard to scale, but doable. (Lots of work)"" Requires tons of networking" " Often with CEOs who have raised capital before"" Move to the bay area for 5 months"" Linked-In"" Tons of scouting for people who fit the profile" " BLOG: bryanstarbuck.typepad.com!
  10. 10. Finding VCs!" Research to find WHICH ones you want to target first" " Very important: Pitching VCs who don’t match will block raising capital" " Find ones that work at your stage, industry, etc."" Easy to find the list of VCs. TheFunded, AngelList, etc."" Top startup law firms can make intro, as a backup"" Intro from CEO they funded is the best"" Target the right partner. "" Start with Partner and above. Not associates" " BLOG: bryanstarbuck.typepad.com!
  11. 11. Closing funding!
  12. 12. Closing Angels!1 Pitch & Demo! 2 They review Financials! 3 Due Diligence (If angel group)! 4 Get all of their questions answered! 5 Rapport & trust! 6 Sign legal docs & close, close, close! " BLOG: bryanstarbuck.typepad.com!
  13. 13. VCs!" Pitch & demo"" Meeting #2 to #4. " " Sometimes with others at the firm"" Present to Monday partner meeting"" Get term sheet"" Negotiate & sign term sheet"" Sheppard details until big stack of legal docs signed" " BLOG: bryanstarbuck.typepad.com!
  14. 14. Important (1 of 2)!" Herd mentality:" " If they see other investors moving and they might lose out, the investor will move" " True for both Angels and VCs" " You need to force enough demand from investors to get the deal closed"" Have polished pitch deck, pitch and financials"" Angel groups are good outside of the bay area" " Quote from the bay area, “Pitching to a bay area angel group is a sign of a bad company”" " BLOG: bryanstarbuck.typepad.com!
  15. 15. Important (2 of 2)!" Get a rent-a-CFO for Projected financials:" " $150 to $270 per hour" " 3 to 7 hours to create very detailed projected financials" " Asked for a fixed price project" " Get a very high quality one. They don’t cost very much more" " BLOG: bryanstarbuck.typepad.com!
  16. 16. The VC process!" Progress in batches of ~6 VC firms" " Hold first meeting" " See which progress"" Start another batch as a smaller number progress to later stages"" In 2 months, work to have several batches progress so more than one arrive to a term-sheet"" More than one greatly improves chances of any funding and improving terms"" After 4 months, VCs will have heard about you and likely think you are a “stale deal”. Then meeting with them will likely be ineffective" " BLOG: bryanstarbuck.typepad.com!
  17. 17. Pre-Money Valuation! If raising under $2 million…"If raising over $2 million from VCs:"" Often valuation above PLUS capital raised"" Investors get ~33% to 48% of round" " BLOG: bryanstarbuck.typepad.com!
  18. 18. Lessons about funding! $1m to $2 round is often better than a $500k round" " Startups are cheap to run early, but…" " So it costs $50k to $70k per month" Funding goes hot and cold"Year 1" Idea ! "Validate" "Alpha "Beta "Launch" "Traction Building" !Year 2" Small traction "Medium Traction ! ! " "Huge traction / Profitable" Raising your series A after your Seen round closes! ! Fund raising is hard" ! Near impossible" " BLOG: bryanstarbuck.typepad.com!
  19. 19. Seattle Notes!" Using a convertible note is the best. The valley does that for seed rounds"" Almost all Seattle investors demand a priced round. By policy"" Watch valuation very closely in Seattle"" Many people are moving to the valley currently, purely because of funding challenges in Seattle in the last 2 years"" I HIGHLY RECOMMEND moving to the bay area for 5 months to raise capital there. Then return." " BLOG: bryanstarbuck.typepad.com!
  20. 20. THE END! ! Q & A!
  21. 21. Next Steps for Learning (1 of 3)!People often ask how to learn more. Here is the best way:" ABSOLUTE Must Read! Strategic Thinking or Execution! Venture Deals On Amazon" Innovator’s Dilemma On Amazon" By: Brad Feld" By: Clayton Christensen" " " " Crossing the Chasm On Amazon" Art of the Start On Amazon" By: Geoffrey Moore" By: Guy Kawasaki" " " Blue Ocean Strategy On Amazon" " By: W. Kim" " " The Lean Startup On Amazon" " By: Eric Ries" Good to Great On Amazon" " By: Jim Collins" " Maverick On Amazon" Other! By: Ricardo Semier" " " The Ten-Day MBA On Amazon" The Four Steps to the Epiphany On Amazon" By: Steven Silbiger" By: Steven Blank" " " Founders at Work On Amazon" Inspiring Excellence On Amazon" By: Jessica Livingston" By: Michael Schutzler" " " " ABSOLUTE Must Read" " BLOG: bryanstarbuck.typepad.com!
  22. 22. Next Steps for Learning (2 of 3)!People often ask how to learn more. Here is the best way:" Marketing! Other! The 22 Immutable Laws of Branding On Amazon" Founders at Work On Amazon" By: Al Ries" By: Jessica Livingston" " " " " Full Frontal PR On Amazon" Startup Weekend On Amazon" By: Richard Laermer" By: Marc Nager" " " " Positioning: The Battle for your Mind On Amazon" Don’t Make Me Think On Amazon" By: Jack Trout" By: Steve Krug" " " The Strategy and Tactics of Pricing On Amazon" " By: John Hogan" " " Purple Cow On Amazon" By: Seth Godin" " " ABSOLUTE Must Read" " BLOG: bryanstarbuck.typepad.com!
  23. 23. More Learning (3 of 3)! " (My) Bryan Starbuck’s Blog on Company Building:" " http://bit.ly/StarbuckBlog" " Dave McClure – Marketing Model for Startups: " " http://500hats.typepad.com/500blogs/2007/06/internet-market.html" " http://vimeo.com/26277733" " http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version" " http://www.slideshare.net/dmc500hats/startup-metrics-101-367863" " More from Dave McClure:" " http://www.slideshare.net/dmc500hats/why-not-to-do-a-startup" " http://www.slideshare.net/dmc500hats/do-marketing-its-not-evil" " Presenting to Investors:" " http://www.slideshare.net/dmc500hats/how-to-pitch-a-vc-aka-startup-viagra-how-to-give-a-vc-a-hardon" " Strategic economics of SaaS https://salesforce.adobeconnect.com/_a13852757/buildingasuccessfulsaasco/" " Startup Marketing: http://howtolaunchastartup.com/2011/06/20/21-must-read-resources-for-start-up-marketing/" " 57 Things I’ve Learned Founding 3 Tech Startups: http://betashop.com/post/1417413108/57-things-ive-learned-founding-3-tech-companies" ABSOLUTE Must Read" " BLOG: bryanstarbuck.typepad.com!
  24. 24. The END!Next Steps:! !" Create your company and have a BLAST"" ! Join the “MicrosoftßàStartup Learning” mailing list" " Join here: http://groups.google.com/group/Knowledge-Startup-to-Microsoft"" Bryan Starbuck’s Blog: bryanstarbuck.typepad.com"

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