Tips to sharpen fundraising approach and strategy for early stage founders

1. Fundraising
Workshop
April 2018
Early Stage Practice

2. Who is SVB: We are a commercial bank
focused on the tech ecosystem, working
with companies from idea through IPO.
FUNDRAISING 101
We bank the majority
of founders and
venture funds.
We are uniquely
positioned to
understand the
journey of a startup.
Our goal is to
accelerate the
success of our clients,
beyond banking.
We are your partner.

3. 3
Our role in the innovation ecosystem is to
increase your odds of success.
Founders VCs

4. Startups are our specialty
4
We’re former investors, operators, and mentors
Jake Mendel
@ijakemendel
Chris Behrens
@crisp_aarons
Denisha Kuhlor
@denishakuhlor
.
Jeremy Shure
@jeremyshure
Shai Goldman
@shaig
Natalie Fratto
@nataliefratto

5. Disclaimers
▸This is not one size fits all; every deal is different.
▸This assumes that you have decided that raising
institutional capital is right for you -- it’s not for every
company.
▸All investors are unique, just as are all founders.
▸Data in this deck is NYC focused - fundraising and VC
Funds differ dramatically by region.
▸Data in this deck is based on 2016-2018 trends.
Fundraising and valuation norms shift yearly.
FUNDRAISING 101

6. Purpose and Goal
FUNDRAISING 101
▸Fundraising forces you to articulate three things:
Why You +
Why Now +
Why this Problem
= How Will You Generate a Return on the Investment
▸Our goal is to help you create a strategy, identify any
blind spots, and sharpen your fundraising focus.

7. QUESTIONS TO ASK WHEN
FUNDRAISING:
▸ What round am I raising and why am I raising?
▸ When’s the best time?
▸ How do I qualify investors?
▸ What does a lead investor do?
▸ Who are the most active seed investors in NYC?
▸ How do I get an intro to a VC?
▸ How should I prep for VC meeting #1?
▸ What should be in my deck?
▸ What other resources are out there?
FUNDRAISING 101

8. WHAT ROUND ARE YOU RAISING?
Pre-
Seed
Seed
Series
A
< $1M
$1-3M
$5M+
▸ pre-product
▸ betting on the team
▸ likely angels, F&F ,
(non-institutional
VC)
▸ Unpriced note
▸ <10- 20% of
company given
▸ Product is
launched
▸ Early traction is
good
▸ Institutional seed
investors (funds
sub $200M) + a
lead
▸ Either note or
priced round
▸ 10-25% of
company given
▸ Product is live and
gaining
momentum
▸ Traction signals
product/market fit
is found (ex. low
churn + high
usage + more
demand)
▸ Institutional Series
A+ investors w/ a
lead
▸ Priced round
▸ 20%+ of the
company given
*based on NY 2017 data
FUNDRAISING 101
Round Size
Traction

9. WHEN’S THE BEST TIME TO RAISE?
▸ Average
raise takes
3-6 months
from start
to term
sheet
▸ Try to avoid
EOY and
summer
holidays
FUNDRAISING 101
Insider Tips

10. YOUR RAISE IS A SALES FUNNEL
Identify 30 qualified
investors
Find best introductions and
batch your meetings
Refine your pitch after each
meeting until you close a
lead
Use Lead as momentum to
close rest of round
FUNDRAISING 101

11. 11
How to qualify investors
Does this fund
invest at your
Stage?
Stage
Does this fund
invest invest in
Your geography?
Location
Does this fund
invest in your
Industry/sector?
Sector
What size check
will they write?
Size
Is this fund still
actively making
investments?
Vintage
Has this fund
invested in any
competitive co’s
Activity

12. Resources to Qualify Investors:
So much of the work has been done for you!
▸To Identify Target VCs:
▸DRF’s VC Wiz, NFX Signal, Investors under 200M, NYC VC Finder, Seed
Deal Leads in NY
▸CRM Tools to Track Your VC Meetings:
▸Streak, Pipedrive, Hubspot, DRF’s VC Wiz
▸More data on Funding Trends, Valuation etc:
▸Cooley Go , Angel List
FUNDRAISING 101

13. START WITH A LEAD INVESTOR
FUNDRAISING 101
▸The lead investor helps the process take flight and
often initiates the deal
▸Lead sets terms for round. Some may want board
seats (some at seed, almost always at A)
▸Social proof to other investors
▸The size of their commitment matters (i.e.: typically
1/3 - 1/2 of round)

14. Find A Lead!!!
Firms in NYC
who lead (price)
$2M+ seed
rounds with a
$750K+ check
• Accel
• Bloomberg Beta
• Boldstart Ventures
• Bowery Capital
• Brand Foundry
• Canaan Partners
• Collaborative Fund
• Corigin Ventures
• Eniac Ventures
• ff Venture Capital
• First Round Capital
• Flybridge
• Genecast Ventures
• Greycroft
• Homebrew
• IA Ventures
• KEC Ventures
• Lerer Hippeau
Ventures
• Compound Ventures
• Primary Ventures
• Resolute Ventures
• Scout Ventures
• True Ventures
• Two Sigma Ventures
• Union Square
Ventures

15. Pre-Seed Investors in NYC
Those that actively
participate in pre-launch
startups based in NYC,
where round sizes are
typically $250K to $750K
Acceleprise
Afore
BoldStart
Bowery
Box Group
Brainchild
Brooklyn Bridge
Bullish
Corigin Ventures
Coventure
Eniac
ffvc
First Round Capital
Flybridge
Full Tilt Capital
Great Oaks
Homebrew
Hustle Fund
IA Ventures
Lakehouse
Lattice
LDV Capital
Lerer Hippeau
Max Ventures
MetaProp
NextGen Venture
NextView
Nomo Ventures
Notation
Precursor
Red & Blue VC
Rough Draft
Scout Ventures
Social Starts
SoGal Ventures
SOSV
Story Ventures
TechNexus
Techstars
Terrapin Bale VC
Third Kind
TJNS
X Factor

16. Seed / A in NY, < $1M, ‘17/’18
all investor types

17. Seed / A in NY , < $5M, ‘17/’18
VCs only

18. 18
Not all introductions are made equal
Spectrum of VC Intros
Strong Neutral Weak
Founders
they
previously
invested in
Trusted Partner
(Existing
Investor, SVB,
Attorney,
Accelerator
Cold Outreach
(Direct or
Indirect)
Other VC that
passed – Don’t
ask for this!

19. HOW TO PREP FOR VC MEETING #1
▸Have both a deck and one pager prepped - don’t plan to use
either.
▸Practice! SVB hosts Safe Spaces for its clients.
▸Don’t ask for an NDA at the outset.
▸Know that you’re not going to get a check today.
FUNDRAISING 101

20. Deck Best Practices
At a minimum, your deck should include:
20
Problem Solution Team
Market Size Competition Traction
Want a deep dive on pitch decks? Click here!

21. FEEDBACK, SIGNALS & WHEN TO
SWITCH GEARS
Can mean any of the following:
▸ Company is too early
▸ Doesn’t feel a fit with team
▸ Lack of capital to deploy
▸ Competitive Investments
▸ Concern on sub-sector
FUNDRAISING 101

22. LOCAL PROGRAMS TO ACCELERATE
YOUR GROWTH
FUNDRAISING 101
techstars.com eranyc.com angelpad.org
https://grandcentraltech.com/ https://expa.com/ http://engineering.nyu.edu/business/future-labs

23. YOU’VE RAISED MONEY?
FUNDRAISING 101

24. Appendix

25. Credit: Primary VC “NYC Seed Deal Report” 25
Seed rounds have been getting bigger
Q4 2017 average NYC seed round size reached $2MM

26. Q1 Update – NYC Seed Deals
Credit: Primary VC “NYC Seed Deal Report”
26
• Median deal size dropped
to lowest since Q1 2016
• Most Active Sectors:
• Enterprise SaaS (28%)
• E-Commerce (24%)
• Fintech (20%) Customized
Text block
$60M

27. 27
Valuations
Credit: Cooley LLP - https://www.cooleygo.com/trends/
Early-stage valuations are driven by a number of factors
• Median stage valuation
• Founding Team
– Prev. exits
– Unique sector expertise
• Sector Activity
– Hot sectors have higher valuations
• Ownership Math
– VC’s back into ownership % based on exit
What drives your
valuation?
Seed Valuations
Series A Valuations

28. Additional Resources
▸Seriously, what’s your (startup’s) problem?
▸Competition is not a bad word
▸Market Size
▸Traction: Invest in Lines not Dots
FUNDRAISING 101

29. TYPES OF INVESTORS
▸Institutional funds
▸Strategic Investors
▸Angels
▸Crowdfunding
▸Non-dilutive sources:
▸Revenue!
▸Grants
▸Venture Debt
FUNDRAISING 101

30. Most Active Accelerators ‘16/’17