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@CHANGDS
BACKGROUND
STARTUP EXPERIENCES
Direct Via Syndicate/Fund ANGEL INVESTMENTS
NOW Building Investing Connecting
Fundraising Basics How to Raise a Round Pitch
 Tips
WHAT OBSTACLES STAND IN YOUR WAY?
CAPITAL SOURCES You hear a lot about • Venture Capital • Angel Groups • Crowdfunding • Friends and Family • Customers • Ac...
BUSINESS TRAJECTORY Lifestyle
 business Bootstrap
 Loans Growth oriented business Crowdfunding
 Personal raise High growth...
VENTURE CAPITAL STAGES Growth Equity Early Stage Angel Friends & Family
VENTURE CAPITAL DYNAMICS Skewed return distribution VCs must swing for the fences
RAISING A ROUND
HOW MUCH TO RAISE • Basic financial model of cost drivers and revenue • Forecast monthly for 2 years • Fundraise rule of t...
USE OF PROCEEDS • Build out the product • Grow the team • Marketing • Customer acquisition • Working capital
MILESTONES See www.techcrunch.com/2015/06/24/running-out-of-money-isnt-a-milestone Team Product Development Market Demand ...
How to Raise a Round
FUNDRAISING CAMPAIGN Prep Target Socialize Raise Close
BASIC PREP ✓ Legal representation ✓ Founders agreements ✓ Financials and budget ✓ Teaser (1 page) ✓ Pitch deck (10 pages)
TARGET CRITERIA Stage Location Industry Vertical Business Model Investment Thesis Social / Trust Filter
BUILD PIPELINE
SOCIALIZE • Prioritize sequence • Find strongest connections to 30+ targets • Tactics: lead gen, cold calling, warm intros...
DON’T ASK FOR MONEY! “I’m not ready to raise” “Who would be helpful?” “Who else should I talk to?”
REFINE PITCH • Incorporate feedback • Double down on consistent themes • Avoid whiplash changes
GO FOR THE ASK • Approach your top candidates at the same time • Run conversations in parallel • Decide whether / when to ...
CREATE URGENCY • Anchor investor acts as the first domino • “Triggering events” to get a (or better) term sheet
STRUCTURE Equity Debt
STRUCTURE • Preferences over common • Board seat or 2 • Option pool • Liquidation preference • Control over sale, new opti...
CLOSING THE DEAL
Seed A B $15 $6 $1 $30 $12 $5 VALUATION & DILUTION ? Dilution: what’s your end stake?Valuation ($M) ?
VALUATION & DILUTION 37% See www.ownyourventure.com Raise $1M on $5M pre 33%Raise $1M on $3M pre 34%Raise $1.5M on $5M pre...
FINAL DEAL POINTS • Rolling close vs. set close • Not done until money is in the bank Key terms ❑ Board composition ❑ Opti...
HOW LONG DOES IT TAKE? • Longer than you expect • 3-6 months • Speed limited by access to investors • Your ability to find...
FINDING THE RIGHT INVESTORS
Pitch
 Tips
KNOW YOUR AUDIENCE
ADJUST FOR THEIR STYLE
LEVERAGE YOUR NATURAL STYLE
SHARE YOUR SUMMIT & BASECAMP
DON’T SHARE EVERYTHING AT ONCE • 1 Sentence • 1 Paragraph • 1 Page • 1 Light Deck • 1 Follow-up Deck
RESOURCES • Pitch • The Best Startup Pitch Decks www.bestpitchdecks.com • NextView www.nextviewventures.com/blog/free-star...
@CHANGDS
Babson How2Tuesdays - How to Raise a Seed Round - Nov 2017
Babson How2Tuesdays - How to Raise a Seed Round - Nov 2017
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Babson How2Tuesdays - How to Raise a Seed Round - Nov 2017

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David Chang, entrepreneur, angel investor, and director of the Babson Summer Venture Program, leads a practical session on how to pitch and land your first investors. David shares his experiences, talks about fundraising basics, walks through a 5-step “how-to” series of tactics to raise from angels/VCs, and finishes with pitch tips.

Published in: Small Business & Entrepreneurship
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Babson How2Tuesdays - How to Raise a Seed Round - Nov 2017

  1. 1. @CHANGDS
  2. 2. BACKGROUND
  3. 3. STARTUP EXPERIENCES
  4. 4. Direct Via Syndicate/Fund ANGEL INVESTMENTS
  5. 5. NOW Building Investing Connecting
  6. 6. Fundraising Basics How to Raise a Round Pitch
 Tips
  7. 7. WHAT OBSTACLES STAND IN YOUR WAY?
  8. 8. CAPITAL SOURCES You hear a lot about • Venture Capital • Angel Groups • Crowdfunding • Friends and Family • Customers • Accelerators • Competitions Not much about • SBA Loans and Personal Debt • Grants • Corporate Venture • Vendors or Equipment Finance • Bootstrapping (creatively)
  9. 9. BUSINESS TRAJECTORY Lifestyle
 business Bootstrap
 Loans Growth oriented business Crowdfunding
 Personal raise High growth scalable business Venture
 Capital
  10. 10. VENTURE CAPITAL STAGES Growth Equity Early Stage Angel Friends & Family
  11. 11. VENTURE CAPITAL DYNAMICS Skewed return distribution VCs must swing for the fences
  12. 12. RAISING A ROUND
  13. 13. HOW MUCH TO RAISE • Basic financial model of cost drivers and revenue • Forecast monthly for 2 years • Fundraise rule of thumb: 12-18 months’ cash
  14. 14. USE OF PROCEEDS • Build out the product • Grow the team • Marketing • Customer acquisition • Working capital
  15. 15. MILESTONES See www.techcrunch.com/2015/06/24/running-out-of-money-isnt-a-milestone Team Product Development Market Demand Product / Market Fit Business Model Execution
  16. 16. How to Raise a Round
  17. 17. FUNDRAISING CAMPAIGN Prep Target Socialize Raise Close
  18. 18. BASIC PREP ✓ Legal representation ✓ Founders agreements ✓ Financials and budget ✓ Teaser (1 page) ✓ Pitch deck (10 pages)
  19. 19. TARGET CRITERIA Stage Location Industry Vertical Business Model Investment Thesis Social / Trust Filter
  20. 20. BUILD PIPELINE
  21. 21. SOCIALIZE • Prioritize sequence • Find strongest connections to 30+ targets • Tactics: lead gen, cold calling, warm intros • Network over 2-3 months
  22. 22. DON’T ASK FOR MONEY! “I’m not ready to raise” “Who would be helpful?” “Who else should I talk to?”
  23. 23. REFINE PITCH • Incorporate feedback • Double down on consistent themes • Avoid whiplash changes
  24. 24. GO FOR THE ASK • Approach your top candidates at the same time • Run conversations in parallel • Decide whether / when to tell investors about each other
  25. 25. CREATE URGENCY • Anchor investor acts as the first domino • “Triggering events” to get a (or better) term sheet
  26. 26. STRUCTURE Equity Debt
  27. 27. STRUCTURE • Preferences over common • Board seat or 2 • Option pool • Liquidation preference • Control over sale, new options • Debt that becomes preferred equity when you raise it • No valuation, but the “cap” is a ceiling • Interest accrues, rate <10% • Conversion discount Equity Preferred Stock Debt Convertible Notes, SAFEs
  28. 28. CLOSING THE DEAL
  29. 29. Seed A B $15 $6 $1 $30 $12 $5 VALUATION & DILUTION ? Dilution: what’s your end stake?Valuation ($M) ?
  30. 30. VALUATION & DILUTION 37% See www.ownyourventure.com Raise $1M on $5M pre 33%Raise $1M on $3M pre 34%Raise $1.5M on $5M pre Dilution: what’s your end stake?Valuation ($M) Seed A B $15 $6 $1 $30 $12 $5
  31. 31. FINAL DEAL POINTS • Rolling close vs. set close • Not done until money is in the bank Key terms ❑ Board composition ❑ Option pool ❑ Voting rights ❑ Founder vesting ❑ Change of control ❑ Redemption rights ❑ Information rights ❑ Anti-dilution
  32. 32. HOW LONG DOES IT TAKE? • Longer than you expect • 3-6 months • Speed limited by access to investors • Your ability to find them • Calendar availability (surprisingly hard)
  33. 33. FINDING THE RIGHT INVESTORS
  34. 34. Pitch
 Tips
  35. 35. KNOW YOUR AUDIENCE
  36. 36. ADJUST FOR THEIR STYLE
  37. 37. LEVERAGE YOUR NATURAL STYLE
  38. 38. SHARE YOUR SUMMIT & BASECAMP
  39. 39. DON’T SHARE EVERYTHING AT ONCE • 1 Sentence • 1 Paragraph • 1 Page • 1 Light Deck • 1 Follow-up Deck
  40. 40. RESOURCES • Pitch • The Best Startup Pitch Decks www.bestpitchdecks.com • NextView www.nextviewventures.com/blog/free-startup-pitch-decks-template • Guy Kawasaki: 10 slides / 20 minutes / 30 point font • www.mjskok.com/resource/getting-behind-perfect-pitch • Legal • Pierce Atwood • Foley & Lardner www.foley.com • Goodwin Procter www.foundersworkbench.com • Techstars www.techstars.com/docs • www.seriesseed.com • General • www.jddavids.com • www.robkornblum.com
  41. 41. @CHANGDS

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