1.
Harvard Law
Entrepreneurship Project
Lunch Talk: Fundraising 101
Nov 11, 2016
David Chang
@changds

2.
My
Journey
Fundraising
Basics
How to Raise
a Round

3.
$80
$4
$42
$7
$17
$110
$210
$270
$1
$135
Funding Exit
My Startups – Venture Returns

4.
Direct Via Syndicate/Fund
My Angel Investments

5.
Now
Building
Investing
Connecting

6.
Fundraising
Basics

7.
What Obstacles
Stand in Your Way?

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.
Growth trajectory of your business?
Lifestyle business
Personal raise – loan,
add folks to cap table
Growth oriented
business
Crowdfunding and
personal raise
High growth scalable
business Venture capital

10.
Venture Capital Stages
Friends and Family
Angel
Early Stage
Growth Equity

11.
Investors
Seed
Early
Growth

12.
Venture Capital Dynamics
•Skewed return distribution
•VCs must swing for the fences
Source: @DawnUmlah

13.
Amount to Raise
How much funding do you need?
•Basic financial model of
cost drivers and revenue
streams
•Forecast monthly for 18
months
•Fundraise rule of thumb:
12-18 months’ cash
How
Much
For
What
To
Prove

14.
Use of Proceeds
What will you use the money for?
•Build out the product
•Grow the team
•Marketing
•Customer acquisition
•Working capital
How
Much
For
What
To
Prove

15.
Milestones
What will be proven that de-risks the business?
•Product development
•Market demand
•Product / market fit
•Business model
•Execution
How
Much
For
What
To
Prove

16.
How to Raise
a Round

17.
Fundraising Campaign
Prep Target Socialize Raise Close

18.
Basic Prep
ü Legal representation
ü Founders agreements
ü Financials and budget
ü Teaser (1 page)
ü Pitch deck (10 pages)

19.
Target List of Investors
Stage Location
Industry
Vertical
Business
Model
Investment
Thesis
Social /
Trust Filter

20.
Socialize
•Get warm intros
• Find strongest mutual connections to 30+ potential
investors
• Network over 2-3 months
•Ask for referrals, not money
•Refine pitch
• Incorporate feedback, but avoid whiplash changes
“I’m not ready to raise”
“Who would be helpful?”
“Who else should I talk to?”

21.
Raise: Go for the Ask
•Talk to your top candidates at the same time
• Run conversations in parallel
• Decide whether / when to tell investors about each
other
•Create urgency
• Anchor investor acts as the first domino
• “Triggering events” to get a (or better) term sheet

22.
Closing the Deal
•Rolling close vs. set close
•Reference check investors
•Not done until money is in
the bank
Key terms
q Board composition
q Option pool
q Voting rights
q Founder vesting
q Change of control
q Redemption rights
q Information rights
q Anti-dilution

23.
Structure
Preferred Stock
• Preferences over common
• Board seat or 2
• Option pool
• Liquidation preference- they
get their $ first
• Control over sale, new options
Convertible Debt
• Debt that becomes preferred
equity when you raise it
• No valuation, but the “cap” is
a valuation ceiling
• Interest accrues, rate <10%
• Conversion discount

24.
Negotiating Valuation

25.
Valuation & Dilution
?
$12
$30$6
$15
Seed A B
Valuation ($M) Dilution: what’s your end stake?
$1M raise $6M raise $15M raise
?

26.
Valuation & Dilution
?
$12
$30$6
$15
Seed A B
Valuation ($M) Dilution: what’s your end stake?
$1M raise $6M raise $15M raise
37%
See www.ownyourventure.com
Raise $1M on $5M pre
33%Raise $1M on $3M pre
34%Raise $1.5M on $5M pre

27.
How Long Does it Take?
•Longer than you expect
• 3-6 months
•Speed limited by access to investors
• Your ability to find them
• Their calendar availability (surprisingly hard)
• Bigger raises = more diligence (up to 30 days)

28.
Resources
• Pitch
• www.pitchenvy.com
• www.bestpitchdecks.com
• Guy Kawasaki: 10 slides / 20 minutes / 30 point font
• NextView www.nextviewventures.com/blog/free-startup-pitch-decks-template/
• www.mjskok.com/resource/getting-behind-perfect-pitch
• www.soulmix.com/remix/619
• Legal
• Foley & Lardner https://www.foley.com
• Goodwin Proctor www.foundersworkbench.com
• Techstars www.techstars.com/docs
• www.seriesseed.com
• General
• www.jddavids.com
• www.robkornblum.com

29.
Q&A

30.
Pitch Tips

31.
Share Your Summit & Basecamp

32.
Leverage Your Natural Presentation Style

33.
Adjust for Your Audience

34.
No Blind Spots
Pricing
Customer
Collaborators
Funding
Promotion
Product / Service
Context
Place
Company
Concept
Competition

35.
Pitch Materials for Each Level
•1 Sentence
•1 Paragraph
•1 Page
•1 Light Deck
•1 Follow-up Deck

36.
Function
Size
Know Yourself
Location
Industry

37.
Start or Join a Company

38.
People Bonds > Company Bonds

39.
Find the Right Co-founders

40.
Choose Investors Carefully

41.
Amplify Your Network

42.
Doing Business in Boston

43.
http://bostontechguide.com

44.
Local Pillar Tech Companies
http://bostontechguide.com

45.
Big Tech Companies with Local Presence
http://bostontechguide.com

46.
Industry Clusters of Expertise
Marketing
Tech e-commerce Cybersecurity Cloud
Travel Mobile Ed Tech Robotics
Life Sciences Health IT Energy
http://www.slideshare.net/bussgang/boston-startup-scene-fall-2015

47.
Accelerators / Incubators
Co-working
Corporate University Independent

48.
Development Shops
http://bostontechguide.com

49.
University Resources
http://bostontechguide.com

50.
Events & Networking
http://bostontechguide.com

51.
www.greenhornconnect.com/events/

52.
Media
http://bostontechguide.com

53.
Community Groups & Trade Organizations
http://bostontechguide.com

54.
@changds @scottbaileyBTV
www.AdClubBrandathon.com

55.
Talent
EcosystemCapital