Successfully reported this slideshow.

HBS Field Y - Fundraising 101 - How to raise a round - April 2021

0

Share

1 of 48
1 of 48

More Related Content

Related Books

Free with a 14 day trial from Scribd

See all

Related Audiobooks

Free with a 14 day trial from Scribd

See all

HBS Field Y - Fundraising 101 - How to raise a round - April 2021

  1. 1. HBS Field Y Fundraising 101: How to pitch and land your first investors D AV I D C H A N G @ C H A N G D S
  2. 2. Fundraising Basics How to Raise a Round Pitch Tips
  3. 3. Background
  4. 4. Startup Experiences
  5. 5. Angel Investments Direct Syndicate/Fund TBD Angels
  6. 6. What obstacles stand in your way?
  7. 7. What’s the business trajectory? Lifestyle or social good Linear growth or revenue fueled High growth, scalable venture
  8. 8. Where to get that first dollar? Revenue
  9. 9. • Active VC List, DocSend • Investors meeting during COVID-19 • Plan for longer runway • Valuations hit 20-30%
  10. 10. Venture capital stages Growth Equity Early Stage Angel Friends & Family
  11. 11. How the VC game works 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 product • Grow 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. Fundraising Basics How to Raise a Round Pitch Tips
  17. 17. Prep Target Socialize Raise Close Run a 5-step fundraising campaign
  18. 18. Basic Prep ✓ Legal representation ✓ Founders agreements ✓ Financials and budget ✓ Blurb (1 paragraph) / teaser (1 page) ✓ Pitch deck (10 slides)
  19. 19. Hone in on target criteria Stage Location Industry Vertical Investment Thesis Business Model Social / Trust Filter
  20. 20. Tools to build the pipeline
  21. 21. University Focused Corporate VC bit.ly/boston-area-investors-firms Local Investors Angel Groups Seed Stage Growth Stage Early Stage VC Tech VC Healthcare, Biotech, Energy
  22. 22. Socialize • Prioritize sequence • Find strongest connections to 30+ targets • Tactics: lead gen, cold calling, warm intros • Network over 2-3 months
  23. 23. Don’t ask for money! Improves hit rate Creates data points Doesn’t start the clock “Who else should I talk to?” “I’m not ready to raise” “Who would be helpful?”
  24. 24. Refine pitch • Incorporate feedback • Double down on consistent themes • Avoid whiplash changes
  25. 25. Go for it! Create FOMO • Approach your top candidates at the same time • Decide whether to tell investors about each other • Land anchor investor as the first domino • Use triggering events to get or improve term sheets “I’m closing a round”
  26. 26. Structure Equity
  27. 27. • 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
  28. 28. • 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
  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 ownyourventure.com See dlopuch.github.io/venture-dealr Raise $1M on $5M pre 34% Raise $1.5M on $5M pre 33% Raise $1M on $3M pre Dilution: what’s your end stake? Valuation ($M) Seed A B $15 $6 $1 $30 $12 $5
  31. 31. 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) How soon to start, how long it takes, general timeline you can expect, how to reduce time between the initial outreach and closing a deal?
  32. 32. Choose your investors carefully What characteristics to look for in a venture partner?
  33. 33. • 1 Paragraph • 1 Page • 1 Light Deck • 1 Follow-up Deck
  34. 34. Articulate in 90 seconds Why you’re the right team Know numbers and business model cold Kevin O’Leary
  35. 35. www.garage.com/resources/perfecting-your-pitch 10 slides 20 minutes 30 point font Guy Kawasaki’s tips
  36. 36. pexels.com
  37. 37. thenounproject.com
  38. 38. Typical Parts Overview Problem Solution Market Opportunity Go-to-Market Traction Revenue & Business Model Team Competitive Landscape Financial Projections Ask & Use of Proceeds Conclusion
  39. 39. www.nextviewventures.com/blog/free-startup-pitch-decks-template
  40. 40. www.bestpitchdecks.com
  41. 41. Resources • Legal • Goodwin Procter www.foundersworkbench.com • Foley & Lardner www.foley.com • Pierce Atwood • Techstars www.techstars.com/docs • www.seriesseed.com • General • www.jddavids.com • www.robkornblum.com bit.ly/startresources
  42. 42. Q&A D AV I D C H A N G @ C H A N G D S

×