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Techstars Boston - The Secret Playbook of Raising $$$ - May 2022

  1. The Secret Playbook of Raising $$$ M AY 2 0 2 2 D AV I D C H A N G @ C H A N G D S
  2. Fundraising Basics How to Raise a Round Pitch Tips
  3. Startup operator and investor $150m raised 80 companies 5x return
  4. What’s the business trajectory? Lifestyle or social good Linear growth or revenue fueled High growth, scalable venture
  5. Where to get that first dollar? Revenue Equity Partners Grants Debt
  6. Where to get that first dollar? Revenue Prepaid product Crowdfunding Consulting service Equity Convertible notes SAFE Stock Partners Vendor services in advance Non-recoverable engineering Grants SBIR Pitch competitions Debt SBA loan Bank loan Personal note
  7. Capital sources have tradeoffs Equipment Financing Traditional VC Micro VC Angel Groups AngelList Angels Corporate / Strategic Venture Customers Jobs Bill Portal Crowdfunding Vendors Founder Friends & Family Crowdfunding Grants- Gov & Foundation Venture Debt Bank Loans Personal Loans Private Equity Competitions Accelerators & Contests Impact Angels & VCs Size Cost Source: Jean Hammond & MassChallenge
  8. Venture capital stages Growth Equity Early Stage Angel Friends & Family
  9. How the VC game works Skewed return distribution VCs must swing for the fences
  10. Raising a Round
  11. 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
  12. Use of Proceeds • Build product • Grow team • Marketing • Customer acquisition • Working capital
  13. Milestones See Team Product Development Market Demand Product / Market Fit Business Model Execution
  14. Fundraising Basics How to Raise a Round Pitch Tips
  15. What obstacles stand in your way?
  16. Just hustle?
  17. Aim for a tight target Break down barriers Create FOMO The ABC’s
  18. A Aim for a Tight Target
  19. Shotgun blast doesn’t work
  20. Target investors using 6 filters
  21. Stage
  22. Stage Location
  23. Location Stage Industry
  24. Location Stage Industry Business Model
  25. Business Model Location Stage Industry Thesis
  26. Thesis Business Model Location Stage Industry Social / Trust
  27. Social / Trust Your ideal investor meets 6 filters Thesis Business Model Industry Location Stage
  28. University Focused Corporate VC Angel Groups Seed Stage Growth Stage Early Stage VC Tech VC Healthcare, Biotech, Energy Local Investors
  29. Tools to build the pipeline
  30. Prep the basics ✓ Blurb (1 paragraph) / teaser (1 page) ✓ Pitch deck (10 slides) ✓ Financials and budget ✓ Legal representation ✓ Founders agreements
  31. B Break down Barriers
  32. “Looking for feedback on the idea” “Who’s knowledgeable in this space?” “I’m not raising right now” “If you want money, ask for advice…”
  33. Improves hit rate by 10x Doesn’t start the clock Creates trend from data points Why not just ask for money?
  34. Don’t make knee-jerk changes Incorporate feedback Refine pitch Spot consistent themes
  35. When to stop fishing?
  36. C Create FOMO
  37. Scarcity Limited Time
  38. Land the anchor investor “I’m closing a round” “Moving faster than expected” “Can I hold a space for you?”
  39. Finish strong Full throttle to avoid mid-flight stall Leverage current investors to pull in new ones “Oversubscribe” optics
  40. Close the deal • 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
  41. Structure Equity Debt
  42. 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
  43. Seed A B $15 $6 $1 $30 $12 $5 Valuation & Dilution ? Dilution: what’s your end stake? Valuation ($M) ? Prep Target Socialize Ignite Close
  44. Valuation & Dilution 37% See See 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 Prep Target Socialize Ignite Close
  45. 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?
  46. Choose your investors carefully What characteristics to look for in a venture partner? How find someone who is properly aligned with your business? Board dynamics with the venture partner, what to expect, what to protect against, how to go about that board relationship?
  47. Aim for a tight target Break down barriers Create FOMO The ABC’s
  48. Works for first-time founders too
  49. Investor FOMO? Here's Everything Early-Stage Entrepreneurs Need To Know About Fundraising $250k $1.5m
  50. Fundraising Basics How to Raise a Round Pitch Tips
  51. Define your target audience Investor Customer Partner Pitch Competition Showcase Event / Booth Media & General
  52. Adjust for style Data Story
  53. Anchor your summit & basecamp
  54. Don’t share everything at once 1 Sentence 1 Paragraph 1 Page 1 Deck 1 Follow-up Deck
  55. Adapt content to the venue Home Office Coffee Shop
  56. Don’t overreact to feedback Incorporate feedback Double down on consistent themes Avoid whiplash changes
  57. Don’t be sloppy and miss details Typoos capitalization & punctuation, Font & sizes Alignment Color Design (icons, photography, clip art)
  58. Typical Parts Intro Problem Solution Market Opportunity Product Go-to- Market Business Model Competition Traction Team Ask Appendix
  64. For inspiration… a-funding-round-startup-pitch-decks-2019-8
  65. Marketing Press / Media Freelancers Agencies National Tech Journalists Boston Tech Journalists Legal Legal Templates Accounting Recruiters Real Estate Co-working Brokers Events Event Spaces Startup Events Listings Startup Community Groups Speakers/Mentors (WIP) Boston Women Leaders Investors Guides Lists Materials / Templates University Entrepreneurship Resources Competitions Student Groups Startup Resources General Guides Development Web Dev Shops Mobile App Dev Shops Tech Talent / Advisors Mobile App Development Tools Design / UX Graphic Design Resources Full-time Freelancers Agencies Product Pros Emerging Stars
  66. The Secret Playbook of Raising $$$ M AY 2 0 2 2 D AV I D C H A N G @ C H A N G D S