How Startups can Raise Money in Today's Climate

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Rose Lewis, one of the founders of startup accelerator Collider12, gave this presentation at Digital Shoreditch in May 2013. It covers the mistakes startups make when trying to raise funding, and how they can get access to money, even in today's tricky financial climate

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  • Facebook $100b 8 yearsInstagram - $1b 14 months est 2010Pinterest $1.5b est 2008Why Now ?The Opportunities to scale globally quickly Cheap Tech Access to skills/resourceAccess to money So it sounds easySo why is it so hard?
  • Know what to do at networking events Practise, Practise and practise againAllow time to build solid relationships Diversity Maintain Give back Knowing when to ask for something
  • How Startups can Raise Money in Today's Climate

    1. 1. Capital DayRaising Money inToday’s Climate24th May 2013Rose Lewis, Partner@roselewis
    2. 2. Never been a better time to be an entrepreneur.• Global market opportunities.• Tech is cheap(er), it works.• Access to resources is high(not necessarily in this country).• Support for start-ups is high.
    3. 3. More money available• Accelerators• Crowdfunding• SEIS/EIS• Angel investing – better than a bank• City meets Tech• Grants – tsb• Corporate Venturing
    4. 4. You could also do this !
    5. 5. Soitshould be easy toraise moneyright….?5
    6. 6. Only2%of those who submit businessplans/applications get funded.
    7. 7. Why?Business Plansare rejectedbecause…• Lack of skills/ credibility in the managementteam - No unfair advantages.• No Market opportunity- “reinvented thewheel”.• No proof of concept- “Ali G pitch”.• Business Model Not scalable.• Forecasts based on unproven assumptions.• Business Model too complex to execute.• Inadequate financial returns (10X within 3years?)• Lack of trust.• No clear exit route.• All solvable maybe?
    8. 8. You can whine all you like that….• Its easier in US, they have a bigger appetite to risk.• They back business plans with million £ valuations.• The UK is rubbish, there is no money, we don’t takerisks!
    9. 9. So,whydosomanyStart-upsfindit too hard toraise ££?
    10. 10. The number 1 reason why start-ups find it hard…They target the wrong sources of moneyat the wrong time
    11. 11. Sources of Money
    12. 12. DifficultyLevel ofRaisingInvestmentSources of MoneyMost of youstart here
    13. 13. Scale Quickly with Capital to get to an Exit.To do this they look for:• Technology Businesses• Market Potential of $100 million• Ability to make 10 X return• And they want traction – you need to haveachieved several key milestones.Most start-ups just don’t have that at the start.VC’s Have Big Ambitions
    14. 14. So Where Should You Start ?• Right at the bottom of the pyramid• Easier to raise investment fromyour Mum right?
    15. 15. Difficulty Levelof RaisingInvestment
    16. 16. Facebook started this way:• His college friend funded it first of all.• Then Peter Thiel (angel investor).• Only then did VC become interestedand even at this stage, many of thempassed.• If they had tried at the top – theywould have failed.• And we wouldn’t have the biggest IPOin history.
    17. 17. So to Successfully Raise MoneyYou Need to Start at the Bottom• It’s easier – you have to prove less.• The early rounds validate yourbusiness which makes it easierwhen you get to the top (FB).
    18. 18. When should you raise moneywww.growthaccelerator.comCAPITAL NEEDSTIMESEED Pre Revenue EARLYGROWTHSUSTAINED GROWTHHIGH RISKLOW RISKCo-investmentFundsBusiness AngelsFormal Venture CapitalExitIPO/Trade SalePRE-SEEDFriends, Family,Neighbours
    19. 19. When you have actuallydone somethingWe are not risk takers so we want youto have de-risked the proposition.Team MarketProduct Returns Potential
    20. 20. Milestones / De-risking• Team – proven – you have done itbefore, you have sector experience.• Product – its built/mvp; trials withcustomers, contracts.• There are current exits in the sectorthat are similar.
    21. 21. How do You Find Your Investors Then?
    22. 22. Plan Plan Plan• Do your research.• Plan your strategy – sector, size.• Profile your investor.• Ask people to help.• Network.• And do something more than just write a plan.
    23. 23. Tips for Success

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