How to raise the funds you need for your next company expansion

1. Raising the NEXT
Round of Funding
Carol Sands
Managing Partner, The Angels’ Forum
October 15, 2015

2. Stages of Growth
Maturity of Company
DollarsInvested
Public
Company
Concept
Product
Development
Market
Adoption
Infrastructure
Development
Product &
Market ExpansionTeam
Expansion

3. Funding Sources
• Friends & Family
• Angels
• Venture Capitalists
• Private Equity Firms
• Corporate Venture Funds
• Government/Foundation Grants
• Joint Ventures
3

4. Inviting vs Shopping
• Pick your investors carefully
– Long term relationship
– Abandonment is costly
• You are always fundraising
• ONLY question – Why Invest in your Company?
– What can you do for the investor?
– Understand Investor’s motivations
4

5. Preparing for Fundraising
• Calculate what you need + 6 months
• Exit Strategy
• Narrowing the Invitation List
– Determine Investor Type
– Research who is the best investor for YOU
• Investment Structure
• Investment Process
– Materials (Marketing, Sales, & Due Diligence)
– Timelines
• Issuing invitations
5

6. Calculating How Much
• What are your next 2 major milestones?
• Financial Plan for the next TWO milestones
– Always have worst case plans!
• Fundraising Plan Formula
Amount of money to reach Milestone
+ 6 months run rate
= Amount to be Raised
6

7. Exit Strategies
• Choices
– Death/Failure
– Life Style
– Acquisition
– IPO
• Exit Opportunity Moments
• Investor’s Patience & Expectations
7

8. Determine Investor Type
• CrowdFunding
• Individual or Angel Group
• Venture Capital
• Corporate Investor
• Issues
– Silicon Valley or Remote/Foreign
– Value-Add Capacity
8

9. Researching VCs
• Firms
– Industry
– Maturity of Company
– Geographic
– Date of Fund
– Investment Conflicts
• HOW?
– Ask industry experts
– Firm’s Website
– Lists/Databases
• Individual VCs
– Industry
– Specific Expertise
– Reputation
– Available Time
• HOW?
– Website
– LinkedIn
– Blogs
9

10. Investment Structure
• Research terms ahead of time
– Talk to Board of Directors, advisors & lawyers
– Understand consequences
• Note or Equity Round
• Valuation
• Terms
• Conditions of closing
• Side Letters
10

11. Investment Process
• Introductions
• Screening Session
• Partner Meeting
• Term Sheet
• Due Diligence
• Funding
11
Be Prepared

12. What You Need
• “One Pager”
• Intro Video
• Intro Emails
• Invitation Investor Deck
• Customized Presentation Deck
– Practice Presentation & Q&A
12

13. Invitation Investor Deck
• Simple definition of the problem/market
• Short statement about your solution/benefit
• Focus on WHY Management Team will succeed
– Details about the Team
– Mention Board of Directors & Key Advisors
• Quick Company performance to date
– Accomplishments
– Financials
• The Ask!
– How much and why
– Your EXIT expectations & future rounds
13

14. Customized Presentation Deck
• Know the audience
– Use investor’s preferred format
– Focus on their key concerns
– Control time (including Q&A)
– Anticipate outcomes
• Every investor is different!
14

15. Due Diligence
• Start gathering documents now!
– Incorporation & Cap Tables
– Employment Agreements
– Intellectual Property
– Customer Contracts
– Vendor Contracts
– Board of Director Minutes
– Financial Records
15

16. Issue Invitations
• Prepare detailed timelines
– Public Relations
– Consider Holidays
– Everything takes longer than expected!
• Prepare Plan for each investor
– Information Database
– Status & Next Step Reporting
• Team Delegation
– Company’s Responsible Person
– Actual Primary Contact
16

17. Fundraising is a Sales Process
• Anyone can fundraise!
• Don’t be afraid of NO
– Listen to the reasons given for a NO & correct
– A fast NO saves you time
• Find champions/supporters
• Build 2-way relationships
• A deal is done when you have the money!
17

18. Thank You & Good Luck
Carol Sands
The Angels’ Forum
www.angelsforum.com
csands@angelsforum.com