Dos and donts of raising investment capital

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Some things to consider before taking on outside investment, where to find that investment and what you need to get it

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Dos and donts of raising investment capital

  1. 1. Dos and Don’ts of Positioning Your Company for Investment TrepHub June 20, 2013
  2. 2. DON’T: Waste time on investment if you don’t need to . . . The Best Investor is Often No Investor
  3. 3. DO:Know Where it Fits Venture Capital Family Offices Corporate VC Angels (Individuals and Groups) Crowdfunding
  4. 4. Corporat e VC Family Offices Crowdfunding DO: Know who to approach? Small $ (<$1MM) Seed Stage Open to Smaller Opportunities (Even Lifestyle) Angel Investors Larger $ (>$2.5MM) Growth Stage Scalable Opportunities ($100MM revenues in 5 yrs) VC Investors
  5. 5. Lines are Blurring Small $ (<$1MM) Seed Stage Open to Smaller Opportunities (Even Lifestyle) Angel Investors Larger $ (>$2.5MM) Growth Stage Scalable Opportunities ($100MM revenues in 5 yrs) VC Investors
  6. 6. Money is Fungible, but it is Not Equal Some investors are strategic Some provide mentoring Some investors expect few strings . . . But may show up for Thanksgiving dinner Some investors cannot be patient due to fixed fund lives Banks expect personal guarantees Grants often have government flow-down provisions Regulatory costs can be deal killers
  7. 7. DO: Build relationships Before you need $
  8. 8. DO: Have a credible team. Most Investors Invest Foremost in the Team DO: Have a Robust Financial Model (era of the spreadsheet jockey) DON’T: have a 35 Page Business Plan DO: Have what the Investor wants to see
  9. 9. DO: Understand market for terms Tech startup – Seed Stage Equity Priced (not a convertible debt round) AVC Blog: www.avc.com
  10. 10. Which Entity to Choose and Where? • Tax Friendly? – LLC (Self employment tax implications) – LLP (Self employment tax implications) – S Corp (limited on number/type of owners) • VC Friendly – C Corp (can always convert upon funding) • Where – Delaware is known commodity – Florida is easy and cheap
  11. 11. Knowledge is Power There is no good reason to make an out-of-market deal… Know what is market and customary (don’t count on your lawyer to know) Fred Wilson’s Blog & Archives: www.avc.com Mark Suster: www.bothsidesofthetable.com Brad Feld: www.feld.com/wp/ Series Seed: www.seriesseed.com Techstars: www.techstars.com/docs/
  12. 12. DO:Get Connected Send me your company’s news for retweets @StartupFL Register for Startup Digest Melbourne http://startupdigest.com/melbourne-fl/ Non-profit center for local tech entrepreneurship including Co-working, events & community http://www.trephub.com Coders, Hacker & Founders http://www.meetup.com/Coders-Hackers-Founders/
  13. 13. Thanks Mark Mohler markrmohler@gmail.com (don’t forget the middle initial)

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