General Assembly Class: Insiders Guide to Seed FundraisingThomas Wisniewski
A deck I presented at General Assembly in NYC seminar on best practices in fundraising for seed-stage tech start-ups. Target Audience: Tech-Startup Entrepreneurs
Seed Fundraising and Angels; Entrepreneurs Roundtable Accelerator (ERA)Thomas Wisniewski
This is a presentation from a recent workshop I led at Entrepreneurs Roundtable Accelerator for the current (Summer 2014) class of start-up founders. New format; content from prior presentations of mine.
General Assembly Class: Insiders Guide to Seed FundraisingThomas Wisniewski
A deck I presented at General Assembly in NYC seminar on best practices in fundraising for seed-stage tech start-ups. Target Audience: Tech-Startup Entrepreneurs
Seed Fundraising and Angels; Entrepreneurs Roundtable Accelerator (ERA)Thomas Wisniewski
This is a presentation from a recent workshop I led at Entrepreneurs Roundtable Accelerator for the current (Summer 2014) class of start-up founders. New format; content from prior presentations of mine.
How to establish credibility when pitching investors (VCs or angels) by Jeff Bussgang, Flybridge Capital general partner and Harvard Business School EIR
From the Women Helping Women in Entrepreneurship on July 24, 2013 at MassChallenge
The Boston entrepreneurial community is home to some of the strongest and most successful women in entrepreneurship. Join the women of Golden Seeds and several local serial entrepreneurs for a discussion on sources of capital for your business. The discussion will be followed by small breakout sessions that focus on the challenges your company may be facing.
www.thecapitalnetwork.org
5 Themes to consider when you are starting your first companyYelena Kadeykina
Dreaming of starting a technology for the first time?This presentation covers essentials of what you need to keep in mind at t=0. Are you solving a real problem, can you have a paying customer, can you build a team? #customer, #entrepreneurship #networking #marketing
Techstars organized a boot camp for people who served in the military. The focus is to teach / encourage veterans to think about starting or joining tech startups. This presentation is a primer on fundraising and other related items.
How to establish credibility when pitching investors (VCs or angels) by Jeff Bussgang, Flybridge Capital general partner and Harvard Business School EIR
From the Women Helping Women in Entrepreneurship on July 24, 2013 at MassChallenge
The Boston entrepreneurial community is home to some of the strongest and most successful women in entrepreneurship. Join the women of Golden Seeds and several local serial entrepreneurs for a discussion on sources of capital for your business. The discussion will be followed by small breakout sessions that focus on the challenges your company may be facing.
www.thecapitalnetwork.org
5 Themes to consider when you are starting your first companyYelena Kadeykina
Dreaming of starting a technology for the first time?This presentation covers essentials of what you need to keep in mind at t=0. Are you solving a real problem, can you have a paying customer, can you build a team? #customer, #entrepreneurship #networking #marketing
Techstars organized a boot camp for people who served in the military. The focus is to teach / encourage veterans to think about starting or joining tech startups. This presentation is a primer on fundraising and other related items.
Building the Billion Dollar SaaS Unicorn: CEO GuideKelly Schwedland
In a Venture Capital world that is obsessed with growth, recurring revenue and software as a service, after you validate that you have a solution that people are willing to pay for, there is an entire new world ahead of you in scaling that venture. For many, this involves an entirely new language and set of metrics to manage the business. For the startup that wants to make the leap to scale up and fast growth this should serve as a starting point for key insights and metrics for that journey.
The Ultimate Guide To Startup Sales Tools (2015)Nic Poulos
Second edition of our Startup Sales Tool Guide! Bowery Capital is a VC based in NYC & SF investing in early-stage business software startups. We accelerate our portfolio companies' growth by focusing squarely on support around early customer acquisition. We've helped many B2B startups build & scale sales teams and know that sometimes you need the right tools to win. So we thought it would be helpful to aggregate some of our team's & founders' learnings around early-stage sales tools that work. We hope startups will find this resulting guide to be helpful and encourage everyone to reach out via Twitter, LinkedIn or email with any feedback so we can update & improve it over time!
Oracle and cVidya Cloud webinar with the first part by Oracle covering SaaS market and opportunities in the cloud and Oracle's SaaS partnering strategy and second part by cVidya's covering cVidya's Journey into the Cloud with cVidyaCloud.
Founding vs Professional CEO Performance Analysis in SaaSYujin Chung
Research cited
For more info, check out my class blog (http://opim.wharton.upenn.edu/enabletech/) and also my other study project on mobile apps and social gaming (http://www.slideshare.net/Enderdoon/media-study-project-final-ydc2).
Yujin
http://www.linkedin.com/in/yujinchung
http://twitter.com/enderdoon
The Ultimate How-To CRM Guide is the document that you need to make your decision between cloud-computing technology and on-premises. We call it "Ultimate" because it is the Ultimate How-To CRM Guide, the "Must-have" Guide :)
The Huge List of 127 Marketing Tools (+11 Bonus Sales Tools!)TrackMaven
In search of new tools to optimize your marketing mix? We've compiled a huge list of 127 marketing tools (plus 11 bonus sales tools!) to help make you a more productive marketer.
Browse through this SlideShare, complete with screenshots and brief descriptions of all of the tools. Or, if you know you're looking for, skip straight to that category!
The tools are broken down by Marketing Automation, SEO, Social, Curation, Research, Content, Organization, Visuals. Collaboration, Technical, Data and Interactions, Email, Productivity, and our bonus category, Sales.
Latest edition of the Silverpeak Benchmark report - Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.
Lean Startup Basics - Evidence Based EntrepreneurshipKelly Schwedland
Introduction and overview to the lean process for startups. An evidence based approach to validate early hypothesis and develop a solid Business Model before launch. Involving Customer Development, Hypothesis testing, Minimum Viable Product, (MVP) to get to Product/ Market fit and ultimately A replicable scalable business model. This simple but disciplined approach takes the guess work out of taking an idea and turning it into a viable company.
Based on Eric Reis, Steve Blank and Alex Osterwald's work with Lean Startup, Lean launchpad, customer development and Business Model Canvas. Now in practice by multiple Incubators, Accelerators, Universities and now the National Science Foundation through ICorp to validate business ideas with before investing.
The SaaS Founder’s Journey: What Matters at Each StageDavid Skok
From a talk given at SaaStock 2017 in Dublin, this slide deck covers the three stages of a startup, the most important question founders should be asking to ensure survival/success, and how to build and scale a sales funnel.
A SaaS Metric designed to Increase Free Trial ConversionsLincoln Murphy
CCAs & Engagement – An Uncommon Way to Engage & Convert Prospects in Your SaaS Free Trial.
A few years ago I came up with a set of metrics that I called Common Conversion Activities – or CCA – that I defined as “The things that all or most paying customers do during their trial.”
In July 2012 I gave a 54-minute presentation where I introduced the next version of this ever-evolving set of metrics for measuring Free Trial success, the CCA, and I want to share that with you now.
See the video of this presentation here: http://sixteenventures.com/free-trial-metrics
How to Drive Growth with Customer Success MetricsGainsight
The most successful Enterprise SaaS companies know that growing revenue only through new customer acquisition is the less efficient way to scale. Rather, they understand that growing revenue within your existing customer base - through up-sells, cross-sells, and expanded use - is the most profitable way to scale.
In fact, Enterprise SaaS companies that grow revenue - and company valuation - by expanding revenue within their existing customer base also know the key to making this work is to focus on - and operationalize - Customer Success.
This presentation - How to Drive Growth with Customer Success Metrics - is from Pulse 2014, the biggest Customer Success industry event ever and included panelists Aaron Ross, author of Predictable Revenue, Jason Lemkin of Storm Ventures, Tomasz Tunguz of Redpoint Ventures, and Brian Stafford McKinsey.
SaaS Marketing Plan: 5 Ways to Get your B2B App to Sell ItselfLincoln Murphy
Your B2B SaaS app will not sell itself unless it is designed to do so. This is a guide to getting your B2B SaaS to 'sell itself' was created by noted SaaS Marketing expert and Growth Hacker Lincoln Murphy of Sixteen Ventures.
This guide is full of actionable, unique, and thought-provoking ideas - Growth Hacks if you will - that are designed to allow your product to sell itself.
From attracting the right audience and driving user engagement, to making it easy to buy and easy to share through orchestrated virality, this guide covers all aspects of what's necessary to drive growth with SaaS companies of any stage and serving any market.
Whether you have a self-service sales model or one that requires outside sales reps to drive business, the tips and techniques contained in this guide and the source blog post will help you achieve your goals of efficiently scaling your sales process.
More here: http://www.thecapitalnetwork.org/
Are you thinking about what you need to fund your company? Where do you start? Funding is not “one size fits all”. Every company has to approach their pathway to funding with a unique approach. Join our fundraising experts for an in-depth discussion of what options you have for funding and how to decide which paths are right for you and your company. We’ll have a specific focus on life science focused companies and technologies and the funding choices available.
Experts:
Jeremy Halpern – Nutter McClennen & Fish
Yumin Choi – HLM Venture Partners
Paul Hartung – Cognoptix, Inc
Are you thinking about what you need to fund your company? Where do you start? Funding is not “one size fits all”. Every company has to approach their pathway to funding with a unique approach. Join our fundraising experts for an in-depth discussion of what options you have for funding and how to decide which paths are right for you and your company. We’ll have a specific focus on life science focused companies and technologies and the funding choices available for them.
Presentation on the investment basics for Startups. Essentials of startup investments, focusing on funding cycles, risk management and investor structures.
Funding Options at Harvard iLab
Are you thinking about what you need to fund your company? Where do you start? Funding is not one size fits all. Every company has to approach their pathway to funding with a unique approach. Join our fundraising experts for an in depth discussion of what options you have for funding and how to decide which paths are right for you and your company. Topics covered will include investment criteria, time to closing, investment range, success rates, control features, compliance requirements and the overall costs of capital from each such source.
www.thecapitalnetwork.org
A detailed look at the different funding options available to small businesses, including bank financing, alternative lenders, peer-to-peer lending, traditional crowdfunding, equity crowdfunding, investors, prepurchases, and community bonds. Originally delivered to Adventure Elevate conference in Saguenay, Quebec, June 6&7, 2016. For more helpful business and strategy tips, visit http://the-social-entrepreneur.com/blog
Raising Capital: Negotiating with Potential InvestorsFinancial Poise
Every business needs capital (cash) to fund its activities. But not all capital is created equal. At the most macro level, a business can raise cash by selling equity or by borrowing (and these alternatives are not by any means mutually exclusive).
This webinar explains the different types of capital available to fund a startup; how to identify potential funding sources; how to evaluate competing funding proposals; and how (and when) to negotiate financing terms. In addition, this webinar will address the kinds of investors for entrepreneurs to consider for their start-ups.
Part of the webinar series: The Start-Up/Small Business Advisor 2022
See more at https://www.financialpoise.com/webinars/
Raising Capital: Negotiating with Potential Investors (Series: The Start-Up/S...Financial Poise
Every business needs capital (cash) to fund its activities. But not all capital is created equal. At the most macro level, a business can raise cash by selling equity or by borrowing (and these alternatives are not by any means mutually exclusive).
This webinar explains the different types of capital available to fund a startup; how to identify potential funding sources; how to evaluate competing funding proposals; and how (and when) to negotiate financing terms. In addition, this webinar will address the kinds of investors for entrepreneurs to consider for their start-ups.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/raising-capital-negotiating-with-potential-investors-2021/
"How to maximize your potential to attract US capital" by John Bautista TheFamily
By John Bautista, Partner at Orrick.
Join us IRL next time! http://meetup.com/thefamilyspecialevents
The contents of this video are intended for general information purposes only and should not be considered or construed as legal advice. The distribution of this presentation or its content is not intended to create, and receipt of it does not constitute, an attorney-client relationship. (The views set forth herein are the personal views of the presenters and do not necessarily reflect those of Orrick, Herrington & Sutcliffe.)
Are you thinking about what you need to fund your company? Where do you start? Funding is not “one size fits all”. Every company has to approach their pathway to funding with a unique approach. Join our fundraising experts for an in-depth discussion of what options you have for funding and how to decide which paths are right for you and your company. Topics covered will include investment criteria, time to closing, investment range, success rates, control features, compliance requirements and the overall costs of capital from each such source.
Jean Hammond – LearnLaunchX, LearnLaunch.org, Hub Angels, Launchpad Venture Group, Golden Seeds
Robert Bishop - Goodwin Procter
In partnership with:
Founders Workbench
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
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financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
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What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
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A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the what's app number of my personal pi vendor to trade with.
+12349014282
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
Show Me the Money: Converible Debt Vs. Preferred Equity for Seed Fundraising
1. Thanks to everyone that
attended SMT$ 4 on
Mon @GA.
Here is the document
that we used.
My contact info is on
p.22, and some Bio
information is on pp. 4 &
5.
“Show Me the $$$$!”…Session 4:
Insiders guide to Debt vs. Equity, and Key Deal Terms
Cheers,
-TW
General Assembly / RosePaul Investments Event
Tom Wisniewski
RosePaul Investments
Monday, January 13, 2014
2. Agenda
I. Kick-off and Introductions
II. Intro to Debt vs. Equity, etc.
III. Panel Discussion and Q & A
•
BREAK: Networking and Beverages
IV. Deeper Dive and Best Practices
•
WRAP-UP: Networking and Beverages
1
confidential
3. Seminar Rationale:
Why are we here?
Start-up raising capital soon/now
Founder / Prospective founder: not raising, looking to
get up to speed
Investor / prospective investor
The Challenge…
Lots of terms and complexity
Lots of noise, lots of conflicting descriptions and
advice.
Stakes seem high: mistakes costly
• Bad deal…buyers remorse, unpleasant “surprises”
later
• Scare-off Investors (or founders!)
2
confidential
4. So….. what helps? Invest some time to:
Understand the basics (and the rationale).
Demystify and Prioritize: Not everything is important
Understand the “other guy’s” position: investor
perspective.
…….learn some best practices from some insiders and
your fellow colleagues.
3
confidential
5. Tom Wisniewski: My background
Born in NYC; grew-up in Montclair, NJ
Physics and Philosophy major undergrad
(Clark University); MBA at Tuck School
(Dartmouth)
1st Job: Programmer at Morgan Stanley then
moved to Investment Banking
After B-school: joined a start-up management consulting firm Mitchell Madison
Group; focus on Strategy/Operations/IT for financial services, tech, outsourcing,
private equity/VC clients (1993 to 2000)
Walker Digital: helped set-up and run an early “internet incubator” (2000)
Independent Advisor / Turn-arounds: Advised VC and PE Firms on portfolio
company strategy and new investments; joined the management team of two
companies
Currently:
• Early stage investor and advisor to start-ups
• Investor and advisor to VC and PE funds
• Member and director at New York Angels
confidential
6. Tom Wisniewski: Investor Profile
Direct “Angel” Investor in Companies
• $25K-250K investments; Typical valuations: $1-5 Million,
• Typical Stage: at least some “product” done, some customer/sales traction
• Sector focus: Opportunistic generally within internet/software space;
- fair amount of Saas B2B, and consumer “marketplace” models, ecommerce enablers.
- NOT (or not much?): hardware, heathcare/pharma, cleantech
• NYC based: 50% investments in NYC area companies; total of ~80% NE overall (e.g
Boston, DC), 20% West Coast.
• Examples:
- Sociocast (social/behavioral big data analytics)
- LiveLook (Saas, live collaboration sales/service platform)
- Anvato (Ad insertion to live video streaming via proprietary machine vision)
- Moveline (Uber for the moving industry)
- Bizodo (Saas, paperwork automation; “Adobe 2.0” internet document sharing)
- Movio (Digital “RedBox”; content delivery via “last 100 ft” of wifi internet)
- HeTexted (Relationship advice forum generating content, media opportunities)
- Wanderu (Kayak for ground transportation)
- DealFlicks (a “Priceline” or “Hotel.com” for movie theater tickets)
- iCharts (tool that enables engaging, sharable, embedible chart content)
Investor in Funds
• In addition to direct investments in start-ups, invest in VC and PE funds.
• Examples:
- Social Starts (Seed fund for start-ups leveraging the Social Web)
- Brooklyn Bridge Ventures (Charlie O’Donnell’s fund)
- Entrepreneurs Roundtable Accelerator (ERA Fund)
- Greycroft Partners (Venture Fund)
- ff Venture Capital (Fund)
5
confidential
7. What would I like you to walk away with?
Better understanding of subject.
A set of specific insights that will *change* your approach.
A “to-do” list: starting point(s), actions, things to try.
A set of recommended resources to consult and learn more
from.
A few new relationships with others in the NYC startup/fundraising ecosystem: fellow entrepreneurs, investors, etc.
Answers to specific questions that you might have.
6
confidential
8. So….what questions do you have about Debt, Equity, Term
Sheets, etc.?
xxx
7
confidential
10. Context: Common Sources of Fundraising Capital
Earlier Stage
“You”
aka Bootstrapped
Later Stage
“Seed”
Friends and
Family
Angel Investment
Venture Capital
“Seed” VC
“Traditional Series A” VC
Round Size $:
• $10’s of K
to $100K
• $100’s of K
to $1M+
• $500K to
$1.5M
• $5M-$15M
Investment Size $:
$5K – $10’s of K
• $25K – $75K
• $250K-$750K
• $3M – $5M
Valuation (PreMon):
• < $1 M
• $1 – 5 M
• $5-10 M
• $10 – 25 M
Who/what are
they?
• People you already
know, that trust
you, and (maybe)
understand your
venture
• Experienced early stage
investors (individuals or a group)
• Accredited Investors.
• Angel investing is not their “job”;
may not be F/T endeavor
• E.g.: NY Angels, GoldenSeeds
• Firm with multiple professionals that
raises, invests and manages
individual funds (other people’s $)
• Working F/T (this is their job…)
• E.g.: Greycroft, RRE, Union Square
9
confidential
11. Debt, Equity and Deal Terms…..How/When does it fit in?
How much does it
matter?
1. Iterate on ideas
2. Refine idea; test tech / business case
Very, very
Little
3. Bootstrap; build/test Prototype
4. Early customer validation
5. Develop “pitch”: gather input/interest
Starts to
Matter
(Maybe!?)
6. Bootstrap more; refine prototype, business case
7. Pitch and receive F&F investment. Terms?
8. Build/validate/refine….Build/validate/refine
9. Pitch Experienced Investors: Angels, Seed VC
10. Term Sheets, negotiation, etc.
10
[.....life continues on: growth, financings, death/sale of company]
confidential
Starts to
Really
Matter
(a lot!?)
12. Basic Definitions: Debt
Debt = A loan. You borrow $, owe interest, pay back interest/
principal. E.g. Mortgage on a home; credit cards
•
Borrower:
- Rationale: source of capital, use now pay back over time +
plus a fee (e.g. interest)
-
•
Risk: can’t pay back principal/interest; loose assets?, bad
credit rating/reputation?, Interests only partially aligned with
investors; Loss of flexibility (e.g. Covenants, restrictions)
Lender:
- Rationale: Believe borrower can definitely repay, Earn fee
(e.g. interest); “senior” to equity = paid “first”, before equity;
backed by assets or cashflow
-
Risk: default; partial payback; interests only partially aligned
with borrower
11
confidential
13. Basic Definitions: Equity
Equity = Stock; Ownership Interest in a company. You sell a
piece of your company, receive capital in return. E.g. shares of
“GOOG”, owning 50% of a apartment building
•
Company/Seller:
- Rationale: source of capital, no need to “pay back”, more
alignment of interests with investors
-
•
Risk: “Cost” more that alternatives?, less control?
Investor/Buyer:
- Rationale: “share of the upside”; rights to future profits and
sale proceeds ; more alignment of interests with company
-
Risk: “Share of the downside”; Company has losses,
Company is alive but “never” is sold, Company goes out of
business
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14. More Relevant Definitions: Common Equity
Common Equity: Basic ownership interest in a company..
•
Common Equity = founders equity, equity for other employees
•
Options = rights to buy Common Equity at a price, during a term.
Valuation: in order to “buy/sell” shares of equity, a price per share
for the company must be agreed on.
•
Setting price/share really same as setting “valuation” of
company.
Most common form: Stock Delaware C-Corp;
•
Most of the details are defined by DE law.
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15. More Relevant Definitions: Preferred Equity
Preferred Equity (or “Priced Round”): “Same” as Common + a
defined set of “preferences” or extra rights, beyond what common
has.
• Economic rights:
- Interest: earn interest on investment
- Liquidation preference: in the event of sale, get paid
investment (and return) before common is paid
• Control rights:
- Board Seats
- Approval of key company actions: financings, sale, ETC.
- Rights to convert to common, right to buy future equity (to
maintain % ownership)
• Valuation: [Like Common Equity] in order to “buy” shares of
equity valuation of the company must be defined.
•
Most typical form: “Straight” preferred (non-participating
preferred), with 4%-9% interest.
- Most “preferences” = downside protection (when things go
well, everyone converts to common equity
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16. More Relevant Definitions: Convertible Debt (Note, etc.)
Convertible Debt: a “loan” …..that converts to equity in predefined ways, circumstances
• Loan Interest rate, defined term (6months – 2 years)
• Conversion: Debt converts to Equity when
- Qualified Financing
- Sale of Company
- End of Term
• No “Valuation” (or other terms, controls): Defined formula for
conversion, e.g. price for buying equity.
- Discount to Next Round (Qualified Financing): 5% - 40%
discount
- Cap: Valuation (and therefore price/share) will be maximum
of $2M - $15+. Uncapped Notes are very rare.
Most typical form:
• Cumulative interest, rate 4%-8%,
• 18 month term,
• 20-25% discount
• Valuation Cap at $3-5M? (usually set ~ “current” valuation)
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17. III. Panel Discussion and Q & A
Introductions: Background on you and your firm
In the last 12 months: convertible debt? Equity?
What like/hate of each and why?
Any interesting stories?
Thoughts on valuation?
Other 1 or 2 Terms that really matter? Why?
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19. D vs. E: Key Pro/Con
Convertible Debt
Preferred Equity
Company/ Pro: Speed/ ease, lower cost,
Founders defer valuation (?), rolling
close?
Pro: Defines valuation/terms(?),
advantage for next round,
aligned interests
Con: Unaligned interests,
payback loan (or F*cked?)
Investors
Con: More time/complexity,
higher cost, must define
valuation, agree on terms
Pro: Speed/ ease, lower cost
Pro: Defined price (know what
you are buying), preferences
compensate for risk, and offer
downside protection
Con: Uncertain price?, lack of
rights (e.g. pro-rata)
Con: More time/complexity,
higher cost,
• Its an Option: want upside
• Discount not enough for risk
• Works for: round <$1M?, As
a Bridge, for F&F round
• Is the “Standard” for VC, and
most Angels
• Round >$1M?
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20. Valuation
Regular Business: Based on earnings/ cash flow.
• Valuation = 3x – 10x company earnings (EBITDA, etc.)
• Valuation = 0.5x – 1x company revenues
Tech Start-ups:
• 10-25x? Earnings…but no current earnings
• 10x – 100x ?? Revenues? …but no/low revenues
• User multiples? (Usually crazy)
Most (experienced) Investors use “Comparables”
• Valuation based on other recent “market” prices: valuation of similar companies, deals
• Investors (especially active ones) see:
- See 3-5 priced deals for every one invested (100’s of pitches for every one invested)
- See/hear about 5-10x more deals
Reality Check:
• Company only worth what someone is willing to pay.
• Supply and Demand:
- Company completely unique (limited supply) + Many interested “buyer/investors”
(lots of demand) = Higher Price
- Many “similar” companies (lots of Supply) + One/No interested “buyers/investors”
(limited demand) = Lower Price (or “no” price)
• Perception vs. Reality: It all comes down to perception, and belief (very few objective
facts, numbers)
• It’s a Negotiation. Sales skills matter.
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21. Notable Opinions
Paul Graham (Y-Combinator): “All financings for companies coming
our to YC are Convertible Notes” (2010/2011)
• Easy, founder friendly, and now the standard
• Its all about the “optionality”: if its worth $ Billions, valuation
unimportant
Fred Wilson (Union Square Ventures). Doesn’t like Notes. “Won’t
do them for my investments.”
• Conflict of interest, “need to know the price of what I am buying”, cost
of preferred is declining
Chris Dixon (Founder Collective). Likes Notes, but will never to uncapped notes.
• Investing in founders; no amount of legal will help if you chose
wrong;
• Reputation: if you screw someone then no one will do business with
you.
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22. Key Success Factors and Advice….continued
Valuation (and Key Terms). Be realistic. Be Flexible. Realize this is a
professional (not personal) discussion ; there will be back and forth. Ultimately
the “market” sets the price/terms.
• There is more to investment terms than valuation….Important to understand.
Timing. Am I ready for Angel Investment?......A few probing questions:
• Have you covered the key success factors mentioned here? Do you have a
compiling business opportunity with huge growth potential?
• Do you really need the money? Now? The more that you can accomplish on
your own, the more compelling your case (and valuation) will be…..
• Are you ready to work for a someone else? e.g. the investors, the board of
directors
• Fund raising is “brain damage”. It wastes valuable time that could be spent
growing the business. Avoid it, minimize it, delay it if you can.
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23. Thanks!
Thomas Wisniewski
Contact Info
Email: thomas@rosepaul.com
LinkedIn: http://www.linkedin.com/in/thomaswis
Twitter: @thomaswis
This presentation: http://www.slideshare.net/Thomaswis/
New York Angels www.newyorkangels.com
New York Angels Educational Meetup: http://www.meetup.com/NY-Angels/
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24. Summary Investor Perspective: Notes vs. Equity
History. Preferred Equity is standard for both Angel/Seed and VC (Series A, B, etc.).
Convertible Notes were used as a “bridge” to a [reasonably well defined, high probability]
upcoming financing.
• Now: Convertible Debt much more popular at Angel/Seed round
Preferred Equity. Equity (stock) that has defined “preferences” over common stock.
• Establishes a value for the company e.g. [$3.5M] pre-money valuation
• Liquidation Preferences. Most commonly used is “non-participating preferred” aka
“straight preferred”. E.g. a [1x] liquidation preference. Means investors get their invested
money back plus [1x] before common equity holders. In the event of success, everyone
converts to common and shares pari passu. Liquidation preference is really downside
protection for investors
• Investor rights. E.g. approval of key company decisions
Convertible Note. Debt that converts to equity when a next financing round occurs. As
Debt, typically: carries interest rate (e.g. 8%); has preference to all equity: gets paid back
1st; secured by assets of company
• Converts to equity at “same terms” as next round…..except the Note usually has
- Discount [10-30%] to the valuation (in the next round)
- Cap on valuation (in the next round); means “valuation not to exceed $__”.
• Terms of conversion
- Upon “qualified financing”, e.g. financing of a least [$2M]
- End of the Note’s term [18 months]
- At the option of investors
Other Key Terms. Employee option pool, board composition, dividends, anti-dilution
provisions, pro-rata investment rights, capped legal expenses.
Source: NY Angels Educational Meetup
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25. New York Angels Process: A Monthly Cycle
1.
Proposals Reviewed Online (via Gust): 50 – 100 monthly
•
Sources:
•
NYA website/Gust (“cold call”: low prob of quality, and success)
•
Syndicated deal from other group/investor (warm intro: better quality, better
success)
•
Referral from NYA member (warmer intro: even better quality/success)
2.
In Person NYA Screening: ~15 companies monthly
•
Around 15 of the 100 are selected to present at an in person pitch/screening session
(1st Wed of the month)
•
Companies have 10 min to pitch, 5 Q&A (5 minute investor discussion)
•
Usually ~40 NYA members attend
3.
Discovery / Follow-up: 1-3 new companies enter monthly (3-6 in-process total)
•
Of the 15, 1-3 companies garner enough investor interest to move forward in some
fashion
•
If there is sufficient interest from a core group of investors, and an investor willing to
“lead”, then the core NYA process moves forward with follow-up “Discovery”
meeting(s) aka deep dives, due diligence.
•
In some cases individual investors want to follow-up and explore the company
further independently
4.
Investment Breakfast: 1-3? companies monthly
•
Those Companies that get to the term-sheet stage with several committed NYA
investors, are brought back to present to the NYA Group at the Breakfast
•
NYA Investment Breakfast meetings: 20 minute presentation + Q&A, 40-60 NYA
members attending
5.
Final Due Diligence, Legal Docs, Closing.
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