AWS Startup Day Santiago 2019.

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Fundraising Essentials:
Raising a Seed Round Efficiently
Felipe Camposano
Managing Partner
Taram Capital
fcamposa@taramcapital.com

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???
FF&F
Angel
Investment
Venture Capital
Private
Equity
SEED FUNDING IN THE VALUE
CHAIN
0 - 50 k
10 - 200 k
300 – 2M
500k – 50+ M
10 – 500+ M
mayorriesgo–menorriesgo
tamaño
Grants

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MOST VC $ GOES TO LATER STAGE!
(IN THE US)

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INDUSTRIA DE VC
SERIES
A-B
SEED/EARLY
PRE-SEED / SEED
SUPPORT
SERIES
C+

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It’s more than just Venture Capital
Non-VC
• Non-dilutive grants
• Accelerators
• Company Builder
• Friends and Family
• Angels & Super Angels
• Angel Funds and Groups
• Crowdfunding
VC
• Pre-seed VCs
• Seed VCs
• Multi-stage VCs
• Corporate VCs

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How long should fundraising take?

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The Secret
Generate authentic competition for your round, giving
investors FOMO (fear of missing out) and a sense of
urgency

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What we’ll cover
1. Establishing ground rules
2. Crafting your fundraising narrative
3. Drafting your round composition
4. Prospecting your initial funnel

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Rule #1:
Fundraising will change your relationship with your
business and the range of acceptable outcomes

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Rule #2:
You’re either in full fundraising
mode or you’re not fundraising

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Rule #3:
Fundraising should be
one person’s full-time job

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Rule #4:
Be direct and confident,
but not arrogant

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Rule #5:
Fundraise in parallel (not in sequence) and
put yourself in a position to say “no”

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Rule #6:
Don’t try to manufacture Investor urgency
with made up close dates

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Rule #7:
Time kills all deals

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What is a fundraising narrative?
A concise explanation of what you do, what’s most compelling about
your business, why this is the right team, key milestones, and your
long-term vision.

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A good narrative can do the
following in 20 seconds

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A good narrative can do the
following in 20 seconds
First 10 seconds
1. Simply explain what you do
2. Communicate the single
thing that’s most compelling

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A good narrative can do the
following in 20 seconds
First 10 seconds
1. Simply explain what you do
2. Communicate the single
thing that’s most compelling
Second 10 seconds
3. Outline your progress-to-date, who
your are, future milestones, and long-term
vision

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Bad example
“We provide data and analytics in a
comprehensive project management
suite, enabling audio content
creators to glean insights that
inform decisions throughout the
production cycle.”

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Good example
“We’re an analytics tool for podcasters,
and we’re a team of former podcast
producers who produced 5 of the 20
most downloaded podcasts of all time.
We are looking for $1M to move from
MVP to a commercial product and get to
2 strategic partners & 500 paying users
in 8 months”

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2. Communicate the single thing
that’s most compelling
What is the one reason that an investor should invest? (Choose one)
• Traction
• Team
• Market size/trends
• Business Model
• Technology

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3. Use milestones of de-risking the business to outline
your progress and future plans , define Key “Value Inflection
Points”
1. Progress to date
2. Next milestone
3. The future

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4. Calculate your ideal round size & conditions
1. Design your ideal funding future scenarios
2. Based on investment and burn-rate required to value inflection points
3. Add 20-30%
4. Adjust to traction and market trends
5. Do not optimize valuation

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5. Equity or Convertible Notes
The Term Sheet - Its much more than valuation
• Prefer Stock (Common, Seed, A, B, C+)
• Warrants / Options
• Prefer Dividends
• BOD compositions & Observers
• “Protective provisions” & “Voting Rights”
• “First Refusal” & “First Option”
• “Lock-In” & “Vesting”
• “Rights to participate”
• “Automatic conversion”
• “Drag Along”
• “Put” y “Call” &“Deadlock”
• “Tag Along”
• “Participating Prefer & Non
Participating”
• Anti-dilution (Full Rachet, Broad Based
WA)
• Information Rights
• “Redemption”
• No compete, Non solicitattion
• “Reps and warrants”
Convertible Note & SAFE – Simpler, faster and cheaper

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Support your narrative
with a financial model
Goal #1:
Verify the story you’re telling
Goal #2:
Show the assumptions you’re
making

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Fundraising narrative takeaways
• Keep it simple and concise
• Frame progress and future milestones in terms of de-risking and
value
• Back up your narrative with math
• Think of the “Long Game”

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Define your fundraising strategy

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Understanding VCs

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Being a successful VC is hard
$12M
Fund size
10
# of investments

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Being a successful VC is hard
$12MFund size
10
# of investments
$10M
Invest
5# of investments
Successful
$36M
Fund Return
$42M
Portafolio Return
8.4
x

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The VC Rule of Thumb:
Every investment needs to have the
potential to return the entire fund (S~50x; A~10x;)

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Seed VCs will want you to
keep climbing the VC path

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Understanding Angel Investors

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Angel Investors have more
diverse motivations

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Angel Investors have a lower
bar for a “good” outcome

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Angel Investors may be
more passively involved

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Round composition takeaways
• Understand how the investor’s business works
• Make sure your goals are aligned with investors
• Be deliberate about the types of investors you want in your round
• Draft your round composition before you start talking to investors

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Create scarcity by
working backwards from
your ideal cap table
$2M
Seed round
1
Lead VC:
$800k
2
Follow VCs:
$600K
5
Angels:
$600K

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Work backwards from the 3:1 rule
Lead VC: $800k
Follow VC #1: $300k
Follow VC #2: $300k
Angel #1: $100k
Angel #2: $100k
Angel #3: $100k
Angel #4: $100k
Angel #5: $100k
Cap table

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Work backwards from the 3:1 rule
Lead VC’s
(3)
Follow VC’s
(6)
Angels
(15)
Lead VC: $800k
Follow VC #1: $300k
Follow VC #2: $300k
Angel #1: $100k
Angel #2: $100k
Angel #3: $100k
Angel #4: $100k
Angel #5: $100k
Cap tableFinal Diligence
(3:1)
Closed
(1:1)

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Work backwards from the 3:1 rule
Lead VC’s
(10)
Follow VC’s
(20)
Angels
(50)
Lead VC: $800k
Follow VC #1: $300k
Follow VC #2: $300k
Angel #1: $100k
Angel #2: $100k
Angel #3: $100k
Angel #4: $100k
Angel #5: $100k
Cap tableInitial Meeting
(10:1)
Final Diligence
(3:1)
Closed
(1:1)

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Work backwards from the 3:1 rule
Lead VC’s
(20)
Follow VC’s
(40)
Angels
(100)
Lead VC: $800k
Follow VC #1: $300k
Follow VC #2: $300k
Angel #1: $100k
Angel #2: $100k
Angel #3: $100k
Angel #4: $100k
Angel #5: $100k
Cap tableProspect
(20:1)
Initial Meeting
(10:1)
Final Diligence
(3:1)
Closed
(1:1)

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People > Firms
• Fundraising is about relationships
• Focusing on people is more effective than firm-hunting
• People have different investment autonomy and investment
focuses

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Prospecting Tactic #1:
Relationships

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Prospecting Tactic #2: Research

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Prospecting Tactic #3:
Other Founders

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Prospecting Tactic #4:
Ask for recommendations at first meetings

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Prospecting takeaways
• Design a strategy
• Get prospects through research and relationships
• Focus your prospecting on people – not just firms

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fcamposa@taramcapital.com