How to raise your first round of capital - February 2017

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How to Raise Your First Round of Capital
Jeffrey Bussgang
Flybridge Capital Partners, General Partner
Harvard Business Sch...

 General Partner at Flybridge Capital Partners, early-
stage VC firm based in Boston and NYC
$625m raised across 4 funds...

8
Why Raise Money from VC?
Deep Pockets:
High risk tolerance
and additional
funding for follow-
on rounds
Swing Big:
VCs d...

VCs vs. Angels
 Will want some control (voting,
board, veto)
 Will want to own 15-25%
 Very actively engaged (they
get ...

 Most VCs and Angels have ADD – operate on
“BLINK” instincts
 Want to SEE everything, but actually INVEST in
very, very ...

6
Ridiculously large returns (> 10x)
are very, very rare (4%) – but are always the goal
A Game of Outliers

7
VC Fund Math 101
To achieve target of 3x the fund, need to see
multiple big exits (10x+) after years 9-12
Prototypical, ...

9
 Scope out the firm –
size matters, as does
the individual
 Arrange for a warm
introduction
 Prepare, be brief
(VCs B...

VC Introduction Algorithm
1. Entrepreneurs who have made them money
2. Entrepreneurs in their portfolio
3. Entrepreneurs t...

10
Investor’s Decision Tree

Elements of the Pitch
 Intro  who are you, why are you here and why are you special?
 Problem  what is the customer pa...

Top 3 Things To Do
 Be gracious and personable
 Say something that makes you smile…authentically
 Tell your personal hi...

Top 3 Things To Avoid
 Do not exaggerate
 Assume everything you say will be verified in due diligence
 Assume the liste...

Typical Investment Criteria
 Tangible things investors like to see:
 Very big market (> $500M? $1B? – support $100+M rev...

So You’ve Had a Good Meeting…
Then What?
 Treat fundraising like a sales process – build a pipeline,
work people through ...

Then, Expect More Due Diligence
 Customers / partners
 Team
 Technology
 Business model
 Market size / analysts
As y...

Partners Meeting
 Ask your champion for the main
objections in advance
 Customize your pitch to address
them
 Command t...

The Vote
18
Partner A Partner B Partner C Partner D Average
Market 4 4 4 4 4.0
Team 4 4 3 5 4.0
Product/Tech 2 4 4 2 3.0
B...

Term Sheet Time
Frequently Asked Questions…
 Should I include VCs in my first round or just angels?
 Should I do a conve...

Expectations and Milestones
 Have well-documented milestones that represent what
you expect to achieve during the initial...

Who’s Ready to Raise Money?

Mastering the VC Game:
How to Raise Your First Round of Capital
Jeffrey Bussgang
Flybridge Capital Partners, General Partn...

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