TECHNOLOGY ENTREPRENEURSHIP WORKSHOP: STEP ARMENIA Enterprise Incubator Foundation (EIF) in cooperation with CRDF Global. Technology Entrepreneurship workshop conducted by invited Top serial entrepreneurs form US and Europe. Setup Presentation for early stages funding panel Securing Early-Stage Funding: Equity Financing (Angel and VC investments), Crowdfunding, Non-equity Funding (self-funding, grants, bank financing, etc.) Lead Presenter: Valto Loikkanen Panelists: Ray Johnson, Yeva Hyusyan and Manuk Hergnyan

1. Entrepreneurship Workshop
Yerevan, Armenia
Building Value & Startup Funding
Valto Loikkanen
Grow VC Group ++
www.growvc.com ++
@growvc ++
Copyrights © Grow VC Group 2015

2. About me

3. My Evolution As an Entrepreneur
● Entrepreneur
● International entrepreneur
● International serial entrepreneur
● International portfolio entrepreneur

4. As an Entrepreneur
● 20 years as international Serial Entrepreneur (US, EU, Asia) &
Portfolio Entrepreneur, with personal hard earned success &
failures
● 17 years experience in developing web based tools for various
business processes
● 6 Years of developing equity crowdfunding and other digital
investment market solutions globally
● 5 years for Startup Ecosystem development combined with online
support tools, platforms & metrics
● For two years, being part of three EC Horizon 2020 Groups:
○ Access to Risk Finance,
○ Spreading Excellence & Widening participation
○ International Cooperation

5. As a Business Advisor
● 10 years of startup mentoring
○ with 2000+ one to one mentoring sessions and workshops
○ with 1000+ entrepreneurs and hundreds of startups around the
world at various development stages and industries
● In parallel 10 years developing Startup Support services, with
entrepreneurial mind and lean methodology (fast ideation,
implement and measure cycle)
● 5 years of “living lab” development for Startup Ecosystem in
Finland with City of Helsinki

6. About Grow VC Group
"The global pioneer of securities crowdfunding, peer
to peer marketplaces and new investment models."

7. Grow Advisors provide consulting and knowledge resources for
Digital Investing Marketplace and Startup Ecosystem
development
Ecosystem Back-end infrastructure and Support to manage,
measure & peer benchmark Startup ecosystems
Deal Index offers Visibility to Professional & International
Investors and real time investment Market Data
Digital Investment Marketplace Back-end solutions and
Development
Other Grow VC Group Companies & Services For Economic
Development

8. Local Investors &
Equity Crowdfunding
International Growth
$
$$
$
i
!
%
?
!
$
i
Local Startup Ecosystem
International Investors &
Multinational Corporations
Talent, Startups &
Support Services
Grow Advisors provide consulting and
knowledge resources for Digital
Investing Marketplace and Startup
Ecosystem development.
Ecosystem Back-end infrastructure
and Support to manage, measure & peer
benchmark your ecosystem.
Deal Index offers Visibility to
Professional & International Investors
and real time investment Market Data.
Digital Investment Marketplace Back-
end solutions and Development
$$$ $$ $$
Talent & Investments
Growing Startups
$$$
The leading global pioneer of digital investment
market solutions for private securities.
Other Grow VC Group Companies &
Services For Economic Development
Peer Benchmarking

9. What is a Startup?

10. A B
C D
High Growth Ambition and
very scalable business model
Low Growth Ambition and/or
Non Scalable business
Market
validated
business
model
Unvalidated
business model
"a kiosk"
"new startup"
“New Startup”

11. Startup stages

12. http://en.wikipedia.org/wiki/Startup_company
Startup Development?

13. ?
Startup Development

14. Startup
Development Phases

15. Build / Release Validate / Iterate
Ideation
Scalable product or
service idea for a big
enough target
market. Some initial
business models for
how it would make
money. One person
or only a vague team;
no confirmed
commitment or no
right balance of skills
in the team structure
yet.
Concepting
Clear and meaningful
target with direction for at
least 3 years with
milestones how to get
there, -> 3, 6, 12, 24, 36
months… Team of two or
three core founding
partners with balanced
ownership. Can also
already have some
extended team with lighter
commitment (stock options
and or cash
compensation)
Commitment
Committed and balanced
founding team. Able to
develop the product or
service (Minimum Viable
Product) without dependency
of uncommitted external
resources, or already an initial
product or service in place.
Existing signed shareholder
agreement between founders,
with milestones, committed
time and money use, for at
least 2+ years with vesting.
Validation
Can demonstrate some
user growth and or
revenue (initial traction).
Continue to attract
additional resources
(money or sweat equity)
for equity or future
revenue. Looking for clear
market validation (Product
Market Fit), to move into
scaling.
Scaling
Showing a clear,
growing and measurable
user and or market
traction in a big or
rapidly growing target
market. Can and wants
to scale fast. May have
attracted significant
funding.
Establishing
Achieved great growth, that
can expected to continue.
No longer needs to
struggle to get resources
and can acquire those
easily. Continues to grow
and often wants to
culturally continue
behaving like a "startup" for
as long as possible.
Founders exit or continue
business as usual.
Minimum Viable Product
This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License.
To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/
or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California,
94105, USA.
www.startupcommons.org
Vision > Target > Mission Growth
Idea / Team Fit Product / Market Fit Business Model / Market Fit
STARTUP DEVELOPMENT PHASES
● Business Model Canvas
● Co-founder Team Building
Scale / Expand
-2 -1 30 21

16. Securing Early-Stage Funding

17. Securing Early-Stage Funding
● Equity Financing (Angel and VC investments)
● Crowdfunding
● Non-equity Funding (self-funding, grants, bank
financing, etc.)
But remember also!
● Bootstrapping
● Customer funding (revenue)

18. Build / Release Validate / Iterate
Ideation
Scalable product or
service idea for a big
enough target
market. Some initial
business models for
how it would make
money. One person
or only a vague team;
no confirmed
commitment or no
right balance of skills
in the team structure
yet.
Concepting
Clear and meaningful
target with direction for at
least 3 years with
milestones how to get
there, -> 3, 6, 12, 24, 36
months… Team of two or
three core founding
partners with balanced
ownership. Can also
already have some
extended team with lighter
commitment (stock options
and or cash
compensation)
Commitment
Committed and balanced
founding team. Able to
develop the product or
service (Minimum Viable
Product) without dependency
of uncommitted external
resources, or already an initial
product or service in place.
Existing signed shareholder
agreement between founders,
with milestones, committed
time and money use, for at
least 2+ years with vesting.
Validation
Can demonstrate some
user growth and or
revenue (initial traction).
Continue to attract
additional resources
(money or sweat equity)
for equity or future
revenue. Looking for clear
market validation (Product
Market Fit), to move into
scaling.
Scaling
Showing a clear,
growing and measurable
user and or market
traction in a big or
rapidly growing target
market. Can and wants
to scale fast. May have
attracted significant
funding.
Establishing
Achieved great growth, that
can expected to continue.
No longer needs to
struggle to get resources
and can acquire those
easily. Continues to grow
and often wants to
culturally continue
behaving like a "startup" for
as long as possible.
Founders exit or continue
business as usual.
Minimum Viable Product
This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License.
To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/
or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California,
94105, USA.
www.startupcommons.org
Vision > Target > Mission Growth
Idea / Team Fit Product / Market Fit Business Model / Market Fit
STARTUP DEVELOPMENT PHASES
● Business Model Canvas
● Co-founder Team Building
Scale / Expand
-2 -1 30 21

19. -2 -1 30 21
Public services
& funding
Private service providers
& investors
Supporting Startup Development
Startup Knowledge - Money & Connections

20. Startup Key Milestones
-2. Ideation
-1. Concepting
0. Commitment
1. Validation
2. Scaling
3. Establishing

21. From “investors”
point of view

22. “Investor”
- anyone that makes meaningful resource
investment purely for ROI
money, work, project, time, skills, contacts etc..

23. Valuation?
● typically used and know from investing money to company
● is needed also for other calculation purposes
● is also needed for founders ownership % estimates & sweat
equity investments (for work, services, contacts etc.)
● acts as a measure of company development
● is a core "deal tool" at all stages

24. About valuation
● for cash investment the valuation is typically lower than for
other types
● is only as real as validated with an actual deal(s) made -
anything else is "guesstimate"
● typical valuation levels do exist for different stages
● early stages more based on promise and later stages more
based on results so far + estimated development curve

25. Ideation
● Potential scalable product/service idea
● Some initial business models for how it would make money
●One person or vague team
●no real commitment confirmed
●and/or no right balance in the team structure yet
-2 3210-1

26. “Investors” view
"pie in the sky"
– a lot of work to get involved....
3-2 210-1

27. Valuation level
$0
3-2 210-1

28. Business Potential
More Potential
Big Market
Market growing
Market pull
Scalable
Less Potential
Small market
Market shrinking
Market Push
Not scalable

29. Concepting
● Have set some clear meaningful target
● clear direction (3y+) with key milestones to get there
● …36, 24, 12, 6, 3 months -> 3, 6, 12, 24, 36 months…
● Team of two or three core people
● but can also have additional team with lighter
commitment
-2 -1 30 21

30. Team
Idea
Market
-2 -1 30 21

31. “Investors” view
“hmmm..., maybe there is something
here...”
still very risky.... money does not really help here...
-2 -1 30 21

32. Valuation level
$0 - 100k
-2 -1 30 21

33. Commitment
● Committed skills balanced founding team
● Able to develop the product/service (without dependency of
uncommitted external resources)
● OR already have initial product/service developed
● Shareholder agreement with “right things” in it
● milestones & committed time/money usage
● founding team commitments for min. 2+ years with
vesting, etc.
-2 -1 30 21

34. Founding
Team & Talent
Idea
Market
-2 -1 30 21

35. “Investors” view
“Looks like this may have real
potential..?
Time to get in for a good deal...? Still very
risky..... Maybe join as Advisor...?”
-2 -1 30 21

36. Valuation level
$300 - 500k
-2 -1 30 21

37. Team Validation
More Potential
Good Team
Balanced Skills
Committed
Doer Attitude
Right Culture
Less Potential
Solo Entrepreneur
Uneven Skills
Not committed
Talker Attitude
Wrong Culture

38. Commission
and/or
Stock Options
Founders or
Regular Shares
With Vesting
Advisor
Stock Options
Commission
Trainee Or
Stock Options
Proven
Talent & Reliability
Unproven
Talent Or Reliability
Motivated by
Vision & Challenges
NOTE: Salary option available only
when there is enough revenue.
Startup
Between Phases -1 to 1
Motivated By
Money & Vision

39. Validation
● Can already show some user growth and/or revenue (initial
traction)
● And/or continue to attract external resources (money /
additional people/work) for equity or future revenues
-2 -1 30 21

40. Overall Team
Talent
Product
Market
Customers
1 3-1 0-2 2

41. “Investors” view
“This is starting to get interesting...”
Join now? - Later I may not get in or it's going to be out of my
range…
-2 -1 30 21

42. Valuation level
$500k - 2M
-2 -1 30 21

43. Between Phases 1 & 2
● Is where assumptions get validated
● If selected market and team is good…
-> The idea and business models can be (and
often is) changed or pivoted several times

44. Commission
and/or
Stock Options
Seed Investors
Shares
Commission
Regular Shares
With Vesting
Advisor
Stock Options
Commission
Trainee Or
Stock Options
Equity
Crowdfunding
Proven
Talent & Reliability
Unproven
Talent Or Reliability
Motivated by
Vision & Challenges
NOTE: Salary option available only
when there is enough revenue.
Startup
Between Phases 1 to 2
Motivated By
Money & Vision

45. Scaling
● Showing clear and growing user/market
traction, momentum and or growth
● And/or is able to attract significant funding
-2 -1 30 21

46. Team
Talent
Product
Market
Customers
Organization
21 3-1 0-2

47. Market
Customers
ProductPeople
Organization
-2 -1 30 1 2

48. “Investors” view
awesome! :)
OR
Oh, I missed the boat :(
earliest time when good VC's start to get interested....
-2 -1 30 21

49. Valuation level
$1 - 10M
-2 -1 30 21

50. Commission
and/or Salary
Seed, VC Or
Strategic Investors
Shares
Salary /
Commission
Stock Options
Regular Shares
With Vesting
Equity
Crowdfunding
Trainee
Equity
Crowdfunding
Proven
Talent & Reliability
Unproven
Talent Or Reliability
Motivated by
Vision & Challenges
Startup
After Phase 2
Motivated By
Money & Vision

51. Establishing
● Pretty clearly is going to make it
● Often wants to culturally continue behaving like a "startup"
for as long as possible
● No longer need to "try" get resources and can get those
easily
● Continue to grow
● Founders make exit or continue biz as usual
-2 -1 30 21

52. Valuation level
$5 - 10M+
-2 -1 30 21

53. Market
People
Organization
Products
Customers
Markets
-2 -1 30 1 2

54. Salary /
Commission
Stock Options
Regular Shares
With Vesting
Commission
and/or Salary
VC & Strategic
Investors Shares
IPO or Equity
Crowdfunding
Trainee
IPO or Equity
Crowdfunding
Proven
Talent & Reliability
Unproven
Talent Or Reliability
Motivated by
Vision & Challenges
Startup
Around 3
Motivated By
Money & Vision

55. Salary /
Commission
Stock Options
Regular Shares
With Vesting
Commission
and/or Salary
VC & Strategic
Investors Shares
Stock Market Trainee
Proven
Talent & Reliability
Unproven
Talent Or Reliability
Motivated by
Vision & Challenges
Startup
After 3
Motivated By
Money & Vision

56. Securing Early-Stage Funding
● Equity Financing (Angel and VC investments)
● Crowdfunding
● Non-equity Funding (self-funding, grants, bank
financing, etc.)

57. Valto Loikkanen
valto@growvc.com
+358 400 421 551 (FIN)
+1 415 854-0546 (US)
Grow VC Group ++
www.growvc.com ++
@growvc ++
Thank You!