This document provides an overview of how to successfully fund a startup through alternative funding sources. It discusses developing a fundraising game plan and understanding important decision points around equity valuation, control, risk tolerance, and alignment. The presentation reviews assessing a company's fundraising profile in terms of stage, traction, team, and capital requirements. It then outlines common funding paths at different stages from ideation to growth. The document compares equity, debt, revenue-based financing, and venture capital. Lastly, it provides tips on preparing for fundraising including knowing your numbers, documenting your company, activating your network, and maintaining momentum.

1. How to
Successfully Fund
Your Startup
#alternativefunding

2. About Your Hosts
2
R. Branden Harper
Director
Sirk Roh
Chief Operating Officer

3. Agenda
• Fundraising game plan
• Fundraising decision points – it’s about more than just the
money!
• Fundraising profile
• Funding paths
• Funding options at different stages of the development
process
• Equity vs debt considerations
• Preparing your company for investment capital

4. Fundraising Game Plan
• How much money do you need to raise?
• What’s that money going to be used for?
• At what cost and with what terms and conditions?
• What type of capital is the best fit for your company,
and why?
• Where do you find the type of financing you need?
• Milestone financing

5. Fundraising Decision Points
• Equity Valuation? What % is worth taking on investment?
• Control Are you the driver? Who makes key decisions?
• Value-add More than just money?
• Risk Tolerance Personal assets?
• Timeframe How long will raising funds take?
• Horizon Exit strategy? Build to exit? Build and hold?
• Culture Is there alignment?

6. Your Company’s Fundraising Profile
Stage, Traction & Capital Requirement
What is the current company stage? Rate of growth?
How big is your addressable market? Higher/lower than $1B?
Ready for scale?
o Product-Market fit?
o Revenue / pricing model?
o What does your sales pipeline look like? How long are sales cycle?
o How much capital do you need to get to the next stage?
Team
Well-rounded and committed team able to handle increased
complexities? Need for key hires?

7. Funding Paths Around Milestones

8. Ideation ($0M)
Bootstrap / Self Credit Family & Friends

9. Launch and Traction ($0-1M)
• Operating: customer and vendor terms
• Crowdfunding
• Incubators
• Revenue-based financing
• Angels

10. Growth and Scale ($1-5M)
• Operating:
customer and
vendor terms
• Crowdfunding
• Revenue-based
financing
• Angels
+
• Strategic
investors
• Banks

11. Breakout and Beyond ($5M+++)

12. Equity / Debt Considerations
Bank / Debt
Revenue-Based
Finance
Venture
Capital
Guarantees &
Controls
Financial Covenants
Sometimes Personal
Guarantees
No Financial Covenants
No Personal Guarantees
Partner in the Business
(Board Seat, Voting
Rights)
Added Value Low / None Medium High
Dilution None / Low None High
Payment
Flexibility
Low:
Fixed Payments
Medium:
Variable Payments
High:
No Payments
Speed 4-8 months 4 weeks
Highly variable. Typical
3-6 months focused
effort

13. Revenue-Based Financing
Up to $1M or 33% of annualized revenue run rate
› No set interest rate
› Matures in 5 years or when cumulative payments equal a set amount,
usually 1.5 – 2.5x principal
› Monthly payments are a fixed percent of revenue, 2-8% range
› Small cash upside participation
Example Loan
› Annual Revenues: $1M
› Principal: $200K
› Maturity: 5 years
› Payment: 5% of monthly revenue
› Repayment: 1.75x principal [$350K]
› Upside Participation: $50K at liquidity event
CumulativePayments
Principal
Loan Maturity
1.5x
to
2.5x
Principal

14. Fundraising Prep
Know Your Numbers
• Historical/Projections
• Ability to defend your assumptions: growth, capital
requirements
• Pivots, capitalization, customers
Document Your Company
• One-page/Executive Summary/Deck/Product Demo
Activate Your Network
Legal + Accounting
Customer, Vendor, Partner References
Keep Momentum
• Follow up, set target dates to funding, sense of urgency

15. Q&A and Thank You!
15
R. Brandon Harper
www.lightercapital.com
@lightercapital
Sirk Roh
www.earlygrowthfinancialservices.com
contact@earlygrowthfinancialservices.com
415.234.3437
@EarlyGrowthFS