This document provides an overview of raising seed capital for startups. It discusses financing options like equity and debt, and sources of funding like angel investors and venture capitalists. Two case studies are presented: Google receiving its first $100k investment from angel investor Andy Bechtolsheim, and Facebook receiving its first $500k investment from angel investor Peter Thiel. Key aspects of founding stage valuations and capitalization tables are also reviewed. The objective is to help entrepreneurs develop skills to raise initial funding and make good business decisions.
This document discusses strategies for funding a startup business. It outlines sources of funds including founders' own money, friends and family investments, angel investors, venture capital, banks, and debt versus equity financing. It emphasizes that outside funding should generally be considered only after internal cash flow and that most startups need less money than anticipated. Guerrilla or unconventional financing involves creativity and thinking outside the box to find funding sources.
February 2017 entrepreneur talk at Ateneo de Manila UniversityLouAnn Conner
This document provides an overview of entrepreneurship from a Silicon Valley perspective. It discusses ideation, funding, ecosystems, teams, and risk. Regarding ideation, it emphasizes validating ideas by getting feedback, testing assumptions, and learning from failures. For funding, it outlines stages from bootstrapping to IPO and what investors look for like traction, management team, and risks. Ecosystems that support entrepreneurship have investors, businesses, universities, and a government that provides infrastructure. Strong teams are emphasized over individual founders, and common risks businesses face are discussed.
Class 1: Introduction to web technology entrepreneurship allanchao
This document provides an agenda and overview for an introductory class on web startups and the Lean Startup methodology. The class covers the context and history of web startups, including the dot-com bubble. It discusses that ideas have little value on their own and that execution is key to success. The document then introduces the Lean Startup methodology, including minimum viable products, agile development, and the customer development process of discovery, validation, creation and company building. It concludes with assigning reading materials and noting that next class will involve practice startup pitches to form project teams.
Seed Fundraising and Angels; Entrepreneurs Roundtable Accelerator (ERA)Thomas Wisniewski
This document provides an agenda and materials for an ERA workshop on seed stage fundraising and angels. The agenda includes introductions, an introduction to angel capital, and key success factors and advice. Tom Wisniewski will provide an introduction including his background in startups, investing, and advising. He will discuss sources of early stage investment including friends and family, angels, and venture capital. Key aspects of angels will be outlined including typical profiles, investment sizes, and focus areas. Success factors emphasized include pitching and getting feedback, finding advisors, effective communication, finding the right investors, and understanding the investment process.
[STARTUP GUIDE] How to get initial funding?HATCH! PROGRAM
A comprehensive guide on how a startup should execute, in order to:
- Survive survive before initial funding
- Prepare the company to get initial funding
- Focus to attract the right funding
This Startup Guide is first introduced at HATCH! FAIR 2014 as a collaboration between HATCH! and Cinnamon, by Cinnamon President: Ph.D Hajime Hotta.
This document discusses strategies for funding a startup business. It outlines sources of funds including founders' own money, friends and family investments, angel investors, venture capital, banks, and debt versus equity financing. It emphasizes that outside funding should generally be considered only after internal cash flow and that most startups need less money than anticipated. Guerrilla or unconventional financing involves creativity and thinking outside the box to find funding sources.
February 2017 entrepreneur talk at Ateneo de Manila UniversityLouAnn Conner
This document provides an overview of entrepreneurship from a Silicon Valley perspective. It discusses ideation, funding, ecosystems, teams, and risk. Regarding ideation, it emphasizes validating ideas by getting feedback, testing assumptions, and learning from failures. For funding, it outlines stages from bootstrapping to IPO and what investors look for like traction, management team, and risks. Ecosystems that support entrepreneurship have investors, businesses, universities, and a government that provides infrastructure. Strong teams are emphasized over individual founders, and common risks businesses face are discussed.
Class 1: Introduction to web technology entrepreneurship allanchao
This document provides an agenda and overview for an introductory class on web startups and the Lean Startup methodology. The class covers the context and history of web startups, including the dot-com bubble. It discusses that ideas have little value on their own and that execution is key to success. The document then introduces the Lean Startup methodology, including minimum viable products, agile development, and the customer development process of discovery, validation, creation and company building. It concludes with assigning reading materials and noting that next class will involve practice startup pitches to form project teams.
Seed Fundraising and Angels; Entrepreneurs Roundtable Accelerator (ERA)Thomas Wisniewski
This document provides an agenda and materials for an ERA workshop on seed stage fundraising and angels. The agenda includes introductions, an introduction to angel capital, and key success factors and advice. Tom Wisniewski will provide an introduction including his background in startups, investing, and advising. He will discuss sources of early stage investment including friends and family, angels, and venture capital. Key aspects of angels will be outlined including typical profiles, investment sizes, and focus areas. Success factors emphasized include pitching and getting feedback, finding advisors, effective communication, finding the right investors, and understanding the investment process.
[STARTUP GUIDE] How to get initial funding?HATCH! PROGRAM
A comprehensive guide on how a startup should execute, in order to:
- Survive survive before initial funding
- Prepare the company to get initial funding
- Focus to attract the right funding
This Startup Guide is first introduced at HATCH! FAIR 2014 as a collaboration between HATCH! and Cinnamon, by Cinnamon President: Ph.D Hajime Hotta.
When you combine the concept of outsourcing with the power of Internet-connected individuals, you have Crowd Sourcing. Companies are using crowd sourcing to raise funds for a start-ups, get product ideas for the next line of merchandise, and to solve problems that seem too big for the organization.
How can your company utilize crowd sourcing? In this workshop we will explore the following “crowd” topics and discuss how you can take advantage of this new technology-enabled workforce:
• Crowd Funding and Capital Raising
• Crowd Creativity and Idea/Content Generation
• Crowd Wisdom, Problem-solving and Decision-making
• Crowd Work
We’ll also discuss how to get your organization “crowd sourcing ready” so that when you find the right problem for this solution, you can jump right in with confidence.
Learning Objectives
What is CrowdSourcing and how can it apply to your business
How to use the “crowd” to get new ideas and designs for your organization
How CrowdFunding can be used to raise capital for research and development
Venture capital involves raising funds from investors to finance new and growing companies, taking equity stakes and actively working with the companies. The presentation provided an overview of the venture capital industry, including its history, typical fund structures, returns, and the roles of venture capital firms and entrepreneurs. It also gave statistics on venture capital investments in 2006 and trends over time.
Raising Capital from Life Science Investors SecureDocs
This document provides information and guidance for life science companies raising capital from life science investors. It discusses identifying potential investors through various sources like investment conferences, financing rounds, and similar companies' websites. It also covers understanding investor fit by analyzing sectors of interest, investment size and stage, and geographic exposure. Different types of life science investors are described, including venture capital, private equity, family offices, corporate venture capital, angels, and venture philanthropy. The document concludes with tips for identifying the appropriate investor contact, crafting the initial email, and following up with a call. The overall aim is to help life science companies effectively target and approach suitable investors for their capital needs.
US Investors: From Early Stage to Series ADavid Shen
I gave this presentation in Oct 2014 at the Silicon Valley Innovation Center to a group of visiting Kazakh entrepreneurs. They wanted to know about US based investors and what they look for, and how to get investment from them.
Have a great idea, but not sure how to get funding to turn it into a business? This presentation highlights the many ways to find funding and focuses on the pros & cons of using venture capital to launch.
This document provides an overview and summary of a webinar on stock pitches for interviewing in sales and trading, hedge funds, and research positions. The webinar is hosted by James Aldige, an investment analyst, and covers preparing for interviews, the interview process, delivering an effective stock pitch, and tips for finding investment ideas. Key aspects of a successful stock pitch highlighted are clearly outlining your investment thesis, valuation analysis, catalysts, and differentiating your view from the consensus.
1. Characteristics or Features or Importance of Successful Entrepreneurs. Or explain the personal Features of Entrepreneurial leadership.
2. What is entrepreneurial decision process?
3. Entrepreneurship and the Entrepreneurial Process. Explain.
4. Explain Break even analysis and its calculator.
5. Write down the steps in preparing Marketing Plan.
6. What is the Importance of International Entrepreneurship?
7. Entrepreneurial Entry into International Business.
8. Features of Joint Venture and Franchising.
9. Features and types of Synergy in Mergers & Acquisition.
10. What are the Methods of Generating Ideasalso explain Innovation, Creativity and Entrepreneurship.
Getting Your Venture "Game Ready" for FundingAndrew Tulchin
Triple bottom line efforts need capital. But securing this capital is often challenging, despite impactful value propositions and promising ROIs. Meanwhile, options for funding are expanding, creating a dizzying array of options for the entrepreneur. In this workshop, you’ll work with two experienced social enterprise funding advisors to get your efforts “game ready” for funding. You’ll learn how to package your venture to successfully raise the funds you need… and from the right type of capital source.
This document provides an overview of small businesses and entrepreneurship. It defines entrepreneurship as undertaking opportunities through innovation to fulfill needs and wants. It discusses key elements of starting a business like conducting analysis, developing a plan, acquiring funding, implementing resources, and scaling the venture. Common traits of successful entrepreneurs are outlined like creativity, risk-taking, and a profit-oriented mindset. Finally, it identifies factors like competence, products/services, financing, planning, and management that contribute to small business success.
This document provides an overview of entrepreneurship including definitions, examples of successful entrepreneurs like Michael Dell, and the entrepreneurial process. It discusses key components of entrepreneurial ventures like opportunity identification, business planning, acquiring funding, implementing plans, and scaling. Common traits of entrepreneurs are risk-taking, creativity, passion, and perseverance. Leadership, business skills, and personal characteristics like integrity, competence, and profit-orientation are also highlighted as important for entrepreneurial success.
This document provides an overview and summary of a presentation by Metamorph Consulting Group on entrepreneurial funding sources. The presentation covers various funding options for businesses including friends and family financing, angel investors, venture capital, bootstrapping, crowdfunding, and government grants. It also discusses when different funding options are appropriate based on the stage and valuation of a business. The document promotes Metamorph Consulting Group's services in areas like strategic planning, marketing, and helping businesses secure funding.
Cutting the Number 8 wire mentality: Lessons from Silicon ValleyAngie Chang
Talk prepared for University of Auckland Centre for Innovation and Entrepreneurship "Unleash Your Potential" speaker series - Angie Chang on July 25, 2018
The document summarizes a new program called "Invest Desk" that aims to educate, train, coach and facilitate fundraising for companies that have graduated from the Lead To Win accelerator program and are ready to raise significant capital. The program will consist of an introductory seminar covering the investment process, developing a financing plan and communications toolkit. It will also include review sessions where companies pitch to expert panels and open pitch sessions to investors. Support will also be provided to help companies identify and qualify target investors. The program has prerequisites for revenue, funding raised to date, capital requirements, and mentor/advisor support. An application process opens on June 8th with a deadline of June 19th and participants will be notified on July
JFDI.asia’s co-founder Meng Wong is a serial entrepreneur and established business angel. He tells the story of how the pre-seed accelerator phenomenon has evolved, what seem to be the vital ingredients and how JFDI.asia fills a gap among complementary early-stage schemes in Asia.
This document summarizes a monthly retirement planning newsletter. It discusses principles of asset allocation and diversification, provides tips for lobbying an employer for improvements to retirement plans, and poses questions about buying stocks based on tips versus doing research. Key points covered include the importance of diversifying investments across different asset classes and companies, getting input from coworkers to improve retirement plan options, and the risks of making investment decisions based on hype rather than fundamentals.
This document summarizes various approaches to funding a new venture. It discusses venture capital funding as well as alternative approaches such as bootstrapping, crowdfunding, customer capital, and strategic partnerships. The presentation provides an overview of each approach and highlights some unique funding ideas to consider, including using customer feedback to refine products or gaining early traction through service-based revenue before developing products. It also reviews research on increasing the likelihood of obtaining venture capital funding.
The Capital Network is a non-profit organization that provides education and mentoring to help entrepreneurs raise seed capital and beyond. It connects entrepreneurs to angel groups, venture capital firms, accelerators, and other investors. It hosts over 40 events per year like workshops and networking events to help entrepreneurs with fundraising. The document discusses different types of companies and the funding sources appropriate for each stage of growth, including friends and family, crowdfunding, angels, micro VCs, and larger VCs. It also covers debt sources like bank loans and compares the differences between angel and VC investing.
From Bootstrapping to Venture Rounds: A Startup Case StudyRoger Ehrenberg
The document provides an overview of the different stages of startup funding: bootstrapping, angel rounds, seed rounds, and venture rounds. It discusses the characteristics of each stage, when they typically occur, the typical amount of funding, and the tradeoffs involved. It emphasizes the importance of understanding the company's goals before taking external capital and performing diligence on potential investors. The case study describes funding the ad tech company The Trade Desk in 2009 when the industry was considered crowded and venture appetite was low. It prompts evaluating whether one would invest in the company based on the presented information and environment.
This document provides an overview of key aspects of starting a startup company. It discusses what constitutes a startup, the importance of validating your idea through market research and prototypes, assembling a founding team, seeking funding from angel investors and venture capitalists, and potential challenges such as a high failure rate. The document emphasizes developing a minimum viable product prototype to demonstrate to potential investors and refining the idea based on user feedback.
A startup is a company designed to search for a repeatable and scalable business model, often based on a new technology idea. It is important for startups to validate their idea through market research, ensure they own the intellectual property, and build an initial prototype app with a small founding team of a developer, manager, and designer. Startups then typically seek angel investment, venture capital, or grants to further develop the prototype and fund initial operations. While startups offer benefits like autonomy and ownership potential, they also carry risks such as lower pay, long hours, and high failure rates if the company cannot produce a viable product and business model.
When you combine the concept of outsourcing with the power of Internet-connected individuals, you have Crowd Sourcing. Companies are using crowd sourcing to raise funds for a start-ups, get product ideas for the next line of merchandise, and to solve problems that seem too big for the organization.
How can your company utilize crowd sourcing? In this workshop we will explore the following “crowd” topics and discuss how you can take advantage of this new technology-enabled workforce:
• Crowd Funding and Capital Raising
• Crowd Creativity and Idea/Content Generation
• Crowd Wisdom, Problem-solving and Decision-making
• Crowd Work
We’ll also discuss how to get your organization “crowd sourcing ready” so that when you find the right problem for this solution, you can jump right in with confidence.
Learning Objectives
What is CrowdSourcing and how can it apply to your business
How to use the “crowd” to get new ideas and designs for your organization
How CrowdFunding can be used to raise capital for research and development
Venture capital involves raising funds from investors to finance new and growing companies, taking equity stakes and actively working with the companies. The presentation provided an overview of the venture capital industry, including its history, typical fund structures, returns, and the roles of venture capital firms and entrepreneurs. It also gave statistics on venture capital investments in 2006 and trends over time.
Raising Capital from Life Science Investors SecureDocs
This document provides information and guidance for life science companies raising capital from life science investors. It discusses identifying potential investors through various sources like investment conferences, financing rounds, and similar companies' websites. It also covers understanding investor fit by analyzing sectors of interest, investment size and stage, and geographic exposure. Different types of life science investors are described, including venture capital, private equity, family offices, corporate venture capital, angels, and venture philanthropy. The document concludes with tips for identifying the appropriate investor contact, crafting the initial email, and following up with a call. The overall aim is to help life science companies effectively target and approach suitable investors for their capital needs.
US Investors: From Early Stage to Series ADavid Shen
I gave this presentation in Oct 2014 at the Silicon Valley Innovation Center to a group of visiting Kazakh entrepreneurs. They wanted to know about US based investors and what they look for, and how to get investment from them.
Have a great idea, but not sure how to get funding to turn it into a business? This presentation highlights the many ways to find funding and focuses on the pros & cons of using venture capital to launch.
This document provides an overview and summary of a webinar on stock pitches for interviewing in sales and trading, hedge funds, and research positions. The webinar is hosted by James Aldige, an investment analyst, and covers preparing for interviews, the interview process, delivering an effective stock pitch, and tips for finding investment ideas. Key aspects of a successful stock pitch highlighted are clearly outlining your investment thesis, valuation analysis, catalysts, and differentiating your view from the consensus.
1. Characteristics or Features or Importance of Successful Entrepreneurs. Or explain the personal Features of Entrepreneurial leadership.
2. What is entrepreneurial decision process?
3. Entrepreneurship and the Entrepreneurial Process. Explain.
4. Explain Break even analysis and its calculator.
5. Write down the steps in preparing Marketing Plan.
6. What is the Importance of International Entrepreneurship?
7. Entrepreneurial Entry into International Business.
8. Features of Joint Venture and Franchising.
9. Features and types of Synergy in Mergers & Acquisition.
10. What are the Methods of Generating Ideasalso explain Innovation, Creativity and Entrepreneurship.
Getting Your Venture "Game Ready" for FundingAndrew Tulchin
Triple bottom line efforts need capital. But securing this capital is often challenging, despite impactful value propositions and promising ROIs. Meanwhile, options for funding are expanding, creating a dizzying array of options for the entrepreneur. In this workshop, you’ll work with two experienced social enterprise funding advisors to get your efforts “game ready” for funding. You’ll learn how to package your venture to successfully raise the funds you need… and from the right type of capital source.
This document provides an overview of small businesses and entrepreneurship. It defines entrepreneurship as undertaking opportunities through innovation to fulfill needs and wants. It discusses key elements of starting a business like conducting analysis, developing a plan, acquiring funding, implementing resources, and scaling the venture. Common traits of successful entrepreneurs are outlined like creativity, risk-taking, and a profit-oriented mindset. Finally, it identifies factors like competence, products/services, financing, planning, and management that contribute to small business success.
This document provides an overview of entrepreneurship including definitions, examples of successful entrepreneurs like Michael Dell, and the entrepreneurial process. It discusses key components of entrepreneurial ventures like opportunity identification, business planning, acquiring funding, implementing plans, and scaling. Common traits of entrepreneurs are risk-taking, creativity, passion, and perseverance. Leadership, business skills, and personal characteristics like integrity, competence, and profit-orientation are also highlighted as important for entrepreneurial success.
This document provides an overview and summary of a presentation by Metamorph Consulting Group on entrepreneurial funding sources. The presentation covers various funding options for businesses including friends and family financing, angel investors, venture capital, bootstrapping, crowdfunding, and government grants. It also discusses when different funding options are appropriate based on the stage and valuation of a business. The document promotes Metamorph Consulting Group's services in areas like strategic planning, marketing, and helping businesses secure funding.
Cutting the Number 8 wire mentality: Lessons from Silicon ValleyAngie Chang
Talk prepared for University of Auckland Centre for Innovation and Entrepreneurship "Unleash Your Potential" speaker series - Angie Chang on July 25, 2018
The document summarizes a new program called "Invest Desk" that aims to educate, train, coach and facilitate fundraising for companies that have graduated from the Lead To Win accelerator program and are ready to raise significant capital. The program will consist of an introductory seminar covering the investment process, developing a financing plan and communications toolkit. It will also include review sessions where companies pitch to expert panels and open pitch sessions to investors. Support will also be provided to help companies identify and qualify target investors. The program has prerequisites for revenue, funding raised to date, capital requirements, and mentor/advisor support. An application process opens on June 8th with a deadline of June 19th and participants will be notified on July
JFDI.asia’s co-founder Meng Wong is a serial entrepreneur and established business angel. He tells the story of how the pre-seed accelerator phenomenon has evolved, what seem to be the vital ingredients and how JFDI.asia fills a gap among complementary early-stage schemes in Asia.
This document summarizes a monthly retirement planning newsletter. It discusses principles of asset allocation and diversification, provides tips for lobbying an employer for improvements to retirement plans, and poses questions about buying stocks based on tips versus doing research. Key points covered include the importance of diversifying investments across different asset classes and companies, getting input from coworkers to improve retirement plan options, and the risks of making investment decisions based on hype rather than fundamentals.
This document summarizes various approaches to funding a new venture. It discusses venture capital funding as well as alternative approaches such as bootstrapping, crowdfunding, customer capital, and strategic partnerships. The presentation provides an overview of each approach and highlights some unique funding ideas to consider, including using customer feedback to refine products or gaining early traction through service-based revenue before developing products. It also reviews research on increasing the likelihood of obtaining venture capital funding.
The Capital Network is a non-profit organization that provides education and mentoring to help entrepreneurs raise seed capital and beyond. It connects entrepreneurs to angel groups, venture capital firms, accelerators, and other investors. It hosts over 40 events per year like workshops and networking events to help entrepreneurs with fundraising. The document discusses different types of companies and the funding sources appropriate for each stage of growth, including friends and family, crowdfunding, angels, micro VCs, and larger VCs. It also covers debt sources like bank loans and compares the differences between angel and VC investing.
From Bootstrapping to Venture Rounds: A Startup Case StudyRoger Ehrenberg
The document provides an overview of the different stages of startup funding: bootstrapping, angel rounds, seed rounds, and venture rounds. It discusses the characteristics of each stage, when they typically occur, the typical amount of funding, and the tradeoffs involved. It emphasizes the importance of understanding the company's goals before taking external capital and performing diligence on potential investors. The case study describes funding the ad tech company The Trade Desk in 2009 when the industry was considered crowded and venture appetite was low. It prompts evaluating whether one would invest in the company based on the presented information and environment.
This document provides an overview of key aspects of starting a startup company. It discusses what constitutes a startup, the importance of validating your idea through market research and prototypes, assembling a founding team, seeking funding from angel investors and venture capitalists, and potential challenges such as a high failure rate. The document emphasizes developing a minimum viable product prototype to demonstrate to potential investors and refining the idea based on user feedback.
A startup is a company designed to search for a repeatable and scalable business model, often based on a new technology idea. It is important for startups to validate their idea through market research, ensure they own the intellectual property, and build an initial prototype app with a small founding team of a developer, manager, and designer. Startups then typically seek angel investment, venture capital, or grants to further develop the prototype and fund initial operations. While startups offer benefits like autonomy and ownership potential, they also carry risks such as lower pay, long hours, and high failure rates if the company cannot produce a viable product and business model.
2. Agenda
This lecture will be structured as followed:
1. Financing Options and Investors
2. Case Discussion #1 – Google’s First US$100K
3. Case Discussion #2 – FaceBook’s First $500K
4. Cap Table and Venture Funding Rounds
5. Valuing the Business
3. Objectives
The lecture and case discussions are designed
to help you develop the skills to:
1. Raise your first seed investment
2. Find the right investors
3. Make some good money and people decisions
4. Agenda
This lecture will be structured as followed:
1. Financing Options and Investors
2. Case Discussion #1 – Google’s First US$100K
3. Case Discussion #2 – FaceBook’s First $500K
4. Cap Table and Venture Funding Rounds
5. Valuing the Business
5. Startup Financing
• It comes in 2 flavors:
– Equity (Common and Preferred Shares)
– Debt (Typically convertible bond)
• Financing is typically provided by:
– Angel Investor at an early stage(Seed and Series A)
– Venture Capital at a later stage(Series A, B, C, D....)
6. Angel Investors – Who are They?
– Rich individuals, Ex-entrepreneurs, or both
– Motivated by wealth or their interests and passions in
startups
• Most of them really wants to help entrepreneurs
– Many are organized by networks (e.g. Keiretsu Forum, Band-
of-Angels, etc).
• They invest as a syndication (e.g. 10 angels investing $100K each to
fund a $1 million round)
– Super-Angels (Peter Thiel, Mark Andreessen) have their own
venture funds, but also invest individually as angels.
• Peter Thiel’s fund – Founders Fund
• Mark Andreessen’s fund - Andreessen Horowitz
• Look them up on https://www.crunchbase.com
9. Angel Investors – Advantages
– Typically ask fewer questions
– Invest in earlier stage (Seed, Series A,..)
– Willing to get involved early:
• Give advice about your business and your market
• Sit on your Board of Directors
– Many are well-connected and can introduce you to
good lawyers, accountants, VPs and CEOs, venture
capitalists.
– Depending on the angel, may have lower expectations
than VCs.
– Can have a longer time horizon than VCs.
10. Venture Capitalists
– Institutional Investors – a number of partners who have
raised $100 million to $1 billion from foundations,
insurance companies, retirement funds.
– Typically not interested in making “smaller” $100-500K
investments at the seed stage.
– Their rule of thumb:
• Their goal is to grow the fund 3X
• To do that, each investment must have the potential to return 10X
their investment (Series B, C, D investments can have lower
returns)
• Expect only 1 out of 5 of their investments to do very very well
11. Venture Fund TimeLine
– Most VC funds are designed for ten year lifetimes
– Invest in year 1-4, Harvest in year 5-10
J-curve
Invest
Exits – IPOs
& Acquisitions
12. Venture Capitalists Disadvantages
(Early Stage)
• Short Time Horizon - Depending on where the fund on the J-Curve, VC firms may
want to push the startup to grow too quickly so that they can get their investment
back within three to five years.
• Forced Management Change - For the majority of venture capital agreements,
management additions (Either CEO or COO) are a requirement to receiving funding.
• Loss of Equity - Venture capitalist requires large equity stake in the company to
safeguard his or her initial investment.
• Loss of Decision Making Autonomy – By holding seats in the Board of Directors,
business owners are required to consult with the venture capitalist prior to making
any key decisions in capital spending, expansion and personnel changes.
• Staged release of funding - business owners need to hit milestones prior to
receiving the financing they initially requested.
13. Agenda
This lecture will be structured as followed:
1. Financing Options and Investors
2. Case Discussion #1 – Google’s First US$100K
3. Case Discussion #2 – FaceBook’s First $500K
4. Cap Table and Venture Funding Rounds
5. Valuing the Business
14. Google Case Discussion
Who is Andy Bechtolsheim?
– Born 1955 near Ammersee, in the
German Bavaria.
– Technology enthusiast since a child
– Left Stanford University in 1982 to
found Sun Microsystems, as employee
#1.
– Left Sun to found Granite System.
Bought by Cisco for $200M (he owns
60% of the company).
15. Google Case Discussion
Andy Bechtolsheim as an Angel Investor
– Co-founded HighBAR Ventures, an early-stage
venture capital investment firm, along with two
Sun colleagues.
– As an angel, he invested $100K in Google $1.7B
in Mar 2010 (GOOGL @$300 per share). This is his
best investment.
16. Google Case Discussion
Why is Andy an angel investor?
• He is at the core an engineer and technologist:
o passionate about the power of technology
o love finding new ways to solve problems
• As a former founder, he was helped by angel
investors. Now he wants to give back.
• He wants to be involved with an extremely
valuable enterprise.
17. Google Case Discussion
What is Andy’s investment philosophy?
• His General Approach:
- Ideas that solved real problems he could
understand
- Businesses with the potential to produce real
profits
- Bright, passionate, and capable founders.
18. Google Case Discussion
How did Google’s founders gain Andy’s trust and
investment?
• Referral from a Trusted Source - They have been referred
to him by David Cheriton, a professor at Stanford
University, a friend who is in his “circle of trust”.
• Working Prototype and Demo - The team has a working
prototype and successfully demo their search engine. Andy
became convinced that he had seen and understood the
demo of a better technology with potential to address a
real problem.
19. Google Case Discussion
How did Google’s founders gain Andy’s trust and
investment?
• Believable Path to Profitability - Instead of making money through
advertising, they proposed that the company can make money by
licensing their superior search technology to portal companies.
• Good Impression - They Impressed Andy :
- They explained Google’s engineering approach to producing
superior search results, that they need money to build their own
inexpensive computers and networks to create the search database.
- They wanted to build a valuable superior product that “speaks for
itself” instead of wasting money on marketing and advertising.
20. Agenda
This lecture will be structured as followed:
1. Financing Options and Investors
2. Case Discussion #1 – Google’s First US$100K
3. Case Discussion #2 – FaceBook’s First $500K
4. Cap Table and Venture Funding Rounds
5. Valuing the Business
21. FaceBook Case Discussion
Who is Peter Thiel?
– Born 1967 in Frankfurt am Main, West
Germany. Emigrated to the USA
– Attended Stanford University. Philosophy
undergrad and JD (Law).
– Formed friendships with other students at
Stanford (e.g. Keith Rabois, David O. Sacks, and
Reid Hoffman). Some later worked together at
PayPal (co-founded by Thiel) and became part
of the PayPal Mafia.
22. FaceBook Case Discussion
Who is Peter Thiel?
– Career in law, investing, then Paypal.
– In 1998 Thiel co-founded PayPal with Max
Levchin. The company later merged with
X.com, then headed by Elon Musk. PayPal was
sold to eBay for $1.5 billion later that year
(Thiel owned 3.7% or $55M).
– A technologist, investment genius and social
critic. Not a hardcore engineer.
23. FaceBook Case Discussion
Peter Thiel as an Angel Investor
– In 2005 Thiel created Founders Fund, a San
Francisco-based venture capital fund.
– In 2004, Thiel made a $500,000 angel investment in
Facebook for 10.2% of the company and joined
Facebook's board. He sold most of his shares
during the FB IPO in 2012 for $1B.
24. FaceBook Case Discussion
How did the Facebook team gain Thiel’s investment?
• Referral from a Trusted Source - They were referred to him by Reid
Hoffman, a member of the “PayPal Mafia”. The two had worked together
at PayPal.
• Working Product that is Scaling - The team were able to demonstrate :
- When a new school joins Facebook, it captures all the students
within a few days, and 80% of them return to the site daily. These
statistics demonstrate (1) Virality, (2) User Engagement.
-The website only allows people with .edu email address to register.
- Schools are begging to join the site.
25. FaceBook Case Discussion
How did the Facebook team gain Thiel’s investment?
• Previous Experience in the Sector:
- Peter Thiel understands the economics of social networks through
his previous investments in LinkedIn and Friendster.
- He knows Sean Parker
• Good Impression:
Peter Thiel is impressed with Mark Zuckerberg – introverted, technical,
visionary, asks questions, willing to admit when he does not know
something.
27. Agenda
This lecture will be structured as followed:
1. Financing Options and Investors
2. Case Discussion #1 – Google’s First US$100K
3. Case Discussion #2 – FaceBook’s First $500K
4. Cap Table and Venture Funding Rounds
5. Valuing the Business
29. Key Takeaways
• It is better for Founders to take no salary or
very low salary until Series A (VC funding).
• An option pool should be created for
attracting new employees.
• The less you need the money, the more the
investors want to give money to you and
accept a higher pre-money valuation.
30. Agenda
This lecture will be structured as followed:
1. Financing Options and Investors
2. Case Discussion #1 – Google’s First US$100K
3. Case Discussion #2 – FaceBook’s First $500K
4. Cap Table and Venture Funding Rounds
5. Valuing the Business
31. Key Takeaways
• Valuation is meaningless during Founding Stage.
• At Seed Stage, valuation is based more on negotiation
between angel investors and the company:
– If company has revenue, valuation can be a multiple of
revenue (3-10x).
– If there is no revenue, the investors will project how much
the company can be sold for or IPOed for, than work
backward so that they get a 10-50x return.
• A US Silicon Valley startup is typically valued at $1.0-5.0
million pre-money at Seed and Series A stages.