The document provides an overview of a MassChallenge 2016 bootcamp on fundraising basics presented by Shereen Shermak and David Chang. The bootcamp covers topics such as sources of capital, venture capital dynamics, stages of fundraising, preparing to raise a round, targeting investors, socializing an idea, closing a deal, and negotiating valuation. Attendees are encouraged to ask questions.
7. Capital Sources
You hear a lot about…
• Venture Capital
• Angel Groups
• Crowdfunding
• Friends and Family
• Customers
• Accelerators
• Competitions
But less about...
• SBA Loans and Personal Debt
• Grants
• Corporate Venture
• Vendors or Equipment Finance
• Bootstrapping (creatively)
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8. Growth trajectory of your business?
’Lifestyle business’–
no plans for big hiring
Personal raise – loan,
add folks to cap table
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Growth oriented
business
Crowdfunding and
personal raise
High growth
scalable business
Venture capital
12. Amount to Raise
How much funding do you need?
• Basic financial modeling of
cost drivers and revenue
streams
• Forecast monthly for 18
months
• Fundraise rule of thumb:
12-18 months’ cash
How
Much
For
What
To
Prove
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13. Use of Proceeds
What will you use the money for?
• Build out the product
• Grow the team
• Marketing
• Customer acquisition
• Working capital
How
Much
For
What
To
Prove
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14. Milestones
What will be proven that de-risks the business?
• Product development
• Market demand
• Product / market fit
• Business model
• Execution
How
Much
For
What
To
Prove
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17. Basic Prep
ü Legal representation
ü Founders agreements
ü Financials and budget
ü Teaser (1 page)
ü Pitch deck (10 pages)
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18. Target List of Investors
Stage Location
Industry
Vertical
Business
Model
Investment
Thesis
Social /
Trust Filter
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19. Socialize
• Get warm intros
– Find strongest mutual connections to 30+ potential
investors
– Network over 2-3 months
• Ask for referrals, not money
• Refine pitch
– Incorporate feedback, but avoid whiplash changes
“I’m not ready to raise”
“Who would be helpful?”
“Who else should I talk to?”
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20. Raise: Go for the Ask
• Talk to your top candidates at the same time
– Run conversations in parallel
– Decide whether / when to tell investors about
each other
• Create urgency
– Anchor investor acts as the first domino
– “Triggering events” to get a (or better) term sheet
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21. Closing the Deal
• Rolling close vs. set close
• Reference check investors
• Not done until money is in
the bank
Key terms
q Board composition
q Option pool
q Voting rights
q Founder vesting
q Change of control
q Redemption rights
q Information rights
q Anti-dilution
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