Download as PDF, PPTX
Uploaded byDavid Chang
MassChallenge 2016 Bootcamp - Fundraising Intro
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.
MassChallenge 2016 Bootcamp - Fundraising Intro
- 1. MassChallenge 2016 Bootcamp FundraisingIntro Shereen Shermak, Good Growth Capital shereen@goodgrowthcap.com @shrcubed David Chang, PersonalVC david@personalVC.com @changds
- 2. Pitch Tips Fundraising Basics How to Raise aRound @shrcubed @changds
- 3. About Shereen Background ExperienceInvestments Today @shrcubed @changds
- 4. About David Background ExperienceInvestments Today @shrcubed @changds
- 5.
- 6.
- 7. Capital Sources You heara 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) @shrcubed @changds
- 8. Growth trajectory ofyour business? ’Lifestyle business’– no plans for big hiring Personal raise – loan, add folks to cap table @shrcubed @changds Growth oriented business Crowdfunding and personal raise High growth scalable business Venture capital
- 9. Venture Capital Dynamics •Skewed return distribution • VCs must swing for the fences @shrcubed @changds
- 10. Venture Capital Stages Bootstrap Angel EarlyStage Growth Equity @shrcubed @changds
- 11.
- 12. Amount to Raise Howmuch 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 @shrcubed @changds
- 13. Use of Proceeds Whatwill you use the money for? • Build out the product • Grow the team • Marketing • Customer acquisition • Working capital How Much For What To Prove @shrcubed @changds
- 14. Milestones What will beproven that de-risks the business? • Product development • Market demand • Product / market fit • Business model • Execution How Much For What To Prove @shrcubed @changds
- 15. How to Raise aRound
- 16. Fundraising Campaign Prep TargetSocialize Raise Close @shrcubed @changds
- 17. Basic Prep ĂĽ Legalrepresentation ĂĽ Founders agreements ĂĽ Financials and budget ĂĽ Teaser (1 page) ĂĽ Pitch deck (10 pages) @shrcubed @changds
- 18. Target List ofInvestors Stage Location Industry Vertical Business Model Investment Thesis Social / Trust Filter @shrcubed @changds
- 19. Socialize • Get warmintros – 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?” @shrcubed @changds
- 20. Raise: Go forthe 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 @shrcubed @changds
- 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 @shrcubed @changds
- 22.
- 23. Valuation (sort of)Matters ? $12 $30$6 $15 Seed A B Valuation ($M) Dilution Example: 50/50 founder split What’s your end stake? • $3M à 17% • $5M à 19% • $7M à 19% • $1.5M raise @$3M à 15% See www.ownyourventure.com $1M raise $6M raise $15M raise @shrcubed @changds
- 24.