MassChallenge Bootcamp Day 5: Finance
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MassChallenge Bootcamp Day 5: Finance
- 3. Sources of Capital: Mass Challenge July 7, 2011 Jean Hammond - Angel Investor, Member Golden Seeds, Launchpad Venture Group and Hub Angels Dan Allred - Senior Relationship Manager, Silicon Valley Bank Phil Holberton SBIR consultant …. Babson and Brandeis Miguel Granier –Founder/Director Invested Development Ed Mallen – CEO TimeTrade
- 4. Funding Options High Growth Business Model Angel & Venture Term Sheets Pitching the Business Plan Preparing for Growth & Exits Building a Fundable Team Non-Dilutive Capital Alternatives TCN Roundtable Curriculum Negotiation & Valuation
- 9. Many types of Entrepreneurship: Don’t raise money until you know where you are 5 year growth rate $1-3M >> >> Investment required to reach breakeven Project finance/ Other sources Small CAPEX “normal growth” business (MOST COMMON) Mostly bank debt Home run long shot (VERY RARE!) VC Funding Cheap fast growing business (RARE!) Angel Funding (and some VC) Higher Lower 50% Blended Funds Debt Non-profit Funds
- 10. Summary of Capital Sources
- 17. Company Attributes that Improve Odds with Angel Groups Factors Companies getting angel investment Companies that don’t CEO Some experience or ‘coachable’, wants listen CEO talks about him or her ‘expertise’ forever Team Enthusiastic! match to required skills, “owners” One person, says no one will work without $$ Unique, Need A neat idea, could be big Talks to customers- needed Seems ‘me too’ “ my” idea -doesn’t talk to mkt. Stage Lots done, working code, just needs mkt. entry $$ Idea and ppt., or a complex science project, or “old” Market size, str. Market is big and can be reached Market is huge or Market extremely fragmented Total investment Cash flow breakeven soon, Can use more $$ Needs $10-20M more after this round Valuation Willing discuss a range of values & funding strategies Is fixated on a very unrealistic high value
- 30. TimeTrade makes a “click-to-schedule” capability for websites, e-mail, and social media that changes the way you do business. ‘ Click-to-Schedule” creates new customers more quickly than you can now, and increases the satisfaction level of customers you already have.
- 31. Who Uses TimeTrade? 30 million Click-to-Schedule prospecting, sales and Customer-care appointments each year 4,000 TimeTrade customers
- 34. Financing Technology: Trends in debt & equity termsheets Dan Allred Silicon Valley Bank (617) 796-6904 [email_address] Twitter: @dgallred http:// danallred.tumblr.com
- 35. Technology Risk vs. Market Risk
- 36. Funding sources: the lines are blurring
- 45. A few examples:
- 46. Questions? Dan Allred Silicon Valley Bank (617) 796-6904 [email_address] Twitter: @dgallred http:// danallred.tumblr.com
- 48. Using SBIR Grants in Your Funding Strategy Phil Holberton Material Courtesy of NIH
- 55. Phil Holberton Phone: 781-259-9719 Email: [email_address] Start Now
- 58. FUNDING OPTIONS FOR SOCIAL ENTREPRENEURS An overview of funding resources available to for- and not-for-profit Social Entrepreneurs
- 65. TCN & Mass Challenge July 7, 2011 Paul G. Sweeney Partner (617) 832-1296 [email_address] © 2011 Foley Hoag LLP. All Rights Reserved. Angel Group and Venture Capital Term Sheets
- 81. Liquidation Proceeds Source: www.wikipedia.org
- 82. Non-Participating Preferred Source: www.wikipedia.org
- 83. Participating Preferred Source: www.wikipedia.org
- 94. Paul G. Sweeney Partner (617) 832-1296 [email_address] © 2011 Foley Hoag LLP. All Rights Reserved. Questions?
Editor's Notes
- Two points on this slide Equity investing is about achieving an exit Rarely an exit takes place based in IP (more common in life siences (especially drug discovery) Almost always $2-3M in 4-5 years is generally deemed a normal growth company For angel backed companies exit planning should be underway by year 4 or 5 When revenue is in the $7-10M range with scaling costs understood a normal product or product line acquisition can be expected At this level the the acquirer can speed growth especially of there a shared sales force At this level
- Focus on what’s in the best interest of the Company Always ask “why” when terms are proposed Require justification Leaving aside whether that’s a good or bad investment strategy, from the viewpoint of the Founder, it’s really bad to have folks in your deal that are there for any other reason than they believe in you. It’s not about your syndicate, nor your angel investors, nor your VCs – it’s about YOU!