This document provides an overview of fundraising for startups. It discusses understanding the investor landscape, the different phases of a startup, product-market fit, scaling the business, and venture capital. It emphasizes the importance of getting early customer validation, demonstrating a repeatable and scalable growth model, and conveying a compelling vision to attract investors. The document also covers selecting the right investor strategy, preparing an effective pitch deck with financial projections and valuation, and crafting a narrative around solving an important problem.

1. Sparklabs Fundraising
WORKSHOP
by Michael Lints

2. INTRODUCTION

3. B I O
1 9 7 5
Ve n t u re Pa rt n e r at
G o l d e n G a t e Ve n t u re s
Fo r m e r E n t re p re n e u r
Vi c e C h a i r m a n E c o n o m i c
D e v e l o p m e n t B o a rd
H a r v a rd B u s i n e s s S c h o o l
Fat h e r, h u s b a n d , c y c l i s t ,
r u n n e r a n d b u i l d s
G u n d a m Ro b o t s

4. INTRODUCE YOURSELF

5. Understanding the landscape
Reduced commitments means it will be
harder to fund raise and investors have a
multitude of choices so they can be picky.
Good companies (and funds) are always able
to raise money.

6. Understanding the landscape
Investors targeting Emerging Markets have a
different profile than investors who invest in
Developed Markets.
Fund managers raised US$20 billion for Emerging
Asia-focused private funds and deployed US$17
billion (2015), representing 15% and 14%
declines compared to 2014. Many factors may be
contributing to this slowdown—such as
decelerating economic growth and volatile public
equity markets in China, as well as currency
depreciation across the region.

7. INVESTOR TYPES
• Angel Investors
• Venture Capital Funds
• Public Pensions
• Fund of Funds
• Corporates and accelerators
• Endowments and foundations
• Family offices
• Banks and financial institutions
• Sovereign wealth funds
• Others

8. THE STARTUP

9. Phases of Startup Life
Search for Product/Market Fit
Search for Repeatable & Scalable &
Profitable Growth Model
Scaling the Business

10. Repeatable and Scalable Growth
CAC
ConversionSales
Price
Leads
Funnel

11. Product Market Fit
1. A set of customers excited enough about your product to pay for
it.
2. A customer/client base large enough to create a viable business.
Mark Andreessen (a16z) says
[Y]ou can always feel product/market fit when it’s happening. The customers are buying the
product just as fast as you can make it — or usage is growing just as fast as you can add more
servers …
Develop v1.0 / Pivot and Iterate

12. Product Market Fit
• The best way to find product/market fit is to get in front of
customers and validate your assertions.
• Start early, and validate before you build anything.
• Use wireframes of the product to walk customers through
your vision, then keep validating throughout product
development.

13. Product Market Fit
• Objective listening
• “The customer doesn’t get it”
• “Happy Ears”
• “The product is great but customers aren’t smart enough"

14. Product Market Fit
• Is the problem your tackling important to the
customer. How do you know. Why is it important?
• Does your solutions really solve a problem?
- Must have or Nice to have?
- Would you commit to buying it at this price?
- How high does this solution sit on your priority list

15. Overall
Conversion%
Campaigns
to drive
traffic
Launch - Key Metrics
Visitors
Trials
Closed deals
Conversion %
Conversion %

16. Focus on Conversion & Retention
• Improve Product/Market Fit
• Find Optimal Customer Segments
• Clear & Simpel Messaging & Positioning

17. Getting to scale
• The process you go through to acquire a paying customer is clearly repeatable.
- Sales vs online
• The process is scalable.
- Increase resources
• Your cost to acquire a customer (CAC) is significantly less than the amount you
can monetize them over the customer’s lifetime (LTV 3 x CAC).
- Recover CAC in less than 12 months

18. Experiment with Sales
Models while keeping a
low burn
Like the search for product/market fit, this is a time
when you should experiment. Don’t believe the
predictions of your business plan, which are purely
unproven hypotheses. Only a tiny number of
startups are able to meet or beat the sales plans they
put together until they have found a repeatable and
scalable sales model.

19. A Changing Experience
• Brand Building
• Team Building
• Product Building
• Market Building
• Change of Management Style

20. VENTURE CAPITAL

21. Build Audience
Momentum.
Foster product development and marketing which
creates organic (or somewhat organic) user traction.
This focus translates into big top line figures,
including some admittedly vanity metrics and pretty
graphs to tell the startup’s story to investors (though
with less substance and less focus on business
metrics or even deep engagement for now).

22. Generate
Real Revenue.
Another approach to raise Series A is to drive
meaningful revenue. For B2B startups especially, this
is the best signal of product-market fit – a sign that
the company is investable.

23. Craft a Small
Scale Machine.
Similar to a revenue-focused strategy, this approach
goes further than vanity metrics in demonstrating
ultra-high engagement and penetrations into a small
number of users/buyers. These users/buyers then
have a clearer LTV/CAC ratio with less focus on the
top-line revenue metric. These small-scale
economics are often very attractive to Series A
investors.

24. Create an Unstoppable
Vision of Promise.
Some entrepreneurs can succeed by
conveying as much excitement and
qualitative promise as possible about
what’s still to come: sensational press,
luminary advisors, blue-chip customers
about sign on, a dream team of co-
founders, and so forth.

25. PICKING THE RIGHT INVESTOR

26. Getting the house in order
• Prepare fundraising plan
• Clear pitch deck
• Pre marketing
• Fundraising team
• Marketing material
• Marketing campaign and roadshow
• Time table (plan the first and final close)
• Roadmap

27. • Can you explain your company / strategy and business model to
your friends & family?
• Value proposition. Create an Unstoppable Vision of Promise
• Are you solving a problem and can you quantify the problem
• What is your solution
• How are you creating value / what’s the product-market fit
• Describe your (small) scale machine
• Team and track record / advisors
Pitch Deck

28. Financials
• Financial summary
• Revenue vs Market share
• Projections
• Gross vs Nett Margins
• Use of Funds
• Investment strategy and valuation

29. Investor Strategy
• Equity vs convertible notes
• Employee Stock for key personnel
• Valuation strategy keeping a next round in mind
• Strategic investor

30. Pitch/Sales Deck
#1. Name a Big, Relevant Change in the World
#2. Show There'll Be Winners and Losers
#3. Tease the Promised Land
#4. Introduce Features as “Magic Gifts”
#5. Present Evidence You Can Make the Story Come True
*Andy Raskin