Presentation based on Ben Holmes, Index Ventures Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual Created for EnterpriseTO

1. The Capital Raising Ladder David Crow Cofounder, Influitive Corporation Cofounder, StartupNorth.ca & DemoCamp david@davidcrow.ca | david@influitive.com http://twitter.com/davidcrow

3. When does 1 + 1 = 10x

4. Raising Money is Hard Starting a business is a big commitment Energy & Passion Time & Effort Financial Resources Take a big breath Inspired by Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

5. Why are you doing this? Make money Feed my kids Change the world How long do you want to commit? What level of financial risk are you prepared to take? Inspired by Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

6. # 1 Focus on the Business First

7. Top Tips Have a great product/service Focus predominately on growing the business, not fundraising Evidence of execution ability is more exciting than 100 page business plan

8. Be honest Do customers want the product/service? Do you have the competence to build the product? The team? Can you monetize the product or service? How competitive is/will the space be? How big can the overall market become? Inspired by Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

9. Focus on your business first Build the product Get users/customers Make money Don’t spend it Get to break-even Scale like crazy

10. The Capital Raising Ladder No cash, moonlighting, sweat Credit card or savings (personal round) Friends and family round Incubators Serious angels and small VCs Classic VCs Corporate VCs Non-recourse working capital bank loans IPO Exit: Capital Realization By Bernard Lunn http://www.readwriteweb.com/start/2009/06/the-capital-raising-ladder.php

11. Non-Equity Financing Equity Financing Angel Financing Overview of financing Bootstrapping/Self Financing Venture Capital Private Equity Debt/Bank Finance Public Markets By Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

13. Needs to be a real business

14. Most emerge from a service offering or consulting companyPros Cons More cash efficient Close to customers Excellent to understand problems and solutions Resources for growth constrained by cashflows May miss a big opportunity if other players raise a lot of cash By Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

15. Debt/Bank Financing Relatively limited funds when available Banks lend to predictable business they understand Great for business that are following a well trodden path Not necessarily great for software, web, mobile businesses By Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

16. Reasons to raise equity finance Prerequisites Unique Product or Concept Passionate Founding Team Large Potential Market Implications Intense Competition Need to move rapidly VC Funding Supports Hiring Rapid Product Development Partnerships Infrastructure Internationalization Commercialization By Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

17. # 1 Reason to Raise Money Market growth is accelerating Add revenue generating units at a predictable profit

18. When NOT to raise money Application is a feature not a product Market size is too small Motivation is not financial The risk is that you waste time trying to unsuccessfully raise money Real risk is that you succeed Lose opportunity for small exit Lose opportunity to run a lifestyle business Get bound to 3+ years of crazy hard work By Ben Holmes of Index Ventures http://www.slideshare.net/benholmes/venture-capital-an-entrepreneurs-manual

19. It’s All in the Sequence Company Title Page Business Overview Management Team Market Product Business Model Customers Strategic Relationships Competition Barriers to Entry Financial Overview Use of Proceeds Capital & Valuation Review Contact Info/Next Steps David S Rose: It’s All in the Sequence http://www.businessweek.com/magazine/content/05_38/b3951447.htm

20. It’s All in the Sequence (pt.2) Company Title PageStart with the name and logo of the company, the name and title of your presenter, a one-line description or tagline about the company, and the dollar amount of the round you are raising. Business OverviewBoil down your elevator pitch to one sentence. Tell us what you sell or do in very concrete language. This sets the context for the rest of your presentation. Management TeamShow us your talent and experience, with one line of background (two lines max!) on each member. MarketWhat’s the environment in which you operate, how big are the segments, what are the pain points? ProductHow do you solve a customer’s pain? What exactly do you do? This can be illustrated with a clear product or screen shot, or a simple process diagram, but if we don’t know what you do, we won’t know why we should fund you. (But don’t spend too much time on this, since you’re pitching the company here, not the product.) Business ModelWho pays whom, how much, for what and from where. What does this mean for annualized revenue streams? CustomersWho are they, how many are there, how do you distribute to them, and how are they attracted and retained? David S Rose: It’s All in the Sequence http://www.businessweek.com/magazine/content/05_38/b3951447.htm

21. It’s All in the Sequence (pt. 3) Strategic RelationshipsIf you have any, make sure we know about them. CompetitionWho and how threatening are they? What are the differentiation factors? Include both direct and indirect competitors. Remember that everyone has competition, even if it is just “the old way” of doing something. Barriers to EntryHow will other potential competitors be kept at bay? Financial OverviewShow us your top-line revenues and expenses, and EBITDA two years back and four years out. Use of ProceedsWhere will our money take you? Capital & ValuationHow much have you raised previously, who are your current investors, what are you looking for in this round, and how do you come to your suggested valuation? ReviewProvide a brief summary of what you said, in this same order, narrowed to the five or six most important points. Contact Info/Next StepsLead us into the next step, such as a follow-up meeting for due diligence…and include your contact info! David S Rose: It’s All in the Sequence http://www.businessweek.com/magazine/content/05_38/b3951447.htm

22. Resources David S Rose: It’s All in the Sequencehttp://www.businessweek.com/magazine/content/05_38/b3951447.htm Business Model Generation by Alex Osterwalderhttp://businessmodelgeneration.com/ Fred Wilson http://avc.com/ Brad Feldhttp://feld.com/ Venture Hackshttp://venturehacks.com/ High-Tech Ventures by Gordon S. Bell

23. For the Gifted – Resources++ Paul Graham http://www.paulgraham.com/articles.html Dave McClure AARRR: Pirate Metrics for Startups http://bit.ly/AARRR David Skokhttp://forentrepreneurs.com/ Sean Ellishttp://startup-marketing.com/ Marc Andreessen http://bit.ly/PMarketFit

24. Thank you. David Crow david@davidcrow.ca & david@influitive.com http://davidcrow.ca/ http://startupnorth.ca/ http://influitive.com/ Twitter: @davidcrow Find me on Facebook, LinkedIn,etc.