Now, it is time for you to raise money. What are the pros and cons? And, here is the legal term that you need to understand too.

1. Intro to fundraising
Week 9

2. Agenda:
● Type of businesses
● Ways of getting money (Fundraising VS Financing)
● How does fundraising work
● Stage of startups
● Investor startup fit
● How to raise money
● Sources for leads
● How much do you need
● Timeline
● Termsheet
● Cap-table
● Valuation
● Key terms
● Type of termsheets

3. Type of businesses
● Startup or lifestyle business?
● Type of businesses:
○ Non-profit
○ Consultant
○ Lifestyle business
○ Startups
● Type of entities:
○ Self-employees
○ LLC
○ C-corp

4. Ways of getting money (Fundraising VS Financing)
Grant
Debt:
Financial loan from bank
Fundraising:
Debt instrument

5. How does fundraising work
You give something such as shares or legal agreement which can affect control of
your company. And enter an economic agreement for them to hold your
company’s shares and certain legal rights.

6. Stage of startups
● Pre-seed stage: Pre-launch or pre-product market fit
● Seed stage: Pre-revenue or looking for product market fit
● Series A: Price round, board seat, post product market fit and testing your
startup’s growth
● Series B and so on: growth stage
● Exit: Either you get acquired by the company or go public

7. Investor startup fit:
1. VCs are close to you and your team:
a. Friends, family, or Angel
2. VCs have supported similar services:
a. Incubation, Accelerator, or Seed-stage VCs
3. VCs have supported to similar startups or service:
a. Incubation, Accelerator, or Seed-stage VCs
4. VCs are interested in working with your startup:
a. Corporate Investor
5. VCs are purely interested to a financial return
a. Institutional investor

8. How to raise money
1. It is a sprint not marathon
2. It is a credential game between Investors and Startups
3. Get more leads rather than just reaching out to a few leads
4. Before starting the process, you need to get ready!
5. It takes usually 3 months to 6 months, this means you need to get ready
much earlier and start to work on this.
6. Don’t get all team members involved for fundraising, usually CEO’s work!

9. Source of leads
● Online:
○ AngelList
○ Crunchbase
○ Website
○ Article or publicity
○ LinkedIn
○ Facebook
○ Twitter
● Offline:
○ Networking
○ Referral

10. How much do you need to raise money for seed
● 18 months runway for the company
● Breakdown of numbers and usage
○ Revenue:
○ Cost: Salary, Marketing, office, software, etc
○ Net revenue:
● What can you achieve 18 months later
○ We will start to monetize when and how much
○ We will expand our service to this platform, this vertical. Countries, etc.
○ We will achieve next round milestone (you need to research what could be the milestone of
the company)

11. Timeline:
1. Start to collect leads and make a spreadsheet to manage it
2. Prepare deck and other fundraising materials
3. Start to pitch people you are close to, get feedback, and modify deck
4. Try to get a referral from experienced people you know
5. You need to have a timeline for closing date too
6. Once you feel comfortable, just reach out to leads to setup a meeting
7. Key is momentum and FOMO

12. What is Termsheet?
A termsheet is a nonbinding agreement setting forth the basic terms and
conditions under which an investment will be made. It serves as a template to
develop more detailed legally binding documents. Once the parties involved reach
an agreement on the details laid out in the term sheet, a binding agreement or
contract that conforms to the term sheet details is then drawn up.

13. Termsheet
ControlEconomic

14. Sample of Termsheet

15. Cap-table
A capitalization table, also known as a cap table, is a spreadsheet or table that
shows the equity capitalization for a company.
The capitalization table is an intricate breakdown of a company’s shareholders’
equity.

16. Valuation
● Pre-Money: The value of your company
● Post-Money: The value of your company after the investor put the money in
● Cash on Cash multiple: The multiple of money returned to an investor on
exit divided by the amount they put in throughout the lifetime of the company
● Equity: Ownership - Represents one’s percentage of ownership interest in a
given company
Ex., Post-Money = Pre-Money + Invested Capital
$1mn = $800k + $200k

17. Key terms
● Liquidation Preference
● ESOP Pool
● Anti-Dilution
● Vesting
● Board of Directors
● Reserve Matters

18. Equity Convertible Notes SAFEs
Debt Instrument? No Yes No
Is the round led
by lead investor?
Yes No No
Round close in... 4-12 weeks 2-6 weeks 2-6 weeks
When? ● Need to raise a lot of
capital
● Expecting massive
growth
● Need long runway before
profitability
● Need some capital
● Want to fundraise
quickly
● Not ready to
establish company
valuation
● Need some capital
● Want to fundraise
quickly
● Not ready to establish
company valuation
● Don’t want to use
debt instrument

19. Any question?