AASU Conference- Financing Your Dreams - Feb 2020
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One of the biggest barriers to entrepreneurship is funding your business. This session explores the fundraising process, the right time to raise money, different financing instruments available, perfecting your pitch, and how to select your investors and advisors. Leveraging years of experience, we will help founders and aspiring founders understand the role of venture capital in entrepreneurship and share lessons learned about fundraising and investing from both sides of the table.
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AASU Conference- Financing Your Dreams - Feb 2020
- 1. Financing Your Dreams: Fundraising 101 David Chang @changds www.davidchang.me A A S U C O N F E R E N C E
- 2. Fundraising Basics How to Raise a Round Key Tips
- 3. Started on a low risk path
- 4. Detour into the startup world
- 5. Investing in the next generation Direct Via Syndicate/Fund
- 6. Incredible potential of student entrepreneurs
- 7. Should you join or start a company?
- 8. What stands in your way?
- 10. 9 out of 10 borrow for college 2x amount of debt Disproportionate impact
- 11. Delays significant life goals
- 12. What’s your entrepreneurial trajectory? • Lifestyle or social good • Linear growth or revenue fueled • High growth, scalable venture
- 13. Source: Jean Hammond & MassChallenge Size Cost Equipment Financing Traditional VC Micro VC Angel Groups AngelList Angels Corporate / Strategic Venture Customers Jobs Bill Portal Crowdfunding Vendors Founder Friends & Family Crowdfunding Grants- Gov & Foundation Venture Debt Bank Loans Personal Loans Private Equity Competitions Accelerators & Contests Impact Angels & VCs Capital Sources
- 14. Grants Equity Debt Revenue Partner Where to get that first dollar?
- 15. Where to get that first dollar? Revenue Prepaid product Consulting service Equity Convertible note SAFE Stock Partner Pay-later services from vendors Non-recoverable engineering Grants SBIR Pitch competitions Debt Bank loan Personal note
- 16. Venture Capital Stages Growth Equity Early Stage Angel Friends & Family
- 17. Venture Capital Dynamics Skewed return distribution VCs must swing for the fences
- 18. Raising a Round
- 19. How Much to Raise • Basic financial model of cost drivers and revenue • Forecast monthly for 2 years • Fundraise rule of thumb: 12-18 months’ cash
- 20. Use of Proceeds • Build product • Grow team • Marketing • Customer acquisition • Working capital
- 21. Milestones See www.techcrunch.com/2015/06/24/running-out-of-money-isnt-a-milestone Team Product Development Market Demand Product / Market Fit Business Model Execution
- 22. Fundraising Basics How to Raise a Round Key Tips
- 23. Prep Target Socialize Raise Close Run a 5-step fundraising campaign
- 24. Basic Prep ✓ Legal representation ✓ Founders agreements ✓ Financials and budget ✓ Blurb (1 paragraph) / teaser (1 page) ✓ Pitch deck (10 slides)
- 25. Target Criteria Stage Location Industry Vertical Investment Thesis Business Model Social / Trust Filter
- 26. Build Pipeline
- 27. Tech Healthcare / Life Sciences Seed Stage Growth Stage Early Stage Angel Groups Corporate VC Corporate VC Energy bit.ly/boston-area-investors-firms Some Local Investors
- 28. Socialize • Prioritize sequence • Find strongest connections to 30+ targets • Tactics: lead gen, cold calling, warm intros • Network over 2-3 months
- 29. Don’t Ask for Money! “Who else should I talk to?” “I’m not ready to raise” “Who would be helpful?”
- 30. Refine Pitch • Incorporate feedback • Double down on consistent themes • Avoid whiplash changes
- 31. Go for It! Create FOMO • Approach your top candidates at the same time • Decide whether to tell investors about each other • Land anchor investor as the first domino • Use triggering events to get or improve term sheets “I’m closing a round”
- 33. Close the deal • Rolling close vs. set close • Not done until money is in the bank Key terms ❑ Board composition ❑ Option pool ❑ Voting rights ❑ Founder vesting ❑ Change of control ❑ Redemption rights ❑ Information rights ❑ Anti-dilution
- 34. Seed A B $15 $6 $1 $30 $12 $5 Valuation & Dilution ? Dilution: what’s your end stake?Valuation ($M) ?
- 35. Valuation & Dilution 37% See ownyourventure.com See dlopuch.github.io/venture-dealr Raise $1M on $5M pre 33%Raise $1M on $3M pre 34%Raise $1.5M on $5M pre Dilution: what’s your end stake?Valuation ($M) Seed A B $15 $6 $1 $30 $12 $5
- 36. How Long Does it Take? • Longer than you expect • 3-6 months • Speed limited by access to investors • Your ability to find them • Calendar availability (surprisingly hard)
- 37. Find the right investors
- 38. Fundraising Basics How to Raise a Round Key Tips
- 39. Ideas alone are worthless
- 40. Don’t go solo
- 41. Paint a vision and how to get there
- 42. 1.10 ^ 12 = 3.1 1.01 ^ 365 = 37.8 Shorten your iteration cycles for big paybacks
- 44. Stay true to the guiding north star
- 45. Take advantage of this time
- 46. Big things start with one person
- 47. Financing Your Dreams: Fundraising 101 David Chang @changds www.davidchang.me A A S U C O N F E R E N C E
- 49. Typical Parts Overview Problem Solution Market Traction Marketing Strategy Team Competition Conclusion Financial Projections (high level) Money Being Raised and Use of Funds Revenue Model & Business Model
- 51. pexels.com
- 53. Resources • Legal • Goodwin Procter www.foundersworkbench.com • Foley & Lardner www.foley.com • Pierce Atwood • Techstars www.techstars.com/docs • www.seriesseed.com • General • www.jddavids.com • www.robkornblum.com bit.ly/startresources