Funding presentation from BOSS 2011.

1. Consider us your business
partner…
Only Better!

2. Ideas2Deals.com

3. Financing Your Business

5. Friends, Family, Founder
Bootstrapping is building the business from
internally generated funds.
• You need to establish a foundation for your
business. Build “equity”
• Build credibility and show that your business has
customers and a product that people want to buy.
• Focus on customers and cash flow.
• Work hard and be creative in seeking ways to drive
revenue while holding expenses down.

6. Grants
Grants are not:
 Free Money
 Money to live on while you figure out
what to do
 Reserves in case things don’t work
out.
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7. Grants
Grants are:
Grants are funds from public sources
(government) designed to provide a
good or service that is needed by the
community but not economically feasible
for the private sector to provide without
subsidy.
Typically grants flow from government
agencies to non-profit firms to provide a
specific public service.
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8. How to Work Grants
 If you are a for-profit entity you probably won't
qualify for grants. There are exceptions
particularly for science and research activity.
 If there are people that will pay for your product
and service and you can build a profitable
business from this activity you probably don't
qualify for a grant.
 A nice strategy for a for-profit is to partner or be
a vendor to a non-profit that is getting grants.
They get the money from the government, you
do the work and get paid.
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9. Angel Investors
Angel investors are high net worth
individuals who are interested in investing in
emerging businesses.
Two Types of Angel Investors
 Professional
 Strategic
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10. Professional Investors
 The underlying reason that they will
invest is return on their investment.
 They invest in spaces they know.
 They invest with people they know
 They invest based on referrals from
people they know.
 Invest based on due diligence.
 Will require professional terms.
 Looking for a big payout based on a
liquidity event.
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11. Strategic Investors
 More interested in the product than
the business.
 Invest based on gut reaction.
 May take common stock
 May not look for a liquidity event.
 May be the friends in FFF (or referred
by FFF)
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12. Key Points About Investors
 If you take someone else’s money
you have a partner. They will want to
have some influence on the company
to protect their investment.
 You will probably have to relinquish
some level of control over the
company.
 If you are unwilling to share
leadership of the company, investors
are not the option for you.
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13. Institutional Venture Capital
 The only reason that they will invest is return
on their investment.
 They only invest in spaces they know.
 They only invest with people they know
 They only invest based on referrals from
people they know.
 Invest only based on due diligence.
 Will only require professional terms.
 They are only looking for a big payout based
on a liquidity event.
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14. Investors’ Interest
Investors invest in people and
teams that can execute.
“A” teams with “B” markets will generally
beat “B” teams with “A” markets.
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15. Investor Business Plan Summary
 Summary should be “concise”
 Summary should provide a clear
description of the problem you solve.
 How you solve it.
 Your business model.
 The underlying magic of your product.
 Defensibility of your product.
 Summary should be no more than “four-
pages”.
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16. Pitching Investors
Question: How can you tell if
an entrepreneur is pitching
their business?
Answer: Their lips are
moving.
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17. Tips For Pitching
 Explain what you do in the first minute.
 “Clearly” explain what you do in the first
minute.
 Articulate the problem in the market and
what you do to solve it.
 Purpose of a pitch is to “stimulate interest” not
to close the deal.
 Keep it tight. 10 slides, 20 minutes, 30
point font.
 Speak to the audience’s interest.
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18. Presentation Slides
Title Slide: This is where you tell what you do and give a
simple to understand example.
Problem: Describe the pain you are alleviating for your
customers.
Solution: Show how you solve the pain.
Business model: Explain how you make money.
The advantage you have: Why are you different than
everyone else?
Marketing and Sales: "Clearly" tell what your sales strategy
is. Do not forget to discuss your pricing.
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19. Presentation Slides
Competition: Show there is enough of a market available to
buy your product even with the competition.
Management Team: You need to convince the investor that
you have the team that can execute and will succeed.
Financial Projections: You need a simplified, clear slide here.
You need to justify your numbers.
Current Status/Future Status: Show your use of funds and
how that will drive the growth of the company. You do need
to discuss exit options. Who are buyers and when. Don't
hem-haw around. show the investor that they can not only
expect the company to succeed (which is about you) but
also that they can expect a return in a certain time frame
(which is about them).
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20. Investor’s Interest
 How are you going to make
money?
 How are you going to generate my
return?
 Are you capable of “executing”?
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21. “Don’t” When Pitching Investors
 Don’t try to BS the investor because they see
through it.
 Get your value proposition across early in case
you don’t get to the end of the presentation.
 Don’t get bogged down on the mechanics of the
product. Early on the investor will assume it
works as you say it will.
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22. “Don’t” When Pitching Investors
 Don’t ask for an NDA at initial meetings!!!
 Real investors are not in the business of
stealing ideas and trying to develop them.
 You control what is in the summary and initial
pitch. You don’t need to disclose the “secret
sauce” at this point.
 Investors will sign an NDA prior to due
diligence.
 Get over it…You’re not that special
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23. Why are banks in business?
To make money not to make
loans.
Lending is a tool to making
money.

24. Commercial Banks
 Banks typically lend for “stuff”.
 Banks are a great option if you have history
and are looking to expand. However, for an
early stage company with limited history and
minimal collateral, getting a loan could prove
difficult.

25. Commercial Banks
 When the company is new the entrepreneur
should establish a banking relationship and
utilize this as far as it will go. The
relationship with a bank will be very helpful
in the future as the business becomes
established.
 There is no 100% financing from a typical
commercial bank.

26. Small Business Administration
 SBA is not in the business of making bad
loans.
 Once the bank has agreed that the loan is
good but in some way outside their
guidelines they will seek an SBA guarantee.
 The SBA is there to help you with your cash
flow.
 Longer term
 Lower down payment

27. What do banks look for?
Credit History and Score
 Credit Score ~ Strive to get/keep
your personal credit score over 740
 Guard Your Credit Score
 www.AnnualCreditReport.com

28. What do banks look for?
Business Plan
 The business plan tells the bank
how you are planning to repay the
loan.

29. What do banks look for?
Collateral
 There is no 100% financing
 To a bank collateral is real estate or
equipment.

30. Working Capital
Short-term money to operate the
business.
Typically financed by a Line of
Credit.

31. Getting the bank to say YES!
 Know your credit score going in.
 Establish a banking relationship
 Keep you plan tight, clear and easy to
understand.
 Use common format, don’t be creative.
 Help the banker say yes. Put yourself
in the banker’s shoes.
 Structure your ask. Separate working
capital, equipment and real estate.

32. Everything is always impossible
before it works.
That is what entrepreneurs are all
about – doing what people have told
them is impossible.

33. For Information on SBDC Activities
The Ohio SBDC at Columbus State
p. 614-287-5294
www.SBDCcolumbus.com