Disrupting Venture Finance in The 21st Century
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There has never been a better time to launch a company! This presentation outlines the different financing options from crowdfunding to venture to credit. The pros & cons.
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Disrupting Venture Finance in The 21st Century
- 1. DISRUPTING VENTURE FINANCE IN THE 21ST CENTURY PRESENTATION BY MELINDA MOORE
- 2. EVERY INDUSTRY IS GOING TO BE DISRUPTED
- 3. FOOD
- 5. CALL CENTERS
- 6. WHY FINANCE IPO’S ARE DECLINING RISE IN CROWDFUNDING MOST ENTREPRENEURS & INVESTORS ARE LEFT OUT
- 7. IPO DECLINE • VC BACKED COMPANIES TAKING LONGER TO IPO • STRATEGIC PARTNER BUYOUTS • MEGA-ROUNDS • LOWER RETURNS • CORPORATE GOVERNANCE ISSUES
- 8. THE EMERGENCE OF CROWDFUNDING • A POWERFUL VEHICLE THAT IS DRIVING A GLOBAL WAVE OF INNOVATION • A WIN FOR ENTREPRENEURS • REWARDS-BASED • EQUITY-BASED
- 9. THE INVESTOR CONVERSATION HAS MOVED FROM BOARDROOMS TO CROWDFUNDING PLATFORMS LIKE KICKSTARTER
- 13. WHY IS CROWDFUNDING IMPORTANT OVER $30 BILLION WAS RAISED VIA CROWDFUNDING IN 2018 NEW PATH FOR ENTREPRENEURS PEOPLE DON’T BUY WHAT YOU DO, THEY BUY WHY YOU DO IT
- 14. LET’S LOOK AT VENTURE FINANCE
- 15. RECORD YEAR FOR VENTURE CAPITAL • VENTURE CAPITAL INVESTMENT HIT 100 BILLION IN 2018 IN THE U.S. • DRIVEN BY UNICORNS WITH MEGA-ROUNDS INCLUDING SLACK, LYFT AND STRIPE • CHINA VC VOLUME SURPASSED THE U.S. FOR THE FIRST TIME
- 16. BUT…IPO MARKET HITS THE BRAKE ON MEGA- ROUND COMPANIES • LYFT STOCK LOST HALF ITS VALUE ON THE FIRST DAY OF TRADING • BOTH COMPANIES SHOW LARGE NET LOSSES AND NO CLEAR ROAD TO PROFITABILITY • LOTS OF SHORT SALES
- 17. PROS OF VC FOR ENTREPRENEURS SMART MONEY + STRATEGIC SUPPORT RAISE SUBSTANTIAL AMOUNT OF MONEY FOR GROWTH GOOD EQUITY PARTNERS CAN MAKE IT EASIER TO RAISE MORE ATTRACTIVE DEBT LATER
- 18. CONS OF VC FOR ENTREPRENEURS PRESSURE TO GO BIG QUICKLY IT'S POSSIBLE TO LOSE CONTROL & BE REMOVED LEFT WITH SMALL PERCENTAGE OF COMPANY
- 19. THE DATA: VENTURE FAVORS WHITE MEN WHITE MEN REPRESENT MORE THAN 90% OF VENTURE CAPITALISTS SO THEY ARE PRONE TO FUND MALE-LED COMPANIES ONLY 2% OF VENTURE CAPITAL WENT TO FEMALE FOUNDERS LESS THAN 1% OF VENTURE CAPITAL WENT TO MINORITIES
- 20. HOW TO GROW YOUR BUSINESS WITHOUT GIVING UP EQUITY
- 21. ASSEMBLED BRANDS PROVIDES WORKING CAPITAL TO EMERGING CONSUMER BRANDS RAISED 100 MILLION TO DEPLOY CREDIT BASED ON INVENTORY & ACCOUNTS RECEIVABLE
- 22. THE PROS OF DEBT FINANCING THE BIGGEST ADVANTAGE OF USING DEBT VS EQUITY IS CONTROL AND OWNERSHIP ONCE THE DEBT IS PAID BACK, THERE IS NO MORE LIABILITY NO ONE TAKES A BOARD SEAT OR PUSHES YOU FOR EXTREME GROWTH
- 23. THE CONS OF DEBT FINANCING IT REQUIRES PAYMENT BACK BASED ON INTEREST BORROWERS MUST UNDERSTAND THE FINE PRINT OF THE FINANCING TERMS; VARIABLE RATES CAN DRAMATICALLY CHANGE OVER TIME TAKING ON TOO MUCH DEBT CAN NEGATIVELY IMPACT PROFITABILITY AND VALUATION
- 24. KEY TAKEAWAYS
- 25. GREAT TIME TO START A COMPANY THERE HAS NEVER BEEN A BETTER TIME TO START A COMPANY BECAUSE THERE ARE MORE FINACING OPTIONS • CROWDFUNDING • VENTURE CAPITAL • WORKING CAPITAL OR DEBT • HYBRID MODEL • EACH METHOD HAS ITS OWN PROS AND CONS
- 26. HOW TO DECIDE • EXPLORE AND DISCOVER WHICH FINANCING OPTION IS BEST FOR YOU AT YOUR STAGE IN BUSINESS • UNDERSTAND BOTH THE SHORT-TERM AND LONG-TERM IMPLICATIONS
Editor's Notes
- 20 million Pre-sell products “This is the original form of crowdfunding where backers get a reward in return for their investment, or entrepreneurs are able to pre-sell their product in order to have money for production costs. For example, an entrepreneur is able to launch a new electric bike or digital watch company by pre-selling the bike or watch as a perk. This is called rewards-based crowdfunding. ” Excerpt From: Melinda Moore. “How To Raise Money: The Ultimate Guide to Crowdfunding.” iBooks.
- “Equity is the newer form of crowdfunding thanks to the JOBS Act passing, which allows companies to raise up to $1 million per year over the Internet via Title III, and up to $50 million via Regulation A+ or Title IV ” Excerpt From: Melinda Moore. “How To Raise Money: The Ultimate Guide to Crowdfunding.” iBooks. “As Simon Sinek famously said in his TED Talk: “People don't buy what you do, they buy why you do it.” Excerpt From: Melinda Moore. “How To Raise Money: The Ultimate Guide to Crowdfunding.” iBooks.