2. VividCortex
• Database performance for MySQL
• Save $$$ on hardware provisioning
• Run your system faster
• Reduce diagnosis and resolution time
• Make your people happy
• Free 30 day trial at vividcortex.com
www.vividcortex.com | info@vividcortex.com
5. About Me
• Founded 6
companies
• Exited one
company
• Learned
Learning from
many mistakes
• Background in
finance, M&A,
and startups
• CrossFit
www.vividcortex.com | info@vividcortex.com
9. www.vividcortex.com | info@vividcortex.com
Why Have A
Company?
• Create Wealth?
• Solve a Problem?
• Be Your Own Boss?
• Create Jobs?
• Save the World?
• Advance Humanity?
• Be Bold?
• Organize the World’s
Information?
• Hack on Some Amazing
Engineering?
10. www.vividcortex.com | info@vividcortex.com
There is only one
reason for a company
• Create Wealth?
• Solve a Problem?
• Be Your Own Boss?
• Create Jobs?
• Save the World?
• Advance Humanity?
• Be Bold?
• Organize the World’s
Information?
• Hack on Some Amazing
Engineering?
11. www.vividcortex.com | info@vividcortex.com
There is only one
reason for a company
A company
exists to
create value
for internal
and external
stakeholders
• Create Wealth?
• Solve a Problem?
• Be Your Own Boss?
• Create Jobs?
• Save the World?
• Advance Humanity?
• Be Bold?
• Organize the World’s
Information?
• Hack on Some Amazing
Engineering?
12. It’s About the Money
www.vividcortex.com | info@vividcortex.com
20. You need to de-risk.
Startups are a constant
de-risking process
21. Expectations
Summary
• Companies
need to make
money
• Create value by
executing
• Build a diverse
team from the
start
www.vividcortex.com | info@vividcortex.com
24. Fundraising
Basics
• Ask for introductions from
investors, peers, rich people
• Never cold call/cold email
• Get on the phone
• You are doing sales
• Know your elevator pitch
• Actually listen to people
• Ask for explanations of “no’s”
www.vividcortex.com | info@vividcortex.com
26. Fundraising Path Goals
Idea
Stage
Early
Stage
Product
&
Market
Fit
Scale
www.vividcortex.com | info@vividcortex.com
Founding
Team
&
Vision
Proof
of
Concept
Early
Customers
Repeatable
Model
27. Fundraising Path Investor Drivers
Idea
Stage
Early
Stage
Product
&
Market
Fit
Scale
www.vividcortex.com | info@vividcortex.com
Founding
Team
&
Vision
Proof
of
Concept
Early
Customers
Repeatable
Model
Story
Telling
Technical
ExecuBon
Visibility
to
Future
Revenue
Business
Model
and
$$$
28. We Raise from Venture Capital
Right?
www.vividcortex.com | info@vividcortex.com
30. www.vividcortex.com | info@vividcortex.com
Venture Capital Is
Not Your Friend
• 2% Management
Fees; 1% Invested
• Fund-life problems
• Terms not aligned
with founder
interests
• Only 3 in 10 deals
create returns
• Mostly risk-averse
• Good old white
male network
31. VCs are Good for Scale
www.vividcortex.com | info@vividcortex.com
Large pools of capital, for post-technology risk expansion.
32. Fundraising Path Cash Sources
Idea
Stage
Early
Stage
Product
&
Market
Fit
Scale
www.vividcortex.com | info@vividcortex.com
Founding
Team
&
Vision
Proof
of
Concept
Early
Customers
Repeatable
Model
Story
Telling
Technical
ExecuBon
Visibility
to
Future
Revenue
Business
Model
and
$$$
Founders
Angels
Angels,
Business,
VC
Angels,
Business,
VC,
PE
33. Fundraising
Protocol Summary
• Understand the
goals for each
stage
• Customer
financing is the
best capital
• VCs are
overrated
www.vividcortex.com | info@vividcortex.com
36. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
37. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Valuation is the price
at which an investor
can purchase
ownership in your
company.
38. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Common Shares
represent the last
group of investors to
be paid in an exit
event.
39. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Preferred Shares
have rights that make
them more valuable
than common shares,
e.g. getting paid first
in an exit event.
40. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Option Pools are
rights to purchase
shares at a specific
price and are typically
issued prior to a
funding round, diluting
the prior round of
investors.
41. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Liquidity Preferences
define which class of
shareholder gets paid
and when.
42. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Control Rights
represent things like
board seats and
protective provisions
for certain events.
43. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Dividends are
typically accrued
amounts that increase
the value of preferred
shares.
44. Defining Important Terms
• Valuation
• Common Shares
• Preferred Shares
• Option Pool
• Liquidity Preferences
• Control Rights
• Dividends
• Convertible Note
www.vividcortex.com | info@vividcortex.com
• Convertible Notes
represent a typical
structure of financing
that allows a
company to raise
capital in anticipation
of a future round of
funding.
45. Imagine the Following Capital
Needs for a Startup
www.vividcortex.com | info@vividcortex.com
Idea
Stage
Early
Stage
Product
&
Market
Fit
Scale
$20,000
$1,000,000
$2,000,000
$5,000,000
47. Example Time
www.vividcortex.com | info@vividcortex.com
• Example Link: http://goo.gl/LuFltg
• Examples 1 – 4: Terms
• Example 5: Valuation
• Via Twitter on @kyleredinger
• Goal: Turn terms into math
49. Summary of Term Impacts
www.vividcortex.com | info@vividcortex.com
Type
1
-‐
Simple
2-‐
Double
Dip
3
-‐
Dividends
Suck
4
-‐
Home
Run
Exit
Value
$15
Million
$15
Million
$15
Million
$100
Million
Dividends
0%
0%
10%
10%
Liquidity
Preference
Simple
ParBcipaBng
Preferred
Simple
ParBcipaBng
Preferred
Take
Home
$3.5
Million
I’m
screwed.
I’m
screwed.
$10M
(everyone
wins)