How to raise money for you startup

How to raise money for you startup

Emma Tracanella

emma.tracanella@gmail.com

IEDLesson 9

Course program1. Italian Startups2. Set up a startup in Italy3. I've got an idea. And now? 4. Value analysis5. Business model6. Communicate, communicate, communicate7. Being net 8. Find your market9. Funding: venture capital, business angel and other ways of financing 10. Pitch

Today's table of content

1. How it works2. Investment in Europe3. Equity capital (seed investment, business angel, venture capitalist, crowd funding)4. Loan capital5. Other capital (announcements, access to credit)6. Hints

Pitch: quick recapA (very) short speech.

1. Be short (less is more!)2. Wow effect (6-10 seconds to generate

curiosity)3. Who (add some info about you)4. KISS

Our rules: •Volunteers (you’ll earn 2 extra points!)• one pitch one person (but we can discuss this)• present your project, if you’ve one or• you can present an existing product/company• slide format: pdf, ppt, Prezi (online)

Pitch: quick recap

Find your market: quick recap

Define:• Who are your customers and who will buy your product• Who are your competitors• Which is the specific demographics to target• Which is the psychographics of your target• Evaluate your decision (target market to big?,…)

Find your market: quick recap

B2CMake a product or service and charge consumers for using it. This model is being used by Starbucks, McDonald’s, Amazon and others.

B2BMake a product or service and charge other companies for using it. Google, Cisco, MySQL and others are using this model.

How it works

http://www.inc.com/guides/201104/how-to-narrow-your-target-market.html

How it works

http://www.inc.com/guides/201104/how-to-narrow-your-target-market.html

How it works - II

http://www.inc.com/guides/201104/how-to-narrow-your-target-market.html

How it works - III

http://www.inc.com/guides/201104/how-to-narrow-your-target-market.html

How it works - IV

Investment in Europe

http://www.consob.it/main/aree/novita/consultazione_crowdfunding_20130329.htm

• 34% government agency

• 15% private individuals

• 12% firms

• 10% banks

• 9% found of founds

• …

http://marketingarena.it/2012/11/26/10-domande-scomode-a-h-farm/

H-Farm Screening Criteria

Types of financing

Types of financing

• Equity

• Loan

• Other sources

Equity capital

• Ownership

• Willingness to take risk

• No interest and repayment

• Profit at exit (maybe…)

Equity Capital - Sources• Parents, friends, …

• Seed Fund

• Equity Crowdfunding

• Business Angel (individual, network)

• Venture Funds

• Corporate Venture

• Stock Markets

Seed Fund• From Idea to Prototype - to support the business until it can

generate cash of its own, or until it is ready for further investments

• Higher risk

• Not only $$ (mentorship, location, contacts,…)

500startups, Ycombinator, Techstars, SeedCampDpixel, Start Up Design Lab e SeedLab

Business Angels

• Angels typically invest their own funds for convertible debt or ownership equity

• Angel investment is a common second round of financing for high-growth start-ups

Venture Capitalist

• Venture capital is the provision of high-risk capital by an investor to finance the startup and growth of a business in high-potential sectors.

• As a shareholder, the venture capitalist's return is dependent on the growth and profitability of the business.

http://www.startupitalia.eu/blog/article/101-venture-capitalist

Crowdfunding• Crowdfunding is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations

• Interest and repayment starts immediately

• No ownership

Crowdfunding models

Fattelo (su Eppela)

http://www.eppela.com/ita/projects/272/fattelo

Website: www.fattelo.com

Loan Capital

• Low willingness to take risk

• Interest and repayment starts immediately

• No ownership

Loan Capital

• Low willingness to take risk

• Interest and repayment starts immediately

• No ownership

Loan Capital - Sources

• Banks

• Real Estates Funding

• Guarantee Schemes (through banks)

Other Types

• Grant and Awards

• Funds

• Leasing

• Factoring

• Negotiate payments terms

• Sponsorshipshttp://www.slideshare.net/bendtsen/financing-your-business

Announcements

ACRI - Acri is an independent, non-profit, apolitical Association that represents the joint-stock Savings Banks and the Foundations of Banking Origin, the non-profit entities that came into existence in the early 1990s. (www.acri.it)

Access to credit

Buonaimpresa – il credito cooperativo con i giovani che vogliono fare impresa (www.buonaimpresa.it)

Sponsorship

Networking!

Remember

Define:1. Fundraising takes longer than you think2. There are periods of low investor activities (avoid late summer and winter holidays)3. A large amount of your funds may come from a few people. Find this super nodes and support them4. A large number of intros will lead nowhere and will waste your time.

An example: Heapsylon

Heapsylon is focused on delivering a family of body-sensing devices for the human foot. Wearable products that capture and communicate data such as activity type, body weight, eversion and in-footwear pressure to the user with a mobile dashboard.

• Soon crowdfunding on Indiegogo. It is on AngelList

• http://www.heapsylon.com

More…

1. With investors there are leaders and followers: you will have higher conversion after getting a committed investor or two.

2. Advisor and mentorship will become more important than connective

Next week

(Your) pitch.