How to raise money

If you need it.

menu

What | Why | When | Who | Where

But first…

•  You will hear a thousand times “You can not make it”, “it's boring”, “not enough of X, Y, Z…”, “there are plenty like you…”

•  You will only make it real if you stand by it •  But you need to have touch points to know

if you are on the right track. Investors are one of those (a very important one).

It's Better to have an investor

•  It's better to have a 10% of something big than the 90% of nothing

•  Take the money and share the value •  An investor is:

– Money – A vote of confidence – A link to another network of investors – A person who will help you and give you a

new point of view

Amazon •  Bezos: “… I needed to raise $1 million,

and I ended up giving away 20 percent of the company.”

•  “I raised it from 22 people at approximately $50,000 a person. That was 1995, and the first question every investor asked me was: ‘What’s the Internet?’”

•  Now that 20% = $35 billion •  Todays Bezos stake =

What investors want

What investors want

•  An investor is as good as their exits. •  What “exit” means.

– Founders buy back the shares – Another investor buys their shares – Company A is bought by company B at a profit – Company goes public – …

•  This exit plan should be done in a time frame of 3-5 years.

Create value

•  Create value = Disrupt a market •  In a reasonable time frame

•  An investor does not invest in a business to obtain a 5%, they invest in people who can create value

A business and a entrepreneur It's not the same

I want to create a new SAP

•  Do I need an investor? •  No. •  Why? •  Because there is little chance to enter the

market and there is little chance to succeed making something “like SAP”. You can do something like SAP inside a big company.

I want to make cupcakes…

•  Do I need an investor? •  No. •  Why? •  Because unless you present a breaking

model for the sector, you are just a business. You are not an entrepreneur.

I have a recipe to make sweet beer

•  Do I need an investor? •  Yes. •  Why? •  Because if everything goes well you can

break the market by introducing a new category that doesn’t exist right now and you can become an acquisition target.

I have a sensor that can prevent obesity

•  Do I need an investor? •  Yes. •  Why? •  You will need resources to make it

happen. You have a good chance for failing but if you succeed you will make history.

If you want to work with investors

THINK BIG

Why you need to think big?

•  An investor will go through hundreds of ideas, business plans, projects in a year

•  You can be project number 86 or something else

•  You also need to offer a clear path to the exit

•  At the end we will see how to present to an investor

Why do you need the money

why

•  You need the money to eat •  You need money to pay the rent •  I need to buy a computer

If that's your case, you need a job. First find a job, then try to start your company. Investors don't pay to make ends meet.

why

•  I have the best idea in the world but I need a team to build it.

You don't need money. You need to convince your team to make a prototype.

why

•  I have a prototype, we have done some testing and it's working. We need to launch an advertising campaign and hire some sales people.

If that's the case investors don't want you. Sales people go by incentives. If you have a product “easy to sell” you don't need an investor.

why •  We are doing well in Spain but we need

some money to make our infrastructure more reliable and be able to expand to other countries. We will double our business by opening in Mexico in the next year.

Then you may have a good chance to have an investor.

why •  We are doing well in Spain (KPIs) but we

need some money to make our infrastructure more reliable and be able to expand to other countries. We will double our business (a number) by opening in Mexico in the next year (a time frame).

Then you may have a good chance to have an investor.

When you need to ask for money

when

when

They don't trust you You need them

You don´t need them

when

•  Before raising money – Work in a company for a while. Learn a little

about how work is done – On your own… do some projects for

others – consultancy, development. Learn things like deadline, compromise, results…

– Finally, start your own thing. Probably you will fail in the first two or three attempts.

•  So don't rush for money.

Who is going to give you money

who

•  Fools (Friends and family) •  Angel investor •  Professional investor - VCs •  Banks

fools

•  You can raise the first 5.000 / 10.000 •  No conditions, no contracts •  They want to help •  Tell them how much are they getting from

the company (normally 10%)

Angels

•  You can raise 25.000 / 50.000 from each one

•  They will need contracts and some conditions

•  KPIs are softer and easier to achieve •  Timing normally is generous

Profesionals - VCs

•  From 100.000 to 500.000… •  The need KPIS •  You will have a contract and conditions •  You need to deliver results every quarter

Your numbers

•  Having your numbers in good shape and in clean sheets is always good

•  If you can not measure, you can not grow •  The basics KPIs

– Overall cost of your operations per month – Overall income per month – Profits (if any)

KPIs

•  Key Performance Indicator •  You need to have a few indicators that will

allow you to explain your business •  Traditional KPIs are sales, users,

visitors… but you can use more specific indicators to add value to your business

KPIS = Traction

•  It´s your product working (usable – can you make a demo?)

•  Are there any real user using your product?

•  Do you have a customer? Two? Three?

Traction means there is a pattern you can understand and scale

Where are they?

•  Fools = You know them :)

•  Angels = Go to expo and demo days, once you are confident in your product and team.

•  VCs = Angels will lead you to VCs.

Where are they?

•  Present your idea and product to everyone you can. From small to big ones. Don't burn your opportunities. Go slowly from bottom to top. If you are doing things right, you will reach them and they will find you.

How to present to a Investor 10 slides

•  Company purpose •  Problem •  Solution •  Why now •  Market size

•  Competition •  Product •  Business model •  Team •  Financials. The

deal

Finally

•  This is not a war. If everything goes well, everyone wins.

•  You need a team to make an enterprise happen.

•  Put all the talent you can find on board. •  Good investors are part of your team.

Thank you

•  Go to feebbo.com •  More about me: cm@feebbo.com