LAFI 2014 Fundraising Villard

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FundraisingApril 27, 2015

Los Angeles

Dimitri Villard

The Founder Institute



Action Plan

• Be prepared

• Be relentless

• Pitch everyone

• Network

• Use mentors

•Follow up



Many types of investors

• Family, fools and friends

• Crowdfunding

• Incubators

• Angels

• VC’s

•Strategic investors

• Venture debt

• Co-founders



Expectations

• FFF’s: Want to get their money back, help you

succeed

• Angels: 20% internal rate of return (IRR)• VC’s: 10x



How much to raise

• More than you think you need

• Next major milestone

• 18 months



Type of capital

• Equity

– Common stock

– Preferred stock

• Convertible Note

– Converts at a pre-determined discount (e.g. 20%) to the

next round

•

Pre-money valuation• Corporations vs LLCs



Presentation

• Pitch deck (short and long)

• Executive summary

• Demo

• Business plan



Art of the pitch

• Start with “The Problem”

–Describe a real-life scenario

–Describe how big The Problem is

–You want to create a mental image of

The Problem the investor can relate to



The Customer

• Who is the target customer?

– This defines the market segment, size, growth potential

and competition

• How much will they pay?



The Solution

• “Our solution does [fill in the blank]”

• Only explain why it works better

–

Do NOT explain HOW it works – Do NOT explain the value proposition

– Do NOT flowchart the process

• Demo the solution if you can



The Competition

• Investors think competition is good because it means

there actually is a market

–

Describe competition and why they don’t solve TheProblem

• Explain why your solution is better, faster, cheaper



Business model

• Who will pay?

– What is the value chain?

•

Is it a Vitamin or a Painkiller? – Vitamin is “nice to have”

– Painkiller is “must have right now”





The Close

• Big Problem

• Growing market

• Business model that works• Team that can execute

• We want investors that will join us

•

We are raising $---- to do ------- – Do NOT mention terms



Timing

• Practice, practice, practice

• Practice some more with high energy

• Video yourself and practice again until you candeliver the pitch without any hesitation and reeking

with self-confidence

•

Do NOT read your pitch – it must be memorized



Tech Coast Angels Criteria

• Management with strong domain expertise

• Technology that solves pressing needs

• Niche dominance

• High growth potential• Sustainable competitive advantages

• Some level of market validation

• Exceptional return on investment

• Use of funds sufficient to complete major milestone

• Ability of attract future funding

• Credible exit potential



Due diligence

Problems for investors:

– Management team issues

– Existing shareholder issues

–

Inadequate IP protection – Litigation

– Liabilities

– Valuation issues

– Excessive stock options

–

Serious competition – Unlikely to attract institutional next round

– Lack of traction





Resources

• Tech Coast Angels

• Angel List

• Keiretsu

• Harvard Business School Angels

• SoCalTech.com

• Originate

•Crowdfunding: Kickstarter, Indiegogo, Peerbackers, Crowdcrux

– 1,000 sites and growing

• Incubators: Amplify, Science, Idealab, Mucker, Disney +

Documents

LAFI 2014 Fundraising Villard