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8/20/2019 LAFI 2015 Fundraising Villard
http://slidepdf.com/reader/full/lafi-2015-fundraising-villard 1/22
FundraisingJanuary 4, 2016
Los Angeles
Dimitri Villard
The Founder Institute
8/20/2019 LAFI 2015 Fundraising Villard
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Action Plan
• Be prepared
• Be relentless
• Pitch everyone
• Network
• Use mentors
•Follow up
8/20/2019 LAFI 2015 Fundraising Villard
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Many types of investors
• Family, fools and friends
• Crowdfunding
• Incubators
• Angels
• VC’s
•Strategic investors
• Venture debt
• Co-founders
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How much to raise
• More than you think you need
• Next major milestone
• 18 months
8/20/2019 LAFI 2015 Fundraising Villard
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Bootstrapping vs. Raising Funds
• If you can build the MVP with little money
• Test it online – Reddit
• Keep control
• Small market
• Don’t need large investment to launch
•
Can grow with internally generated profits
8/20/2019 LAFI 2015 Fundraising Villard
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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
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Stages of Capital Raising
• Pre-Seed (< $100K) – Savings, grants, FF&F
• Seed – ( $100K - $1.5M) - Angels, FF&F, VCs, Business
Managers
• Series A & B ($500K - $5M) - VCs, Strategic (corporate)
investors, Angels
• Series C (VCs, Private Equity)
•IPO or M&A Exit
• Expectation of each stage investors: a higher valuation and an
eventual exit
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Investors’ Rights
• Pre-emptive Rights
• Anti-Dilution
• Board Representation
• Veto Rights on Key Decisions
• Liquidation Preference
•
Rachet• Monthly or Quarterly Reporting
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Presentation
• Pitch deck (short and long)
• Executive summary
• Demo• Business plan
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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
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The Customer
• Who is the target customer?
– This defines the market segment, size, growth potential
and competition
• How much will they pay?
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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
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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
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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”
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The team
• What is the Team’s experience?
– Any previous startups?
– Domain experience?
• What credible advisors do you have?
– Advisors validate the concept and you
• What is the sales & marketing component of the
Team?
– Investors really want to know who will deliver the revenue
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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
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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
8/20/2019 LAFI 2015 Fundraising Villard
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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
8/20/2019 LAFI 2015 Fundraising Villard
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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
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Materials
• Competitive analysis
• Financial statements
• Financial projections – 36 months
– Revenue assumptions
– Monthly expense budgets and staffing plan
– Balance sheet and cash flow projections
– Use of proceeds
• Management team
– Org chart
– Bios
– Table of compensation and stock options
• Cap table
• References contact information
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Resources
• Tech Coast Angels
• Angel List
• Keiretsu
• Harvard Business School Angels
• SoCalTech.com
• EZnumbers.com
•Crowdfunding: Kickstarter, Indiegogo, Peerbackers, Crowdcrux
– 1,000 sites and growing
• Incubators: Amplify, Science, Idealab, Mucker, Disney +