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MY STARTUP STORY: Multiple sources of funding
Benno Groosman MScBAExperienced startup entrepreneurwww.groosman.info
November 9, 2015YES!Delft incubator, Delft
IntroductionBenno Groosman MScBA• MSc Entrepreneurship & New Business Venturing• 10 years entrepreneur• Involved in and founder of multiple startups • Experience in multiple incubators and accelerators• Award winning health care company with 3 international
patents and multiple products, €1.4M funding and… a bankruptcy!
Now: • International startup (ecosystem) consultant• Co-founder Surge-on Medical: patented innovations for (knee)
surgery www.groosman.info
Outline presentation
Salusion case
Funding sources
Bankruptcy
Lessons and
suggestions
My current startup
www.groosman.info
Problem statement Salusion
Over 30% of replacements ofincontinency diapers in nursing
homes is not at the right moment.
This leads to leakages andunnecessary replacements. www.groosman.info
Salusion high-lights
• Developed and sold 3 international patented products• €1.4 M total funding• Multiple big institutional customers• High product profit margins and revenues• 11 fte working in Salusion
www.groosman.info
The first steps in 2008
• Master: business plan + mentor • Summer: feasibility study (tech/funding)• Autumn: acquiring patent and search for money, start product development (smart deal)• Winter: proof of principle & €100k funding by Amsterdam Medical Centre (VUmc) & acceptance YES!Delft incubator
www.groosman.info
About funding
• In touch with: >15 informal investors, 10 VC funds, 4 government investment funds, 4 banks: work on these relationships!
• Actual funding: banks, grants, government contracts, awards.
• Family and friends: don’t let them invest, let them save you when your startup dies
• Minimal viable product: proof of technology and especially market: sold for €22k. Not for product, but for process knowledge. Investors and banks loved this!
www.groosman.info
Validated product and business case:some of Salusion’s awards
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Complete funding: momentum!
• Winning Shell LiveWire, securing government contract €450k and finalizing intensive negotiations with multiple banks for €600k all in one month. Use momentum!• Possible because we build track record, had 3 international patents, had a paying customer (although product development was not finished) and we (personally) and manufacturer guaranteed a part of bank loan.• … but still no end-product!
www.groosman.info
Funding scheme Salusion
600 Government guaranteed bank loan75 Innovation bank loan450 Ministry of Health development contract20 Subordinated loan25 Award money95 Government grants 100 Soft preseed loan10 Founders
www.groosman.info
Some reflections
• With hindsight we should’ve used this momentum to secure an additional €1M+ VC investment. But… we wanted all the shares (and thought we had enough money anyway)• Funding is a job. It took me a day per week, for years. Contacts, contracts, business plans keeping the network active, financial planning, etc. At peak moments it takes around 4 days per week.
www.groosman.info
The bankruptcy
Zooming in on bank loan structure
€600k Total loanBanks don’t like risks, so the loans was covered by:100 Corporate guarantee manufacturer130 Personal surety founders360 Guarantee Dutch government (estimated)
+ Intellectual property, inventories and debtors
Bankruptcy
www.groosman.info
What happened?• Bank loan has option for 24 month
suspension of repayments, founders opted for 6 months suspension. Bank agrees for even 12 months, but needs extension of corporate guarantee.
• Bank and manufacturer agreed on end date (12-31-2013) for the corporate guarantee, this is not part of the loan contract Salusion has with the bank.
• Salusion keeps in conversation with manufacturer and follows manufacturer’s demands, e.g. to reduce number of employees to cut down costs. Yet, still no extended corporate guarantee.
• Bank freezes Salusion’s accounts: employees don’t get salary. Escalation with manufacturer. No time to arrange other guarantees.
• Founders are obligated to file for bankruptcy before the end of 2013, to secure the bank’s rights (corporate guarantee and others).
Founders file for
bankruptcy
Suspend repayment bank loan
Unexpected end date corporate guarantee
Manufacturer doesn’t
extend guarantee
Bank freezing accounts and credit
Bankruptcy
www.groosman.info
Clear value proposition + business case
for every stakeholder
www.groosman.info
We paid most suppliers afterwards and our customers paid 80% in
advance
www.groosman.info
Business plan and financial planalways up to date and to the point
www.groosman.info
www.groosman.info
Get started here:http://
www.slideshare.net/benno_groosman/financial-investment-plan-for-new-ventures
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Download the free template at:www.groosman.info and check
http://www.slideshare.net/benno_groosman/my-startup-stories-with-a-guideline-to-raise-money-for-your-startup
Why am I a RICHER person now?Now!
Thanks for your attention!Please feel free to contact me
Benno Groosman MScBA
Email: [email protected]: www.groosman.infoTwitter:www.twitter.com/Benno_Groosman Slideshare:www.slideshare.net/benno_groosman
www.groosman.info
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