The game of funding (investment) for a startup
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A startup needs to look at any and all sources of capital that will allow them to create value inflection points, reduce risks and position themselves for additional investment. Here are various funding sources (angels, seed, VC etc.), the process of funding and some tips of entrepreneurs looking for funding for their startups.
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The game of funding (investment) for a startup
- 2. Only2outof100 Business gets NOTICED BRILLIANTLY CRAFTED PITCH POWERFUL WELL RESEARCHED IDEA TEAM OF ROCKSTAR TRACTION AND BUZZ UNIQUE POSITION VIA COMPETITION
- 3. Market Size & Potential Business Model & Milestones Problem & Opportunity Unique Idea Product & Proposition Funding? Competitive Landscape
- 4. Accelerator Idea Idea Validation Approach Customer sell to start-ups IPO Venture Capital Round organisation building Implement Process and Procedure Thestoryof Typical Start-Ups Angel Round Industry Grade Product Product validation sell to small and medium Enterprise Private Equity Merger, Acquisition Global Expansion Concept Risk Execution Risk Scale-Up Risk Execution Risk Scale-Up Risk Scale Up Risk
- 5. Investor Value Addition • Long Term Capital, Solidly underpinning the Company Growth • The Adoption of management practices, improved Process and increased Productivity • Strategic and Operational Support System • Assistance with subsequent round of Fundraising • Alliances - Due to Investor network on contact and Portfolio Companies • Sharing on Risk and Reward • A partial or total Exit Strategy
- 6. Project Timeline Years Investor Perspective-Thinks they Look for 7-8 Unique TechnologyRockstar Team
- 7. NutsandBolts Angel Investment • Often successful, exited entrepreneurs or retired business persons • Invest both time and money in companies • They invest their own money Why they Invest: • Helping Entrepreneurs • Stay Engaged - Using experience and Skills • Giving back to community • An active form of investing Return on Investment in the Metrics
- 8. NutsandBoltsVenture Capital • A VC is accountable to their Investor • VC have to raise money every or Four to stay relevant • VC have a mandate VC Do Not Make Money When they Invest, They Make Money When they Raise
- 9. SomeTipon Fundraising • Don't Raise Money unless it wants You • Be in Fundraising Mode or Not • Consider No, till they say YES • Avoid Investor who don’t Lead • Get the First Commitment • Close Committed Money
- 10. Stagesof Fundraising Stages Entrepreneur Private Equity Firm Reports Approach the Private Equity Firm along with Elevator Pitch/Business Plan Prepare Elevator Pitch, Establish Contact. Receive Elevator Pitch, May ask for detailed Business Plan Elevator Pitch Business Plan Reference Letter if any Initial Enquiries and negotiation Provide additional Information. Reference to Customers Conduct initial diligence Value the business consider financing structure offer Letter or Term sheet Meet to discuss business plan Build Relationship Negotiate outline terms
- 11. Stagesof Fundraising Stages Entrepreneur Private Equity Firm Reports Due Diligence Submit previous account statement Contracts signed by the company in the past Introduction to Advisor, Board Members, Key Employee Initiate external Due Diligence May ask for certain representation and warrantees Accounting Reports Other Reports Final Negotiation and Completion Discuss all relevant business Information Draw up complete documentation Disclosure Letter Warrantees and Indemnities Memorandum and Article of Association Shareholder Agreeement Negotiate Final Terms Document Constitution and Voting Rights
- 12. People youMeetduring Fundraising Position Explanation Analyst The lowest professional position in Venture firms. crunch numbers or compile industry reports for the kind of deals early investor make. Associate The are the people who would have joined from the ranks of Entrepreneurs and Engineers. They are the people who help venture fund in the process of due diligence, Vice President Provide substantial support to portfolio companies and sometimes sits on the board. The position is a feeder for prospective Principal or Partners Principal On track to becoming a partner who may or may not lead his or her own deals. Principals almost always get carry and may sit on boards of portfolio companies Partner The bosses of venture fund. Most firm have between three and seven partners who gets the majority of the carried interest Managing General Partners A title generally reserved for a firm founder or highest ranking investor
- 13. Things to Avoid • Will You Sign an NDA? • I will quit my Job Upon Funding? • Seasoned Management will be hired upon Funding? • These Projection are Conservative? • We Have no competitors? • All we need is to grab 1% of the Market?
- 15. Accelerator Idea Idea Validation Approach Customer sell to start-ups IPO Venture Capital Round organisation building Implement Process and Procedure Thestoryof Crowdfunding Angel Round Industry Grade Product Product validation sell to small and medium Enterprise Private Equity Merger, Acquisition Global Expansion Concept Risk Execution Risk Scale-Up Risk Execution Risk Scale-Up Risk Scale Up Risk