A comprehensive guide on how a startup should execute, in order to: - Survive survive before initial funding - Prepare the company to get initial funding - Focus to attract the right funding This Startup Guide is first introduced at HATCH! FAIR 2014 as a collaboration between HATCH! and Cinnamon, by Cinnamon President: Ph.D Hajime Hotta.

1. Startup Guide:
HOW TO GET
INITIAL FUNDING?
By Ph.DHajime Hotta
Chief Technology Officer
Cinnamon (Singapore)
a publication of

2. HAJIME HOTTAExperienced entrepreneur from Japan CTO at Cinnamon (Singapore) »Koala, selfiemessengerPh. D in computer science at the age of 25 »Got in total 350k grants for my research in AI x WebFormer Chief Architect at CiriusTechnologies »The world’s first Location-based ad tech provider »Acquired by Yahoo! JapanFormer CTO at Naked Technology (Japan) »Technology to enable smooth UI on smartphone »Licensed to big enterprises (NTT Docomo, Dentsu, etc) »Software distributed to 10M+ users in Japan »Acquired by Mixi, largest social game provider
How to get Initial Funding? – Hajime Hotta

3. TWO TYPES OF BUSINESSES
How to get Initial Funding? – Hajime Hotta
SME Small-to-Middle
Enterprise
IDE Innovation-Driven Enterprise
•Linear growth
•Local
•Bank/Family finance
•Lots of experienced people exist already
•Exponential growth
•National/International
•Equity Finance
•Less experienced entrepreneurs

4. IDE IS EXPECTED TO MAKE FAST GROWTH
How to get Initial Funding? – Hajime Hotta

5. IDE IS EXPECTED TO MAKE FAST GROWTH
How to get Initial Funding? – Hajime Hotta
SeedMoneySeries AMoneyPreparation$200k~500k$1.5M~5M

6. WHAT IS REQUIRED FOR EACH ROUND?
How to get Initial Funding? – Hajime Hotta
Series ASeedTeamBiz PlanProductTractionMinimum forProduct ValidationEnough to seeexponential growthValuation$1.5M-2M$4M-$6MMVP runningSolidExcellent LevelExcellent LevelExcellent LevelExcellent Level

7. WHAT IS REQUIRED FOR EACH ROUND?
How to get Initial Funding? – Hajime Hotta
Series ASeedTeamBiz PlanProductTractionMinimum forProduct ValidationEnough to seeexponential growthValuation$1.5M-2M
$4M-$6MMVP running
SolidExcellent Level
Excellent LevelExcellent Level
Excellent Level
HOW TO MAKE IT?

8. OPTIONS
Have a different profitable business (Outsource)
»Unstable resource allocation
Weekend
»Lose CEO’s attention to businesses
Personal debt from family and friends
»Perfect in case you are in such a lucky situation
Pre-seed Round
How to get Initial Funding? – Hajime Hotta

9. DIFFERENCE BETWEEN PRE-SEED AND SEED
How to get Initial Funding? – Hajime Hotta
Seed
Money
Series A
Money
Pre-Seed
$200k
~500k
$1.5M
~5M
$20k
~50k

10. DIFFERENCE BETWEEN PRE-SEED AND SEED
How to get Initial Funding? – Hajime Hotta
Seed
Professional
Investors(Institutes)
Experienced
Entrepreneurs
or Accelerators
Investor Profile
Put money
to scale up
the business
Surely lead to
IDE model
Goal of Investment
Pre-Seed

11. READINESS FOR “PRE-SEED” ROUND
How to get Initial Funding? – Hajime Hotta
SeedTeamBiz PlanProductTractionMinimum forProduct ValidationValuation$1.5M-2MMVP runningExcellent LevelExcellent LevelPre SeedN/A$300k-$800kProof ofExecution AbilityMarket DetectionExcellent Level

12. QUESTIONS
1.Is pre-seed round necessary? Aren’t advisors enough?
2.Who is the right investor on pre-seed round?
3.How to reach out to angel investors?
4.How to pull their commitment?
How to get Initial Funding? – Hajime Hotta

13. QUESTIONS
Is pre-seed round necessary? Aren’t just advisors enough?
How to get Initial Funding? – Hajime Hotta

14. ANSWER
Not necessary
if you are confident enough
as a perfect management team
How to get Initial Funding? – Hajime Hotta

15. DIFFERENCE BTW RIGHT ANGEL AND ADVISORY
How to get Initial Funding? – Hajime Hotta
Observe
Status
Find Critical
Problems
Find
Solution
Execution
Advisory’s
Value Add
Investor’s
Value Add

16. WHAT ARE TYPICAL HIDDEN RISKS?
»Polishing the product which CANNOT convince investors
»Do exceeding debt financing and BS/PL look weird
»Hiring too much at the early stage
»Building core team with weird ownership structure / allocate too much ESOP
»Pitch with bad quality or and get declined by VC already (typically no response / keep me updated)
»Chosen bad seed investor (point of no return)
How to get Initial Funding? – Hajime Hotta

17. QUESTIONS
Who is the right investor on pre-seed round?
How to get Initial Funding? – Hajime Hotta

18. CHECK SHEET
How to get Initial Funding? – Hajime Hotta
SME
Background
Thought-type
IDE
Entrepreneur
Financial
Pessimistic
Optimistic
Quick Win
Sight
Long-term
Hands-on
Help
Hands-off
Expectation-Type

19. MY RECOMMENDATION
How to get Initial Funding? – Hajime Hotta
SME
Background
Thought-type
IDE
Entrepreneur
Financial
Pessimistic
Optimistic
Quick Win
Sight
Long-term
Hands-on
Help
Hands-off
Expectation-Type
+ Chemistry Match

20. QUESTIONS
How to reach out to angel investors?
How to get Initial Funding? – Hajime Hotta

21. WHERE ARE THE PRE-SEED INVESTORS?
How to get Initial Funding? – Hajime Hotta
Competition/
Programs
Accelerators
Friends’
friendsStartup WeekendEchelonHATCH! PROGRAMStartup Asiaetc. JFDIFounder InstituteiAxiletc. UseLinkedIn / Facebookto post messages
They are not professional investors,
therefore they don’t often say “I am investing”

22. WHERE ARE THE PRE-SEED INVESTORS?
For those who seems to experience startup founders and make some successful stories:
Magic Words:
Can we have a short meeting for the feedbacks to our product?
Ideas behind:
Advisory type experienced entrepreneurs are very happy
to see exciting idea and make feedbacks
because they’ve made a lot of mistakes before.
How to get Initial Funding? – Hajime Hotta

23. QUESTIONS
How to pull their commitment
How to get Initial Funding? – Hajime Hotta

24. READINESS FOR “PRE-SEED” ROUND
How to get Initial Funding? – Hajime Hotta
SeedTeamBiz PlanProductTractionMinimum forProduct ValidationValuation$1.5M-2MMVP runningExcellent LevelExcellent LevelPre SeedN/A$300k-$800kProof ofExecution AbilityMarket DetectionExcellent Level

25. SHOW YOUR EXCELLENT TEAM
Some of outstanding track record
»Ph.Dor Stanford/CMU/Harvard class univgrads
»Serial Entrepreneur (key role, has to be successful)
»Engineer, understanding business quite well
»Manage to reach amazing numbers (acquire 1M users, 100 brands connections, etc)
»Fluency in English
»Winner in competition (Startup Weekend, etc)
»Engineer worked for Google / Apple / Facebook
»Get strong recommendation by successful people
+ The quality of current product is really nice(less bug, natural/professional UX) How to get Initial Funding? – Hajime Hotta

26. Investors’ concerns:
»The founders might break up
»Might quit soon
»Too confident
»Less transparent
»No value can be conveyed to the teamTell your own story to blow those concerns away:
»How strongly-tied with your cofounders? (single founder is not really nice)
»The history to show the will
»Show the strength and weakness honestly along with your one successful experience
SHOW YOUR EXCELLENT TEAM
How to get Initial Funding? – Hajime Hotta

27. MARKET DETECTION
The markets are already set in investors’ mind
How to get Initial Funding? – Hajime Hotta
Commerce
Mobile
Game
Uberification
Edu-Tech
Payment
O2O
Finance
Tech
IoT
SaaS
Crowd
source
Big Data/
Analytics
Ad-Tech

28. THE REALITY OF VC’S MIND
We are AdBoost, the crowdsourcing
approach of advertisement optimization
XXXXXXXXXXXX
(interested in ad tech / crowdsourcing)
Very interesting business model!! Come to tell me more
(interested in e-commerce)
Can take a look at this pitch, but basically I don’t believe in crowdsourcing approach….
How to get Initial Funding? – Hajime Hotta
Founder:
VCs:

29. MY PERCEPTION (PERSONAL)
Excellent team+ Excellent Market+ Excellent Plan
Excellent team+ Excellent Market+ Low quality Plan
Excellent team+ Not interesting Market
Excellent team+ No business plan
How to get Initial Funding? – Hajime Hotta
100

30. MY PERCEPTION (PERSONAL)
Excellent team+ Excellent Market+ Excellent Plan
Excellent team+ Excellent Market+ Low quality Plan
Excellent team+ Not interesting Market
Excellent team+ No business plan
How to get Initial Funding? – Hajime Hotta
10080409060~

31. TO ENGINEERS WHO WANTS TO START-UP
»You should contact potential angel investors for brainstorming
»and better to have a clear learning roadmap with mentors,
while working for similar startups
How to get Initial Funding? – Hajime Hotta

32. WORK AND LEARN TO BE ENTREPRENEUR
Email: hotta@cinnamon.is
Facebook: http://facebook.com/hotta
Facebook Group
Southeast Asia Startup Engineers and Founders
How to get Initial Funding? – Hajime Hotta

33. This amazing startup guide is the result of the collaboration between
HATCH! PROGRAM and Ph.DHajime Hotta, CTO at Cinnamon (Singapore).
Would you have any information or wisdom that should be posted?
Please feel free to contact us at:
xinchao@hatch.vn
(+84) 4 6275 7406
http://hatch.vn
CONTACT US

34. FOR ALL BRAVE START-UPS