STARTUP FINANCINGFROM CROWDFUDNING TO DEBT & EQUITY

Tytus Cytowski, Managing Partner

ICT Summit

WARSAW, POLAND

December 3, 2014

CYTOWSKI LLC

Disclaimers

Any US federal tax advice contained in this presentation is not intended to be used,and cannot be used, to avoid penalties under the Internal Revenue Code or topromote, market or recommend any transaction or matter addressed herein.

This material is for informational purposes only and do not constitute advertising, asolicitation, or legal advice and should not be construed as legal advice for anypurpose whatsoever.

Information contained herein is not intended to create, and receipt thereof doesnot constitute formation of, an attorney-client relationship.

1

TYTUS CYTOWSKI

Attorney at Law

EDUCATION

• HARVARD LAW SCHOOL (LLM)

• WARSAW UNIVERSITY (Mag Iur)

EXPERIENCE

• STARTUPS

• VENTURE FINANCING

• FUND FORMATION

ADVISOR

• STARTUPWISEGUYS (Estonia)

• DEFY VENTURES (NYC)

CLIENTS

• EU, USA

2

DANKE!

WWW.CYTLAW.COM

3

STARTUP FINANCE

IS NOT …

4

DANKE!

WWW.CYTLAW.COM

5

FUNDRAISING HARD WORK

LETTER TO SANTA CLAUS

6

Friends &

Family

Angel

Investment

Seed VC VC – Series A

Round Size $10 G - $100 G $100G - $1 M $500G - $1.5M $5M -$15M

Investment Size $5 G - $25G $25G - $75G $250 - $750G $3M - $5M

Valuation < $1 M $1 - $5 M $5 - $10M $10M - 25M

Stage - Idea

- B-Plan

- Full time Founders

- Detailed B-Plan- Customers,

pilot, revenue?- Legal

Documents

- Full time Founders

- Detailed B-Plan- Customers,

pilot, revenue?- Legal

Documents- Income- Next Funding- Business Model- Brake Even

- Big Client

- Growth Potential

- Income

- Angels

-Key Management

DANKE!

WWW.CYTLAW.COM

7

CAP TABLE

DANKE!

WWW.CYTLAW.COM

8

VALUATION

STARTUP FINANCE - 101

9

BUILD

RELATIONSHIPs/COMMUNITY

THEN… RAISE MONEY

DANKE!

WWW.CYTLAW.COM

10

ART OF PRICING

RISK

STARTUP FINANCE – 101

MORE RISK

= NEED TO

GIVE MORE

UP11STARTUP FINANCE - 101

DANKE!

WWW.CYTLAW.COM

12

YO

YOU CAN SELL A LOT

OF THINGS FOR MONEY?

STARTUP FINANCE – 101

EQUITY

13

DEBT

14

DANKE!

WWW.CYTLAW.COM

15

PRODUCTvia crowdfunding

DANKE!

WWW.CYTLAW.COM

16

CROWDFUNDING

FINANCE IS EASY

WHAT ABOUT

US TAX?

DANKE!

WWW.CYTLAW.COM

17

INCOME?

DANKE!

WWW.CYTLAW.COM

18

NON-

TAXABLE

GIFT?

$14 G

EXCLUSION

DANKE!

WWW.CYTLAW.COM

19

STATE SALES

TAX

DANKE!

WWW.CYTLAW.COM

20

CONVERTIBLE

DEBT

DANKE!

WWW.CYTLAW.COM

21

SAFE

KISS

DANKE!

WWW.CYTLAW.COM

22

HOW DO

YOU

CONVERT

DEBT INTO

STOCK?

DANKE!

WWW.CYTLAW.COM

23

DISCOUNT

DANKE!

WWW.CYTLAW.COM

24

CAP

25

EQUITY

LIQUIDATION

PREFERENCE26

DANKE!

WWW.CYTLAW.COM

27

SIZE

MATTERS

28

SIZE OF

EQUITY

29

SIZE OF EXIT

DANKE!

WWW.CYTLAW.COM

30

OPTION POOL

LIKE US ON FACEBOOK!

www.facebook/cytowskillc

FOLLOW ON TWITTER

@tcytowski

31