EMBA Funding for Ventures, Startups using FinTech
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Transcript of EMBA Funding for Ventures, Startups using FinTech
FUNDING AND FINTECH VOODOO FOR YOUR VENTURE
MICHAL GROMEK RESEARCHER ON FINTECH & CROWDFUNDING #SE.LINKEDIN.COM/IN/MGROMEK
EXECUTIVE MASTER OF BUSINESS ADMINISTRATION SESSION ON FINTECH STOCKHOLM, FEBRUARY 9TH, 2017
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STOCKHOLM GRAB YOUR PHONES
PLEASE VOTE ON
menti.com YOURCODE60 99 70
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PRESENTATION IS ONLINE ON
SLIDESHARE.COM/MICHALGROMEK
FOR TODAY
ROADMAP
EMBA SSE 9TH FEBRUARY2017
9:15- 10:00 FUNDING A VENTURE (TRADITIONAL & FINTECH)
10:00-10:10 Q&A COMMUNICATION WITH INVESTORS
10:10 - 10:30 TEAM ASSIGNMENT (USAGE IN PRACTICE)
10:30 - 10:50 PRESENTATION AND DICUSSIONS
BREAK
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POTENTIAL QUESTIONS:
I HAVE AN VENTURE SO HOW DO I
RECEIVE FUNDING?
CAN I JUST UPLOAD MY BUSINESS
IDEA ONLINE?
HOW CAN THE STARTUP THAT I
WORK WITH RECEIVE FUNDING?
ROAD MAP FOR OUR 90 MIN TODAY: DIFFERENT TYPES OF FUNDING SOURCES FOR ENTREPRENEURS AND STARTUPS (FIRST 45) WITH AFOCUS ON CROWDFUNDING (SECOND 45 MIN)
NO CANNED
SOLUTION :)
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STARTUP FINANCING CYCLE (MODEL)
CLICK HERE FOR VIDEO EXPLANATIONPRE-SEED FUNDING
FRIENDS, FAMILLY (AND "FOOLS"), BUSINESS ANGELS, PUBLIC FUNDING LIKE ALMI,
REWARDS BASED CROWDFUNDING, STING
PRE - SEED FUNDING - I HAVE AN IDEA
WHO IS PROVIDING PRE-SEED FUNDING?
WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE
EARLIEST STAGE, DESIGN OF THE PRODUCT, PROVISION OF MARKET FIT, CREATION
OF THE COMPANY.
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STARTUP FINANCING CYCLE (STAGES OF FUNDING)
PRE-SEED FUNDING
SEED FUNDING
FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK
CLICK HERE FOR VIDEO EXPLANATION ABOUT SEED FUNDING
BUSINESS ANGELS, EQUITY CROWDFUNDING, REWARD CROWDFUNDING,
PUBLIC FUNDING
SEED FUNDING - I HAVE A COMPANY
WHO IS PROVING SEED FUNDING?
WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE
SIZE AROUND 230K EURO UP TO 2M EURO IN ORDER TO BRING THE PRODUCT TO
MARKET, SIGN FIRST BIG CONTRACTS, ADVERTISE TO THE PUBLIC
CLICK HERE FOR A VIDEO EXPLANATIONABOUT STARTUP FUNDING
WE ARE NOW IN OUR C-SERIES SHARE ISSUE PROCESS AND CONSIDER 20M
INVESTMENT.
STAGES OF INVESTMENTS
WHAT DOES THE FOUNDER SAY TO YOU:
WHAT DOES THIS MEAN
THE COMPANY HAS AN SUCCESSFUL PROOF OF
CONCEPT, TEAM, EXPERIENCE IN RISING
FUNDING, SIGNIFICANT INVESTMENT AND
POTENTIAL SOME INT. EXPANSION
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STARTUP FINANCING CYCLE (STAGES OF FUNDING)
PRE-SEED FUNDING
SEED FUNDING
SERIES A / SERIES B
FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK
CLICK HERE FOR VIDEO EXPLANATION ABOUT SERIES A FUNDING
BUSINESS ANGEL, EQUITY CROWDFUNDING, VENTURE CAPITAL (LATELY VC ARE
LESS LIKELY TO PROVIDE SERIES A FUNDING)
SERIES A - OPTIMISE PRODUCT & USER BASE
WHO IS PROVIDING SERIES A FUNDING
WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE
SCALING THE PRODUCT, EXPLORING THE TRUE MARKET FIT, INTRODUCTION OF
NEW FEATURES. IN THE PAST THE MEDIAN HAS BEEN AROUND 7M EURO. IT WENT
UP SIGNIFICANT IN RECENT YEARS TO 6.5 M-14M EURO
> INTERESTING CASE: AGGREGATE MEDIA - EQUITY FOR ADVERTISEMENT SPACE.
EXAMPLE OF AN VENTURE THAT RAISED SERIES B
VENTURE CAPITAL, (THAT SPECIALISE IN LATER STAGE FUNDING) INSTITUTIONAL
INVESTORS, HEDGE FUNDS FUND REPRESENTATIVES
SERIES B - "B" IS FOR BUILD
WHO IS PROVIDING SERIES B FUNDING?
WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE
THE STARTUP HAS A WORKING BUSINESS MODEL AND WOULD LIKE TO EXPEND ITS
REACH. IT RECEIVES SIGNIFICANT TRACTION AND HAS A TRACK OF RECORD. THE
COMPANY RAISES FUNDING FOR NEW TEAM MEMBERS, FURTHER EXPANSION.
SIZE: USUALLY 7M+ EURO
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STARTUP FINANCING CYCLE (STAGES OF FUNDING)
PRE-SEED FUNDING
SEED FUNDING
SERIES A / SERIES B
SERIES C
FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK
EXAMPLE OF AN VENTURE THAT RAISED SERIES C200M USD
VENTURE CAPITAL, INSTITUTIONAL INVESTORS, HEDGE FUNDS
FUND REPRESENTATIVES
SERIES C (D, E, F... )
HOW IS PROVIDING SEED FUNDING
WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE
ACCELERATION BEYOND SERIES B, ACQUISITION OF COMPETITORS
OR PARTNERS, INTERNATIONALISATION. INVESTOR INJECT MONEY INTO
SUCCESSFUL BUSINESSES WITH THE
GOAL TO AT LEAST RECEIVE THE DOUBLE AMOUNT BACK.
KEYWORDS:
COMPETETIVE ADVANTAGE, MERGER
AND SYNERGISTIC PARTNERSHIP
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STARTUP FINANCING CYCLE (STAGES OF FUNDING)
PRE-SEED FUNDING
SEED FUNDING
SERIES A / SERIES B
SERIES C
FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK
WATCH A VIDEO ON MEZANINE FUNDING
IS A TERM WHEN A COMPANY DECIDES TO "GO PUBLIC" AND TO OFFER
THEIR SHARE ON A STOCK EXCHANGE- CLICK HERE FOR A VIDEO
EXPLANATION.
POSSIBLE SCENARIOS FOR YOUR STARTUP
PROJECT (BUT LESS LIKELY:))
IPO - INITIAL PUBLIC OFFERING
MEZANINE FUNDING
FUNDER IS OBTAINING A LOAN WITHOUT A COLLATERAL (AN
MOVABLE OR NONE MOVABLE ASSET THAT BACKS UP THE LOAN.
IN CASE OF A DEFAULT THE LENDER CONVERTS HIS DEBT INTO
SHARES. - CLICK HERE FOR A VIDEO EXPLANATION.
USUALLY USED WITH A TRACK RECORD AND REPUTATION USED
OFTEN TO PERFORM AN IPO. TYPICAL INTREST IS SOMEWHERE
BETWEEN 10% AND 22%
COMPREHENSIVE VIDEO EXPLENATIONALOF CONVIRTABLE LOAN
A COMPANY ISSUES A LOAN TO LENDERS AND AT A SPECIFIC DATE THE
INVESTORS CAN DECIDE IF THEY WOULD LIKE TO RECEIVE THEIR DEBT
REPAID OR CONVERT IT TO OWNERSHIP IN THE COMPANY.
LENDERS USUALLY RECEIVES A DISCOUNT RATE TO CONVERT INTO
VALUATION AT A LATER STAGE.
POSSIBLE SCENARIOS FOR YOUR STARTUP
PROJECT (BUT LESS LIKELY:))
COVERTABLE LOANS: (DEBT)
BRIDGE FINANCING (FORM OF CONVERTABLE DEBT)
IS A LOAN THAT CONVERTS TO EQUITY
THE INVESTOR CAN DECIDE ON THE TRIGGER POINT IF THE
LOAN WITH THE DISCOUNT SHOULD BE CONVERTED
ACCORDING TO AN OLD POST MONEY VALUE OR A NEW
PREMONEY VALUATION FOR NEXT ROUND.
WATCH A VIDEO ON BRIDGE FINANCING
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STARTUP FINANCING CYCLE (WHAT DO YOU PITCH)
TEAM VISION MISSION TRIGGER EMOTIONS REPUTATION
INSTITUTIONAL FUNDING
HEDGE FUNDS
PUBLIC FUNDING
REWARD BASED
CROWDFUNDING
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STARTUP FINANCING CYCLE (WHAT DO YOU PITCH)
TRACK RECORD PATENT APPLICATION TRACTION RETENTION DATA, DATA, DATA
INSTITUTIONAL FUNDING
HEDGE FUNDS
PUBLIC FUNDING
PUBLIC FUNDING
FRIENDS FAMILLY FOOLS
THEY JUST FUNDING, DON'T HOPE FOR STRATEGY TIPSCAN BE A NIGHTMARE TO DEAL WITH THEM - SO FAR LITTLEBUSINESS S EXPERIENCE (IT WAS FOR ME) IN CASE BUSINESS FAILS THEY CAN TAKE IT PERSONALLY
DOWNSIDES
COMMUNICATE RISK CLEARLY HAVE A SHAREHOLDER AGREEMENT DON'T ASK FOR MONEY THAT THEY CAN NEED
TIPS:
UPSIGHTS
USE YOUR REPUTATION
DON'T CHECK CREDIBILITY
LESS BURACRATIC
BUSINESS ANGELS
BUSINESS ANGEL CAN BE STRONG INDIVIDUALS, AND SOME GOTWEALTHY BECAUSE OF LUCK AND NOT NECESSARY EXPERIENCE. SOME BUSINESS ANGELS LIKE TO HAVE MORE CONTROL THANWHAT FOUNDER ARE WILLING TO GIVE.
DOWNSIDES
SPEAK TO FOUNDERS OF COMPANIES WHERE BA'SHAS INVESTED INTO. REVIEW THE BA'SPERFORMANCE IN YOUR SECTOR
TIPS:
UPSIGHTSINVEST ON EARLY STAGE, LIKE TO TAKE RISK
CAN OPEN DOORS WITH THEIR INFORMAL NETWORK
MONEY IS NOT A LOAN (USUALLY)
BUSINESSES OPERATE LONGER AND HAVE A HIGHER RATE OF RETURN
LINK TO HOW TO RAISE MONEY FROM ANGEL INVESTORS (PLEASE SKIP FIRST 12 MINUTES)
VENTURE CAPITAL
LONG DUE DILLENGENCE PROCESSTENDENCY 95% DISCOUNTED VALUATION METHOD STRONG PERSONALITIES SINCE 2009 > USUALLY LATE STAGE FINANCE (SERIES A+)
DOWNSIDES
UNDERSTAND HOW VC WORKS (PRESENTATION BELOW)REVIEW WHEN THEY HAVE BEEN RAISING MONEYAND IS THERE OWN PERFORMANCE
TIPS:
UPSIGHTSMAYBE SMART MONEY
STRONG NETWORK
LONGTERM PARTNER 4.2% OF VCEMPLOYEES ARE
FEMALE*
*SOURCE: http://fortune.com/2015/01/30/women-are-not-making-progress-in-male-dominated-vc-world-data-shows/ (ACCESSED 20th OF JANUARY)
LINK TO HARVARD INNOVATION LAB ON HOW VC MAKE DECISION
TO MUCH OF THE FUNDINGDECREASES THE SENSE OFURGENCY AND FOCUS ON SALES "WE DIDNT FEEL THE URGENCY TOFOCUS ON SALES" - CEO FIKABOX
PLANNING FOR FUNDING IS ONLY AS GOOD AS THE QUALITY OF YOUR BUSINESS FORECAST
TO SMALL FUNDING ROUND(PERMANENT FOCUS ONFUNDING -
"IT TOOK ME AROUND 70% OFMY TIME TO FOCUS ON FINANCE"- CEO TIMESULIN
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Crowdfunding is theaccumulation of smallinvestments in individualprojects bya large number of individuals(“the “crowd”) with the helpof the internet or socialnetworks (De Buyer et al.,2012)
DEFINITION:
CURRENT TYPES OF CROWDFUNDING
DONATION BASEDCROWDFUNDING
REWARD BASED CROWDFUNDING
LENDING BASEDCROWDFUNDING
REAL ESTATECROWDFUNDING
C2B / B2B LENDING CROWDFUNDING
EQUITY BASED CROWDFUNDING
CURRENT TYPES OF CROWDFUNDING
YOU BACK UPPROJECT ANDEXPECT NOTHINGIN RETURN.
DONATION REAL ESTATE COLLECTSFUNDING FORCONSTRUCTIONOF A REAL ESTATE
EQUITY PARTIES AREBUYING SHARESFROM A LTD.(AB IN SWEDEN)
CROWD BACKS UP A PROJECTAND EXPECTS A REWARD INRETURN.
PLATFORMFACILITATESLENDING BETWEENDIFFERENTPARTIES
PARTIES ARESEEKINGFUNDING USINGTHE PLATFORM
REWARD LENDING C2C / C2B / B2B LENDING
CURRENT TYPES OF CROWDFUNDING
YOU BACK UPPROJECT ANDEXPECT NOTHINGIN RETURN.
DONATION REAL ESTATE COLLECTSFUNDING FORCONSTRUCTIONOF A REAL ESTATE
EQUITY PARTIES AREBUYING SHARESFROM A LTD.(AB IN SWEDEN)
CROWD BACKS UP A PROJECTAND EXPECTS A REWARD INRETURN.
PLATFORMFACILITATESLENDING BETWEENDIFFERENTPARTIES
PARTIES ARESEEKINGFUNDING USINGTHE PLATFORM
REWARD LENDING C2B / C2B / B2B LENDING
REWARD BASED CROWDFUNDING
REWARD
IDEA THERE IS ACONNECTION TOTHE CROWD THEENTREPRENEURS TEAMS TRUST
AVERAGE FUNDING ROUND: LESS THAN 9.5K EURO
REWARD BASED CROWDFUNDING
C2B / C2B / B2B LENDING
Source: https://www.fundedbyme.com/en/campaign/1061/flippinburgers/?p=v2 (Accessed 5th of February 2017)
REWARD BASED CROWDFUNDING
C2B / C2B / B2B LENDING
Source: https://www.fundedbyme.com/en/campaign/1061/flippinburgers/?p=v2 (Accessed 5th of February 2017)
EQUITY BASED CROWDFUNDING
REWARD
EQUITY
THERE IS A LTDCOMPANY THERE IS AVALUATION TRUST /REPUTATION WHAT IS THE EXITSTRATEGY?
AVERAGE FUNDING ROUND ON ONE OF SE PLATFORMS - 65K EURO
SOU
RC
E: h
ttps://w
ww
.fun
ded
bym
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/ (accessed 5
.2.2
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ote: ju
st as ind
icator as n
ot all o
f the co
mp
anies h
ave been
equ
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aigns)
EQUITY BASED CROWDFUNDING
C2B / C2B / B2B LENDING
Source: https://www.fundedbyme.com/en/campaign/1061/flippinburgers/?p=v2 (Accessed 5th of February 2017)
Source: https://www.fundedbyme.com/en/campaign/7707/the-fox/?type=e&p=v2 (ACCESSED 05.02.2017)
CROWDLENDING (C2B / P2P LENDING)
REWARD
EQUITY
LENDING
COMPANYEXISTS FOR ATLEAST 18MONTHSTRACK RECORD COLLATERALS
AVERAGE LOAN SIZE (UK) 170K EURO, INVESTORS PORTFOLIO 20K EURO
SOURCE
: HTTP
S://W
WW
.FUNDINGCIRCLE
.S/BLOG
/PRESS
/ (ACCESSED
05
.02
.2017
)
CROWDLENDING
C2B / C2B / B2B LENDING
Source:https://toborrow.se/sv/projekt/respiceswedenab2/ (Accessed 5th of February 2017)
WHAT MOTIVATES USERS
SOURCE: PROF KARIM LAKHANI, OPEN INNOVATION HOW CAN I USE THE CROWD, ESBRI 26.02.106PICTURE: HTTP://BLOG.CROWDS.IO/WP-CONTENT/UPLOADS/2015/07/CROWDSOURCING-COMMUNITY-750X410.JPG
3.
PHILANTROPHY EXTERNAL 2.
(EXTRINSIC)
1. INTRISTIC
(INTERNAL)
CAPITAL C - NOT ONLY FUNDING
AMBASSADORS
DOOR OPENERS
FREE PR FANS
INFORMALNETWORK
TEST GROUP
SHORT SUMMARY
VENTURE FUNDING IS NOT ONLY ABOUTFUNDING BY PRIMARY ABOUT ADDITIONALNON-FINANCIAL BENEFITS:
CANNED SOLUTIONS DON'T EXIST AS EACHVENTURE HAS DIFFERENT CHELLANGES,REFLECT ON YOUR NEEDS AND MATCHINVESTOR TYPE.
CROWDFUNDING IS AN OLD PHENOMENON.DIFFERENT TYPES OF CROWDFUNDING MATCH DIFFERENT DEVELOPMENT STAGES. ITPROVIDES A RANGE OF NON-FINANCIAL BENEFITS TO COMPANIES.
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FINTECH IN PRACTICE
EVALUATE ALL FORMS OFFUNDING PRESENTED TODAY.PRESENT TO THE CLASS THEMOST SUITABLE TYPE FORYOUR "PROJECT VENTURE"
WORK IN YOUR PROJECT GROUPS.PRESENTATION PER GROUP 80 SEC - PREPARATION TIME 10 MINUTES
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10MINUTES
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5MINUTES
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2MINUTES
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1MINUTES
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GROUP 7
FUNDING
FINTECH DAY
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GROUP 1
FUNDING
FINTECH DAY
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GROUP 8
FUNDING
FINTECH DAY
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GROUP 5
FUNDING
FINTECH DAY
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GROUP 6
FUNDING
FINTECH DAY
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GROUP 4
FUNDING
FINTECH DAY
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GROUP 2
FUNDING
FINTECH DAY
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GROUP 3
FUNDING
FINTECH DAY