How to get money for your startup

2

3D Founders: Developer, Designer and Distributor

Someone who understands how to build technologies and systems to solve problems_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Someone who understands the human factors behind these problems, why they exist, what it takes to fix them and how to shape the experience_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Someone who understands how to reach, talk and sell to the people whose problems are being solved - and keep finding more

of them.

02. Team

3

Find a startup idea that:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

is already making money for someone else in a growing industry interests you aligns with your skill sets.

03. Idea

4

04. Remedy

Once you find such an idea, simply carve out a niche within the industry by: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Addressing pains of an under-served segment within that industry_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Or, making it much easier to use than existing solutions_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Or, disrupting the market by making your product accessible to masses at a much affordable price.

5

05. Getting investments. Theory

Initial stage of investment is called «seed round» or «angel round»_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

The most typical investors - individuals with experience in high-tech and some capital_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

A less common type of investor - a venture capital companies, who wants to invest in small deals _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Also, it may be your relatives or friends.

6

06. Getting investments. Theory

Try to stay away from: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

investors without investment experience_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

and competence (dumb money)_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

unknown persons for you_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

your relatives or friends.

7

07. Getting investments. Theory

The typical amount of initial funding - is $100,000 - 500,000. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

No point to take less than $100,000 because it will be not enough to reach the next round of funding_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Very hard to take more than $500,000, because your company had not developed sufficiently.

8

08. Getting investments. Theory

The typical equity, you need to share at this stage is - 10% to 30%_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Ideal case - less than 20%_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Never give more than 30% for the initial funding.

9

09. Getting investments. Theory

There are lots of forms of structured deals, which can be used for investment. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

The best way - convertible debt - simply a loan (a debt obligation) that can be turned into equity (stock ownership), generally upon the occurrence of future financing.

10

10. Getting investments. Investor deck

Create project presentation - investor deckYou need to create no more than 10 slides_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

10 - is the optimal number of slides in a PowerPoint presentation because a normal human being cannot comprehend more than 10 concepts in a meeting - and venture capitalists are very normal. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

If you must use more than 10 slides to explain your business, you probably don’t have a business.

11

11. Getting investments. Investor deck

The investor deck should contain mostly text, some graphics and images. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Forget about Business Plan at this stage - it is usually a waste of time, because everything will change very fast.

12

12. Getting investments. Investor deck

10 topics that a venture capitalist cares about are:

1. Problem

2. Your solution

3. Business model

4. Underlying magic/technology

5. Marketing and sales

6. Competition

7. Team

8. Projections and milestones

9. Status and timeline

10. Summary and call to action

13

13. Getting investments. Elevator pitch

Create elevator pitch. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

It is a short summary that is used for quick and simple defining of your product or service and its value proportion._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

The name "elevator pitch" reflects the idea that it should be possible to deliver the summary in the time span of an elevator ride, or approximately thirty seconds to two minutes._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Go to my website to collect free elevator pitch example: www.kenigshtein.com

14

14. Getting investments. Investors list

Compile a list of target investors. Create this list in Excel, using your & your friends network. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Forget about Sequoia Capital or Mangrove Capital at this stage._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

You should be able to find 10-20 investors in your area._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

If you are not able to find at least 10 investors around you - change the area.

15

15. Getting investments. Investors list

You need to make priority of investors and determine who is TOP5 in your list. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

You also need to allocate a specific time-frame for consideration of each investor. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

If the investor is "flog a dead horse" more than 1 month - forget him, most certainly he is just an idiot.

16

16. Getting investments. Pitching

Twenty minutes. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

You should give your ten slides in twenty minutes. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Sure, you have an hour time slot, but you’re using a Windows laptop, so it will take forty minutes to make it work with the projector. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Even if setup goes perfectly, people will arrive late and have to leave early._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

In a perfect world, you give your pitch in twenty minutes, and you have forty minutes left for discussion.

17

17. Getting investments. Pitching

Guy Kawasaki is the co-founder of Alltop.com, an “online

magazine rack” of popular topics on the web, a founding

partner at Garage Technology Ventures and the Chief

Evangelist of Apple previously, said:

18

18. Getting investments. Pitching

"As a venture capitalist, I have to listen to hundreds of entrepreneurs pitching their companies. Most of these

pitches are crap: sixty slides about a “patent pending,” “first mover advantage”, “all we have to do is get 1% of the

people in China to buy our product” startup. These pitches are so lousy that I’m losing my hearing, there’s a

constant ringing in my ear, and every once in while the world starts spinning."

19

19. Getting investments. Money

This is the most important stage in your project’s life.

Start talking with the investors.

E-mails, Skype calls, meetings - use everything you can.

Most professional investors will agree to invest even before the end of your meeting or Skype call.

20

20. Getting investments. Money

Once you get the written consent of one investor, refer to the next investors, appealing to the fact that the previous one has already agreed._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Many investors could be interested, but it is hard to convert just interest into the formal signing of documents, without extra motivation.

21

20. Getting investments. Money

Offer more favorable conditions for those who makes decision faster and motivates investors when someone else agrees. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Whenever you have any new arrangements, let them all know about it, thereby giving them additional reason to follow.

22

22. Getting investments. Money

Nothing pushes investors to make an investment decision, as the actions of other investors. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Every time when someone agrees - immediately ask them to sign a papers and send the money. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

It is very important, as each day of delay reduces the chance of signing.

23

23. Getting investments. Money

Remember! Always be closing.

24

24. Findings

Choose a niche for your startup;

Find the first investor with a good reputation, skills and competence;

Communicate with many investors, 3-4 times more than you need;

Push the investors;

Bring to the end every deal.

25

25. Contacts

Good luck!Ilia Kenigshtein

Business / Sales ExecutiveSerial Entrepreneur

ilia@kenigshtein.com http://linkedin.com/in/kenigshtein