Raising the NEXT Round of Funding

Carol Sands Managing Partner, The Angels’ Forum

October 15, 2015

Stages of Growth

Maturity of Company

Dol

lars

Inve

sted

Public Company

Concept

Product Development

Market Adoption

Infrastructure Development Product &

Market Expansion Team Expansion

Funding Sources

• Friends & Family • Angels • Venture Capitalists • Private Equity Firms • Corporate Venture Funds • Government/Foundation Grants • Joint Ventures

3

Inviting vs Shopping • Pick your investors carefully

– Long term relationship – Abandonment is costly

• You are always fundraising • ONLY question – Why Invest in your Company?

– What can you do for the investor? – Understand Investor’s motivations

4

Preparing for Fundraising

• Calculate what you need + 6 months • Exit Strategy • Narrowing the Invitation List

– Determine Investor Type – Research who is the best investor for YOU

• Investment Structure • Investment Process

– Materials (Marketing, Sales, & Due Diligence) – Timelines

• Issuing invitations

5

Calculating How Much

• What are your next 2 major milestones? • Financial Plan for the next TWO milestones

– Always have worst case plans!

• Fundraising Plan Formula Amount of money to reach Milestone

+ 6 months run rate

= Amount to be Raised

6

Exit Strategies

• Choices – Death/Failure – Life Style – Acquisition – IPO

• Exit Opportunity Moments • Investor’s Patience & Expectations

7

Determine Investor Type

• CrowdFunding • Individual or Angel Group • Venture Capital • Corporate Investor • Issues

– Silicon Valley or Remote/Foreign – Value-Add Capacity

8

Researching VCs

• Firms – Industry – Maturity of Company – Geographic – Date of Fund – Investment Conflicts

• HOW? – Ask industry experts – Firm’s Website – Lists/Databases

• Individual VCs – Industry – Specific Expertise – Reputation – Available Time

• HOW? – Website – LinkedIn – Blogs

9

Investment Structure

• Research terms ahead of time – Talk to Board of Directors, advisors & lawyers – Understand consequences

• Note or Equity Round • Valuation • Terms • Conditions of closing • Side Letters

10

Investment Process • Introductions • Screening Session • Partner Meeting • Term Sheet • Due Diligence • Funding

11

Be Prepared

What You Need

• “One Pager” • Intro Video • Intro Emails • Invitation Investor Deck • Customized Presentation Deck

– Practice Presentation & Q&A

12

Invitation Investor Deck • Simple definition of the problem/market • Short statement about your solution/benefit • Focus on WHY Management Team will succeed

– Details about the Team – Mention Board of Directors & Key Advisors

• Quick Company performance to date – Accomplishments – Financials

• The Ask! – How much and why – Your EXIT expectations & future rounds

13

Customized Presentation Deck • Know the audience

– Use investor’s preferred format – Focus on their key concerns – Control time (including Q&A) – Anticipate outcomes

• Every investor is different!

14

Due Diligence • Start gathering documents now!

– Incorporation & Cap Tables – Employment Agreements – Intellectual Property – Customer Contracts – Vendor Contracts – Board of Director Minutes – Financial Records

15

Issue Invitations • Prepare detailed timelines

– Public Relations – Consider Holidays – Everything takes longer than expected!

• Prepare Plan for each investor – Information Database – Status & Next Step Reporting

• Team Delegation – Company’s Responsible Person – Actual Primary Contact

16

Fundraising is a Sales Process

• Anyone can fundraise! • Don’t be afraid of NO

– Listen to the reasons given for a NO & correct – A fast NO saves you time

• Find champions/supporters • Build 2-way relationships • A deal is done when you have the money!

17

Thank You & Good Luck

Carol Sands The Angels’ Forum

www.angelsforum.com csands@angelsforum.com