Raising Money
Sources of Funding Crowd Funding (Product) Crowd Funding (Equity) Bootstrap Friends & Family Angel Micro VC VC Strategic Partner Grants
Crowd Funding (Product) Kickstarter, Indiegogo, etc. Product or working prototype Manufacturer identified Costs known Prove customers exist before investing in making the product Retain equity ownership
Crowd Funding (Equity) Seedinvest, MicroVentures, Angel.co Pool of accredited investors looking for deals ~4-6 vetted deals/mo Series Seed, A, B Have1/3-2/3 of current round hard committed Leveraged approach to fundraising Can be less burdensome on entrepreneur
Bootstrap You opertate on Your savings Sales You don t need outside capital You don t need outside capital You don t want to give up equity
Friends & Family Raise early money from friends and family $25k - $100k You are very early You need some money to finish your product or find first customers You are having trouble raising outside capital You need early money to get to the point where you can raise outside capital
Angel Usually first money Typically invest in what they know Typically invest when they can make and impact $25 - $250k You have a great idea or initial traction Angels can add expertise you don t have You need the money
Accelerator Techstars, Y Combinator, others 3 Month program to help you get off the ground 10 companies from 1000+ applicants $100k+ You have initial traction To avoid first time founder mistakes Access to capital Strategic help & huge network
Micro VC Early money typically first or second Strategic Access to other capital/advisors/mentors $50k - $500k You have initial traction You have the potential for high growth You need capital to further prove traction & growth You need strategic help
VC Strategic investors $1MM+ You found product market fit You have customers You have the iconic hockey stick business Join the big leagues Need gasoline for the fire You are on a rocket ship and need a bigger engine
Strategic Partner Strategic investor Money Sales & distribution channels Strategic help You need sales & distribution channels you couldn t build on your own You could use their strategic help All the things they have to offer besides money May be in a position to dramatically help your business grow
Government Grants Non dilutive funding SBIR/BAA $150,000 - $1MM (Phased) You have a big technical hurdle to overcome You have a technology that is of interest to the various funding agencies Technical challenge needs to be overcome before productization You want to retain equity
NSF I-Corps $50,000 Investigate the commercialization of universty intellectual property or research You know about interesting reasearch you think could be commercialized Unsure of commercial potential of a technology Gives you funding for customer development
Motivation Friends and family They know you and love you Angel investors VC s Want to give back or help out Want to be a part of something exciting Not just in it for the return Want to make money If you don t want to make a lot of money, your interests are not aligned
Funding Documents Convertible Note Right to purchase equity in future Low cost 2 8 pages Fast Kicks the valuation can down the road Equity Financing Purchase of equtiy NOW $$$ Sorry trees Slow Valuation can opened
Funding Terms Convertible Note Cap Discount Inerest Term Not many more Equity Financing Valuation (pre/post) Others Board Seat Information Rights Many many more
Funding Terms, Negoiation, Getting a Deal Done
Tips Be prepared Have a pitch deck that you have practiced Know your audience Know your terms Be professional Show up and leave on time Be realistic About your valuation About how much you are raising Be Persistent You are either in or you are out And if you are in.
No Excuses
Thank You Mike Troy mike@geekdomfund.com