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Funding Options for Early-Stage Companies
Upcoming Programs
@TCNupdate	
  
#tcnLIVE	
  #MCengage	
  
Funding Options for Early Stage Companies
July 2, 2013
Today’s	
  Presenter	
  
•  Jean	
  Hammond;	
  	
  
•  Suppor@ng	
  Growth	
  of	
  educa@on	
  and	
  learning	
  cluster	
  in	
  Boston:	
  LearnLaunch,	
  
LearnLaunchX,	
  	
  
•  Ac@ve	
  angel	
  in	
  lots	
  of	
  deals,	
  first	
  investor	
  in	
  Zip	
  car:	
  	
  	
  
Launchpad,	
  Golden	
  Seeds,	
  &	
  Hub	
  Angels	
  
•  Serial	
  entrepreneur:	
  
Axon	
  Networks	
  and	
  Quarry	
  Technologies	
  	
  
•  Eco-­‐system	
  supporter:	
  
Board	
  TCN,	
  MIT	
  Trust	
  Center,	
  Mass	
  Challenge,	
  TechStars,	
  &	
  ACA/ARI	
  trainer	
  
jean@jph-­‐associates.com	
  
4	
  
Agenda	
  
•  Funding Sources
–  Risk adjusted investing
•  Business Stage
–  Improving communication
•  Experiences (Q&A)
•  Backup other sources
–  Government, etc
5	
  
How	
  Can	
  We	
  Build	
  Value	
  and	
  Reduce	
  Risk?	
  
What type of
company should
we build ?
Stage-appropriate
growth-oriented
strategy
Flexible, High-
Performance Team
- that can grow
& change
IP &
Differentiated
Product
Bookkeeping
& Accurate
Accounting
Legal
Structure
Boards
Governance
Partners:
manufacturing,
development,
distribution, etc.
Deep Market
Understanding
& Marketing
Execution
Profitable
Business
Model
Outer ring:
this is how
you grow.
By growing,
you prove
the market
exists,
REDUCE
RISK, and
earn access
to different
financial
partners
6	
  
How	
  Can	
  We	
  Build	
  Value	
  and	
  Reduce	
  Risk?	
  
What type of
company should
we build ?
Stage-appropriate
growth-oriented
strategy
Flexible, High-
Performance Team
- that can grow
& change
IP &
Differentiated
Product
Bookkeeping
& Accurate
Accounting
Legal
Structure
Boards
Governance
Partners:
manufacturing,
development,
distribution, etc.
Deep Market
Understanding
& Marketing
Execution
Profitable
Business
Model
Outer ring:
this is how
you grow.
By growing,
you prove
the market,
REDUCE
RISK, and
earn access
to different
financial
partners
7	
  
Funding	
  the	
  Company	
  
Before	
  you	
  can	
  get	
  funded,	
  	
  
you	
  have	
  to	
  know	
  	
  
where	
  to	
  look	
  
Before	
  you	
  know	
  where	
  to	
  look,	
  	
  
you	
  need	
  to	
  understand	
  
	
  what	
  you	
  are	
  
8	
  
What	
  Type	
  of	
  Company	
  Are	
  You?	
  
•  In	
  many	
  cases	
  the	
  nature	
  of	
  the	
  business	
  
decides	
  the	
  type	
  of	
  company	
  …	
  	
  
•  In	
  others,	
  changing	
  how	
  you	
  bring	
  the	
  product	
  
to	
  market	
  can	
  really	
  affect	
  the	
  cost	
  of	
  scaling	
  
and	
  the	
  funding	
  requirements	
  
•  Example:	
  license	
  new	
  baeery	
  technology	
  to	
  exis@ng	
  
players	
  vs	
  build	
  a	
  baeery	
  company	
  with	
  outsource	
  
manufacturing	
  	
  or	
  build	
  a	
  manufacturer	
  
•  Every	
  company’s	
  financing	
  path	
  is	
  unique	
  
9	
  
All	
  Financial	
  Partners	
  Are	
  Specialists	
  
•  Funding	
  comes	
  in	
  dis@nct	
  flavors;	
  all	
  financial	
  partners	
  are	
  
specialists	
  
•  To	
  understand	
  who	
  to	
  approach	
  and	
  when	
  to	
  get	
  to	
  them	
  
takes	
  really	
  understanding	
  what	
  they	
  specialize	
  in.	
  	
  You	
  need	
  
to	
  match	
  type	
  of	
  company	
  to	
  the	
  type	
  of	
  funding	
  partner	
  
•  Different	
  types	
  of	
  funding	
  partners	
  specialize	
  in	
  different	
  levels	
  
of	
  risk,	
  so	
  apply	
  different	
  funding	
  criteria	
  
•  Most	
  basic	
  rule:	
  the	
  more	
  risk	
  a	
  funding	
  partner	
  
takes,	
  the	
  more	
  return	
  (and	
  control)	
  they	
  are	
  
going	
  to	
  require	
  
10	
  
Entrepreneurship	
  comes	
  in	
  many	
  types	
  	
  	
  
NORMAL	
  GROWTH	
  
COMPANY	
  
HIGH	
  
GROWTH	
  
COMPANY	
  
EXTREME	
  
HIGH	
  GROWTH	
  
COMPANY	
  
SOCIAL	
  VENTURE	
  
COMPANY	
  
•  Includes all
service
businesses
•  Exploiting a local
market need
•  Team has ‘great
jobs’
•  Growth by adding
resources one by
one
•  Exit will be based
on value of cash
flow (mature biz.)
•  Growth profile
ultra-scalable
•  Team focus is exit
•  Revenue $40M+
with lots of room
for growth (5 yr.)
•  Based on $20M+
investment
•  Exit targeted to
IPO or by ‘large’
M&A event
•  Goal is to fulfill
a social need
•  Has mission
orientation
•  Team needs to
support mission
•  Growth profile
often one
resource at a
time
•  Exit …much
harder to find fit
•  Company can
grow fast (on-line)
or has a scalable
system
•  Team often
motivated by exit
•  $7-10M revenue in
4-5 yrs & market
size allows
significant
additional growth
•  Capital efficient
total investment
$2-4M
•  Exit by M&A
11	
  
Growth	
  and	
  Maturity	
  Reduce	
  Risk	
  
12	
  
Size of Capital
Raise:
High
Time
High
Risk
Low
Risk
Crystallize
Ideas
Demonstrate
Product
Early Scaling
Growth
Sustained
Growth
Market Entry
As	
  you	
  develop	
  your	
  company,	
  you	
  
reduce	
  risk	
  for	
  your	
  financial	
  
partners	
  
Size of Capital
Raise: Low
12	
  
Capital	
  Sources:	
  Size	
  &	
  Cost	
  
Investment Size
Investment
“Cost”
Traditional VC
Micro VC
Equipment Financing
Angel Groups
Angels
Equity Crowdfunding
Angel List, Circle Up, etc
Corporate / Strategic
Venture
Customers
Jobs Bill Portals
Vendors
Founder
Friends & Family
Crowdfunding: etc.
Grants
Venture Debt
Bank
Loans
Personal
Loans
Private Equity
B’Plan Competition
Accelerators
13	
  
Match	
  Funding	
  Sources	
  
NORMAL	
  GROWTH	
  
COMPANY	
  
HIGH	
  
GROWTH	
  
COMPANY	
  
EXTREME	
  
HIGH	
  GROWTH	
  
COMPANY	
  
SOCIAL	
  VENTURE	
  
COMPANY	
  
•  Friends, family,
founders
•  Debt, Bank, and
other
•  (Future) Crowd
funding (portal
style)
Early on
•  Accelerators
•  Individual Angels
•  Micro Cap VCs
•  Seed from VC
Later stages
•  Venture Funds
•  Strategic VCs
•  Angel
Syndication
•  Friends
family,
founders
•  Charity$$
•  Crowd funding
(Kickstarter,
etc)
•  Impact Angels
•  (Future)
Crowd funding
(portal style)
•  Angels
•  Angel Groups
•  Angel Group
Syndication
•  Angel List
•  Micro-cap Funds
•  (Future) Crowd
funding (portal
style)
•  Increasingly
Strategic
Corporate VCs
14	
  
Alterna@ve	
  Sources	
  of	
  Capital	
  
•  Business	
  Plan	
  Compe@@ons	
  and	
  Accelerators	
  
•  Many	
  firms	
  gain	
  enough	
  for	
  some	
  product	
  comple@on	
  steps	
  	
  
•  Revenue	
  –	
  Best	
  of	
  all	
  	
  (Bootstrapping)	
  
•  Revenue	
  history	
  opens	
  more	
  types	
  of	
  debts	
  
•  Pre-­‐payments	
  from	
  business	
  partners	
  
•  Self-­‐interested	
  support	
  from	
  supply	
  chain	
  	
  
•  Vendors,	
  partners	
  and	
  customers	
  
•  Including	
  NRE	
  to	
  build	
  joint	
  product	
  
•  Great	
  source	
  of	
  quick	
  capital	
  for	
  marke@ng	
  or	
  sales	
  collabora@on	
  
•  SBIR	
  Grants	
  
•  ~$2	
  Billion	
  department	
  specific	
  funding	
  
•  2	
  or	
  3	
  ‘research’	
  calls	
  from	
  each	
  department	
  each	
  year,	
  must	
  be	
  used	
  for	
  
research	
  …	
  then	
  you	
  commercialize	
  with	
  other	
  funding	
  
•  Other	
  government	
  funding,	
  lots	
  of	
  “detailed”	
  sources	
  
•  Mass	
  Life	
  Science	
  &	
  Sustainable	
  Energy	
  –loans	
  or	
  conver@ble	
  notes	
  
15	
  
Debt	
  Capital:	
  Repayment	
  
•  Debt	
  Capital	
  
–  Funding	
  based	
  on	
  a	
  set	
  schedule	
  of	
  principal	
  and	
  interest	
  
payments	
  that	
  provide	
  a	
  fixed	
  return	
  for	
  the	
  lender.	
  
Availability	
  may	
  be	
  based	
  on	
  asset	
  value	
  or	
  cash	
  flow	
  or	
  
personal	
  guarantee	
  
•  Sources:	
  
–  Personal	
  Loans	
  –	
  Friends/Family	
  
–  Bank	
  Loans	
  
–  SBA	
  Loans	
  
–  Expect	
  debt	
  classes	
  from	
  Jobs	
  Bill	
  crowd	
  funding	
  portals	
  
–  Credit	
  Cards	
  
–  Venture	
  Debt	
  usually	
  linked	
  to	
  equity	
  
16	
  
Equity	
  Capital:	
  Shared	
  Upside	
  (VC	
  /	
  Angels)	
  
•  Equity	
  Capital	
  requires	
  an	
  exit:	
  
–  IPO	
  &	
  Private	
  Equity	
  	
  
–  M&A	
  (most)	
  
•  VCs	
  invest	
  other	
  people’s	
  money	
  (from	
  pension	
  funds	
  etc.)	
  
–  Returns	
  are	
  measured	
  on	
  a	
  per	
  fund	
  basis	
  
–  Focus	
  is	
  on	
  finding	
  the	
  best	
  as	
  fast	
  as	
  possible	
  and	
  adding	
  
resources	
  to	
  aid	
  success	
  
–  ~$26.5B	
  annually,	
  ~	
  3,700	
  new	
  investments	
  2012	
  
•  Angels	
  invest	
  own	
  money	
  
–  Prefer	
  capital	
  efficient	
  /	
  early	
  exit	
  opportuni@es	
  
–  ~$23B	
  annually,	
  ~	
  67,000	
  new	
  investments	
  2012	
  
–  24	
  New	
  England,	
  10	
  greater	
  Boston	
  
•  Angel	
  groups	
  ~10-­‐15%,	
  	
  
•  Informal	
  networks	
  &	
  one-­‐@me-­‐investors	
  ~15-­‐20%,	
  	
  
•  Super	
  angels	
  ~25-­‐30%,	
  	
  
•  Family	
  offices	
  ~35-­‐45%	
   17	
  
Example	
  VC	
  &	
  Angel	
  Deal	
  Metrics	
  
•  Time	
  to	
  closing	
  	
  
•  Investment	
  dollar	
  range	
  	
  
•  Success	
  rate	
  –	
  How	
  narrow	
  is	
  the	
  
funnel?	
  	
  
•  Accept/require	
  Credit	
  Support	
  /	
  
Guarantees	
  
•  Total	
  #	
  of	
  Similar	
  Sources	
  
•  Affected	
  by	
  general	
  economic	
  
condi@ons?	
  	
  
•  Dry	
  Powder	
  /	
  Secondary	
  Capital	
  
Reserved?	
  
18	
  
Close	
  Up:	
  Extreme	
  High	
  Growth	
  vs	
  High	
  
Growth	
  
Capital Needs
Time
High
Risk
Low
Risk
Formal
Venture
Capital
M&A or
IPO
Crystallize
Ideas
Demonstrate
Product
Early Scaling
Growth
Sustained
Growth
Angel Group
(or Micro-cap)
Syndication
Angels or
Accelerators
or Micro-cap
funds Angels or
Accelerators or
Micro-cap
funds
Angels
Market Entry
M&A
Later VC
Rounds
Extreme
High
GrowthHigh
Growth
Friends,
Family &
Founders
Friends,
Family &
Founders
19	
  
Agenda	
  
•  Funding Sources
–  Risk adjusted investing
•  Business Stage
–  Improving communication
•  Experiences (Q&A)
•  Backup other sources
–  Government, etc
20	
  
“Stage”	
  &	
  Equity	
  Capital	
  Sources	
  
21	
  
Stage	
  
Crystallize	
  Idea	
  
and	
  Early	
  
DemonstraHon	
  
Demonstrate	
  
Product	
  &	
  
Market	
  
Interest	
  
Market	
  Entry	
  
and	
  Early	
  
Growth	
  
Early	
  Scaling	
  
Growth	
  
Repeatable	
  
Growth	
  
Capital	
  
Source	
  
Founders,	
  
Friends,	
  Family,	
  
Grants,	
  
Kickstarter,	
  etc.	
  
Accelerators,	
  
Individual	
  
Angels,	
  many	
  
others	
  now	
  
“exploring”	
  
Angel	
  Groups,	
  
Angel	
  Group	
  
Syndica@on,	
  
Micro-­‐Cap	
  
Funds	
  
VCs,	
  Angel	
  
Group	
  
Syndica@on,	
  
Micro-­‐Cap	
  
Funds	
  
VCs	
  
Investment	
   $25K	
  -­‐	
  $100K	
   $100K	
  -­‐	
  $500K	
   $500K	
  -­‐	
  $1M	
  
$5M	
  –	
  as	
  
needed	
  
as	
  needed	
  
These	
  2	
  need	
  
sophis@cated	
  growth	
  plans	
  	
  
This	
  is	
  the	
  
stage	
  where	
  
advice	
  can	
  
make	
  you	
  
eligible	
  for	
  
outside	
  
funding	
  later	
  
Accelerators	
  
and	
  a	
  few	
  
individual	
  
angels	
  play	
  
here	
  …	
  unless	
  
it	
  is	
  a	
  big	
  idea	
  
This	
  is	
  where	
  
Angel	
  
Groups	
  do	
  
most	
  1st	
  
investments
….	
  	
  
22	
  
What	
  Investors	
  (and	
  others)	
  Need	
  to	
  Know	
  	
  
•  5	
  P’s	
  of	
  investment	
  
–  Product	
  –	
  differen@ated	
  technology	
  or	
  service	
  that	
  serves	
  market	
  need	
  
for	
  a	
  significant,	
  large	
  market	
  product	
  
–  PromoHon	
  –market	
  entry	
  strategy,	
  with	
  detailed	
  plan	
  
–  Profits	
  –	
  a	
  business	
  model	
  that	
  has	
  margins	
  and	
  distribu@ons	
  costs	
  
that	
  are	
  profitable	
  
–  People	
  –	
  a	
  team	
  to	
  meet	
  the	
  needs	
  of	
  the	
  business	
  	
  
–  Plan	
  –	
  good	
  idea	
  of	
  the	
  steps	
  (&	
  prioi@es)	
  needed	
  to	
  create	
  a	
  
repeatable	
  business	
  model	
  
•  Some	
  key	
  concepts	
  to	
  convey:	
  
–  What	
  our	
  poten-al	
  customers	
  are	
  saying	
  to	
  us:	
  is	
  this	
  a	
  nice	
  to	
  have	
  or	
  
must	
  have	
  
–  How	
  we	
  plan	
  to	
  run	
  a	
  series	
  of	
  market	
  entry	
  tests	
  delivering	
  
meaningful	
  metrics	
  
–  How	
  the	
  team	
  matches	
  the	
  needs	
  of	
  the	
  business	
  
–  How	
  we	
  will	
  scale	
  against	
  a	
  repeatable	
  business	
  model	
  
What	
  Do	
  We	
  Mean	
  By	
  “Risk”	
  
Examples	
  of	
  things	
  that	
  make	
  a	
  company	
  risky	
  to	
  a	
  financial	
  
partner:	
  
•  Your	
  company	
  is	
  early	
  stage	
  
•  You	
  need	
  more	
  money,	
  now	
  or	
  down	
  the	
  road	
  
•  You	
  are	
  a	
  new	
  entrepreneur	
  
•  You	
  have	
  unproven	
  technology	
  
•  You	
  need	
  to	
  raise	
  equity	
  instead	
  of	
  asset	
  backed	
  debt	
  with	
  
obliga@on	
  to	
  repay	
  
•  You	
  are	
  chasing	
  a	
  new	
  unproven	
  market	
  
•  You	
  have	
  less	
  IP	
  or	
  defensibility	
  
•  Your	
  business	
  does	
  not	
  have	
  high	
  growth	
  
•  You	
  have	
  a	
  longer	
  path	
  to	
  exit	
  
•  You	
  have	
  fewer	
  exit	
  op@ons	
  
23	
  
Crystal:	
  Idea	
  to	
  Business	
  Plan	
  
•  Goal of Stage: Think out the issues
–  No one wants to read a plan … but organizing your thinking in a structured
way will help you get things done at the right time
•  The Team
–  Why do you folks have unique knowledge to understand this market opening
•  The Key Stage Specific Information
–  Product: How big is the market, the product nice to have or is there a need
•  How will we learn the answers
–  What do we know about this industry
•  What is the margin structure and how buying is done, how competitive,
etc.
–  At the highest level … how long to reach a shippable product and how much
money does that take
24	
  
Crystal:	
  Idea	
  to	
  Business	
  Plan	
  
25	
  
#2	
  Is	
  it	
  a	
  big	
  market,	
  with	
  
a	
  big	
  need	
  …	
  when	
  will	
  
the	
  product	
  be	
  done?	
  
#4	
  	
  	
  What	
  are	
  total	
  
expenses	
  
#3	
  Can	
  this	
  industry	
  be	
  
penetrated	
  and	
  have	
  we	
  
talked	
  to	
  poten@al	
  
customers	
  
#1	
  	
  	
  How	
  much	
  
experience	
  ?	
  
Demonstrate:	
  Product	
  &	
  Market	
  Entry	
  Plan	
  
•  Goal of Stage: Think out the issues to drive market
–  Show the product works, show your path to market is working
•  Traditionally called Beta test
–  You want lots use so you can find patterns especially in how to find
and match with customers
•  The Team
–  Path to market is the … key
–  Time to fill out team to reach the market … marketing and
selling skills
•  The Key Stage Specific Information
–  Customers	
  want	
  it,	
  …	
  can	
  we	
  fell	
  customers	
  leaning	
  in	
  …	
  goal	
  at	
  end	
  of	
  stage	
  
is	
  equivalent	
  of	
  pipeline	
  
–  Product	
  Fit…	
  	
  understand	
  use	
  of	
  product	
  
–  Promo@on	
  –	
  start	
  market	
  trails	
  …	
  develop	
  a	
  detail	
  list	
  of	
  ideal	
  metrics	
  and	
  
then	
  start	
  filling	
  in	
  the	
  grid	
  
26	
  
Demonstrate:	
  Product	
  &	
  Market	
  Entry	
  Plan	
  
27	
  
#3	
  Build	
  metrics	
  to	
  show	
  
sales	
  and	
  marke@ng	
  cost?	
  
#2	
  Fill	
  in	
  team	
  ..	
  Start	
  to	
  
build	
  external	
  team	
  
#1	
  	
  	
  Understand	
  
customer	
  ….lots	
  of	
  
market	
  trials	
  	
  
#4	
  Market	
  dynamics	
  
Market	
  Entry	
  &	
  Early	
  Growth	
  Stage	
  
Early	
  Repeatable	
  Business	
  Model	
  
•  Goal of Stage: Think out the issues to drive scale
–  Show market metrics are scalable
–  Goal of the stage: what resources will drive growth … exact metrics for
the immediate plan … big ideas for the “add-on” products and markets
–  Execution
•  The Team
–  Can this team scale
•  The Key Stage Specific Information
–  Refine metrics and build “what-if” plans
–  Details plans for varying market conditions based on scaling knowledge
–  Work with industry partners
–  Find other market gaps
28	
  
Market	
  Entry	
  &	
  Early	
  Growth	
  Stage	
  
Early	
  Repeatable	
  Business	
  Model	
  
29	
  
#3	
  How	
  to	
  hit	
  the	
  rest	
  of	
  
the	
  market	
  
#2	
  Can	
  this	
  team	
  scale	
  
#4	
  	
  	
  Asses	
  profitability	
  of	
  
business	
  and	
  effect	
  on	
  
capital	
  needs	
  
#1	
  Understand	
  growth	
  
metrics	
  
Factors	
  defining	
  a	
  Business	
  
30	
  
Factors Crystal Stage Demo Stage Growth
Product /
Service and
Market
#2 #4 #3
Promotion and
Market
Strategy
#3 #1 #1
Profits and
Business
Model
#3 #4
People
#1 #2 #2
Plan
#4
Funding	
  Sources	
  
1.  Funding	
  partners	
  are	
  specialists	
  
2.  To	
  understand	
  who	
  to	
  approach	
  and	
  when	
  to	
  get	
  to	
  
them	
  takes	
  really	
  understanding	
  what	
  they	
  
specialize	
  in.	
  	
  You	
  need	
  to	
  match	
  your	
  company	
  type	
  
to	
  the	
  right	
  type	
  of	
  funding	
  partner	
  
3.  Company	
  stage	
  is	
  shorthand	
  for	
  types	
  of	
  risks	
  that	
  
business	
  faces	
  	
  
– Risk	
  awareness	
  is	
  the	
  key	
  to	
  early	
  successful	
  
communica@on	
  with	
  funders	
  
31	
  
Closing	
  Thoughts…	
  
32
Leverage the Entrepreneurial Community in Boston!
- Greenhorn Connect
- The Capital Network
- Etc.
Grants, etc
Funding Options for Early Stage Companies
33	
  
SBIR/STTR	
  Program	
  
SBIR	
  +	
  STTR	
  =	
  3%	
  -­‐	
  3.6%	
  of	
  federal	
  R&D	
  Budget	
  	
  
Best	
  for	
  research	
  …	
  need	
  other	
  commercial	
  $$	
  
•  Pros:	
  	
  
–  It	
  is	
  a	
  contract/grant	
  –	
  non	
  dilu@ve	
  
•  Cons:	
  
–  Long	
  Solicita@on	
  Process	
  
–  March-­‐in	
  Rights	
  	
  
–  Work	
  with	
  universi@es	
  for	
  exper@se	
  
–  Best	
  to	
  incorporate	
  (but	
  more	
  acceptance	
  of	
  LLCs)	
  
–  Accoun@ng	
  systems	
  must	
  be	
  compliant	
  with	
  the	
  
government	
  
–  Very	
  compe@@ve	
  in	
  some	
  agencies	
  
KATZ
NANNIS +
SOLOMON, PC
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS ADVISORS
www.knscpa.com
34	
  
KATZ	
  
NANNIS	
  +	
  
SOLOMON,	
  PC	
  
CERTIFIED	
  PUBLIC	
  ACCOUNTANTS	
  
BUSINESS	
  ADVISOR	
  	
  CONSULTANTS	
  
lnannis@knscpa.com	
  
DOD 	
   	
  HHS 	
   	
  NASA	
  
DOEnergy	
  NSF 	
   	
  USDA	
  
DOC 	
   	
  EPA 	
   	
  DOT	
  
ED	
  	
  NIST 	
   	
  	
  
DHS	
  
DOEducaHon 	
   	
   	
  	
  
SBIR/STTR	
  Par@cipa@ng	
  Agencies	
  
Web site address at SBA for the agencies’ SBIR links:
http://www.sbir.gov/federal_links.htm
Innovation Development Institute
www.inknowvation.com
35	
  
www.masslifesciences.com
•  Small Business Matching Grant Program
•  Competitive Program - $500k Matching Funds
•  Life Science Accelerator Program
•  Loan up to $750k 5 year 10% with warrant coverage
www.masscec.com
•  Various projects centered around Clean Energy
•  $40,000 grants with Tech Transfer Center
•  Dealings with ARPA-E program
•  Supplementary Funds
SBIR/STTR	
  Par@cipa@ng	
  Agencies	
  (cont’d)	
  
36	
  
Massachusetts Technology Transfer Center
www.mattcenter.org
Mission is to support technology transfer activities between research
institutes and companies in Massachusetts.
•  Fund researchers at universities
•  Move their inventions to development
•  Development of the feasibility in specific industry applications
•  Small and Medium Massachusetts manufacturers
•  Term loans and working capital loans
•  Contract and purchase order financing
•  Targeted technical assistance-50% paid by MGCC
SBIR/STTR	
  Par@cipa@ng	
  Agencies	
  (cont’d)	
  
37	
  
Web site for entrepreneurs is:
http://www.sba.gov/starting_business/
index.html
Web site for lending programs is:
http://www.sba.gov/financing/
index.html
7(a) Loan Program
Disaster Recovery
CDC / 504 Program
Micro Loans
Small Business Investment Companies
Services Specific Territories
Management Consulting
Start-up Consulting
Business Plan Development
Financing Plan Development
Low Cost Training Programs
Procurement Technical Assistance
Center
Mass Export Center
SBIR/STTR	
  Par@cipa@ng	
  Agencies	
  (cont’d)	
  
38	
  
www.mass-ventures.com
•  Normally fills a gap in Angel or Venture Round, Seed / 1st
•  Massachusetts-based companies
•  $250,000 - $500,000
•  State-funded VC
•  START Program- Phase II Matching Grant Program
•  Initially $6M as part of bond fund
•  10 at $100k; 5 at $200K; 2 at $500K in first year
•  2nd year of program – first 100K applications are over
SBIR/STTR	
  Par@cipa@ng	
  Agencies	
  (cont’d)	
  
39	
  
Addi@onal	
  Resources	
  
Commonwealth of Massachusetts
www.mass.gov/bizteam
Smaller Business Association of New England
www.sbane.org
Association of Corporate Growth
www.acgboston.org
City of Boston Resource Guide
www.cityofboston.gov/dnd/obd/BRG/A_intro.asp
States of NH, CT, RI,VT, ME Doing Business Guides
www.nh.gov/businesses/doing.html
www.ct.gov then go to “Doing Business”
www.ri.gov/business/
vermont.gov/doing_business/business.html
www.maine.gov/portal/business/small_bus.html
40	
  
41	
  
Example	
  VC	
  &	
  Angel	
  Deal	
  Metrics	
  
•  Time	
  to	
  closing	
  	
  
•  Investment	
  dollar	
  range	
  	
  
•  Success	
  rate	
  –	
  How	
  narrow	
  is	
  the	
  
funnel?	
  	
  
•  Accept/require	
  Credit	
  Support	
  /	
  
Guarantees	
  
•  Total	
  #	
  of	
  Similar	
  Sources	
  
•  Affected	
  by	
  general	
  economic	
  
condi@ons?	
  	
  
•  Dry	
  Powder	
  /	
  Secondary	
  Capital	
  
Reserved?	
  
42	
  
Return	
  on	
  Equity	
  Return	
  on	
  Debt	
  
Income	
   High	
  Return	
  
NON	
  PROFIT	
  
ORGANIZATION	
  
Capital	
  Source	
  View	
  
Debt-
Pay it back
Fixed Amounts
Equity –
Ownership stake
% of Future Value
Charity	
  $$	
  
Impact	
  /	
  Tax	
  Write	
  off	
  
NORMAL	
  GROWTH	
  
COMPANY	
  
HIGH	
  
GROWTH	
  
(COMPANY)	
  
EXTREME	
  
HIGH	
  GROWTH	
  
(COMPANY)	
  
Risk / Return
SOCIAL	
  VENTURE	
  
COMPANY	
  
43	
  
If	
  You	
  Cannot	
  Reduce	
  Risk,	
  	
  
You’ll	
  Pay	
  More	
  For	
  Your	
  Capital	
  
•  Examples	
  of	
  ways	
  riskier	
  companies	
  aeract	
  risk	
  capital:	
  
–  offer	
  more	
  shares	
  (beeer	
  price)	
  
–  have	
  collateral	
  (pledges,	
  guaran@es)	
  
–  offer	
  beeer	
  conversion	
  terms	
  (price)	
  
–  offer	
  more	
  control	
  (board	
  seats,	
  vo@ng	
  agreements)	
  
–  go	
  a}er	
  an	
  extreme	
  high	
  growth	
  market:	
  
•  massive	
  poten@al	
  
•  possibly	
  faster	
  path	
  to	
  exit	
  
•  possibly	
  more	
  exit	
  op@ons	
  
44	
  

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Funding Options for Early-Stage Companies

  • 3. Funding Options for Early Stage Companies July 2, 2013
  • 4. Today’s  Presenter   •  Jean  Hammond;     •  Suppor@ng  Growth  of  educa@on  and  learning  cluster  in  Boston:  LearnLaunch,   LearnLaunchX,     •  Ac@ve  angel  in  lots  of  deals,  first  investor  in  Zip  car:       Launchpad,  Golden  Seeds,  &  Hub  Angels   •  Serial  entrepreneur:   Axon  Networks  and  Quarry  Technologies     •  Eco-­‐system  supporter:   Board  TCN,  MIT  Trust  Center,  Mass  Challenge,  TechStars,  &  ACA/ARI  trainer   jean@jph-­‐associates.com   4  
  • 5. Agenda   •  Funding Sources –  Risk adjusted investing •  Business Stage –  Improving communication •  Experiences (Q&A) •  Backup other sources –  Government, etc 5  
  • 6. How  Can  We  Build  Value  and  Reduce  Risk?   What type of company should we build ? Stage-appropriate growth-oriented strategy Flexible, High- Performance Team - that can grow & change IP & Differentiated Product Bookkeeping & Accurate Accounting Legal Structure Boards Governance Partners: manufacturing, development, distribution, etc. Deep Market Understanding & Marketing Execution Profitable Business Model Outer ring: this is how you grow. By growing, you prove the market exists, REDUCE RISK, and earn access to different financial partners 6  
  • 7. How  Can  We  Build  Value  and  Reduce  Risk?   What type of company should we build ? Stage-appropriate growth-oriented strategy Flexible, High- Performance Team - that can grow & change IP & Differentiated Product Bookkeeping & Accurate Accounting Legal Structure Boards Governance Partners: manufacturing, development, distribution, etc. Deep Market Understanding & Marketing Execution Profitable Business Model Outer ring: this is how you grow. By growing, you prove the market, REDUCE RISK, and earn access to different financial partners 7  
  • 8. Funding  the  Company   Before  you  can  get  funded,     you  have  to  know     where  to  look   Before  you  know  where  to  look,     you  need  to  understand    what  you  are   8  
  • 9. What  Type  of  Company  Are  You?   •  In  many  cases  the  nature  of  the  business   decides  the  type  of  company  …     •  In  others,  changing  how  you  bring  the  product   to  market  can  really  affect  the  cost  of  scaling   and  the  funding  requirements   •  Example:  license  new  baeery  technology  to  exis@ng   players  vs  build  a  baeery  company  with  outsource   manufacturing    or  build  a  manufacturer   •  Every  company’s  financing  path  is  unique   9  
  • 10. All  Financial  Partners  Are  Specialists   •  Funding  comes  in  dis@nct  flavors;  all  financial  partners  are   specialists   •  To  understand  who  to  approach  and  when  to  get  to  them   takes  really  understanding  what  they  specialize  in.    You  need   to  match  type  of  company  to  the  type  of  funding  partner   •  Different  types  of  funding  partners  specialize  in  different  levels   of  risk,  so  apply  different  funding  criteria   •  Most  basic  rule:  the  more  risk  a  funding  partner   takes,  the  more  return  (and  control)  they  are   going  to  require   10  
  • 11. Entrepreneurship  comes  in  many  types       NORMAL  GROWTH   COMPANY   HIGH   GROWTH   COMPANY   EXTREME   HIGH  GROWTH   COMPANY   SOCIAL  VENTURE   COMPANY   •  Includes all service businesses •  Exploiting a local market need •  Team has ‘great jobs’ •  Growth by adding resources one by one •  Exit will be based on value of cash flow (mature biz.) •  Growth profile ultra-scalable •  Team focus is exit •  Revenue $40M+ with lots of room for growth (5 yr.) •  Based on $20M+ investment •  Exit targeted to IPO or by ‘large’ M&A event •  Goal is to fulfill a social need •  Has mission orientation •  Team needs to support mission •  Growth profile often one resource at a time •  Exit …much harder to find fit •  Company can grow fast (on-line) or has a scalable system •  Team often motivated by exit •  $7-10M revenue in 4-5 yrs & market size allows significant additional growth •  Capital efficient total investment $2-4M •  Exit by M&A 11  
  • 12. Growth  and  Maturity  Reduce  Risk   12   Size of Capital Raise: High Time High Risk Low Risk Crystallize Ideas Demonstrate Product Early Scaling Growth Sustained Growth Market Entry As  you  develop  your  company,  you   reduce  risk  for  your  financial   partners   Size of Capital Raise: Low 12  
  • 13. Capital  Sources:  Size  &  Cost   Investment Size Investment “Cost” Traditional VC Micro VC Equipment Financing Angel Groups Angels Equity Crowdfunding Angel List, Circle Up, etc Corporate / Strategic Venture Customers Jobs Bill Portals Vendors Founder Friends & Family Crowdfunding: etc. Grants Venture Debt Bank Loans Personal Loans Private Equity B’Plan Competition Accelerators 13  
  • 14. Match  Funding  Sources   NORMAL  GROWTH   COMPANY   HIGH   GROWTH   COMPANY   EXTREME   HIGH  GROWTH   COMPANY   SOCIAL  VENTURE   COMPANY   •  Friends, family, founders •  Debt, Bank, and other •  (Future) Crowd funding (portal style) Early on •  Accelerators •  Individual Angels •  Micro Cap VCs •  Seed from VC Later stages •  Venture Funds •  Strategic VCs •  Angel Syndication •  Friends family, founders •  Charity$$ •  Crowd funding (Kickstarter, etc) •  Impact Angels •  (Future) Crowd funding (portal style) •  Angels •  Angel Groups •  Angel Group Syndication •  Angel List •  Micro-cap Funds •  (Future) Crowd funding (portal style) •  Increasingly Strategic Corporate VCs 14  
  • 15. Alterna@ve  Sources  of  Capital   •  Business  Plan  Compe@@ons  and  Accelerators   •  Many  firms  gain  enough  for  some  product  comple@on  steps     •  Revenue  –  Best  of  all    (Bootstrapping)   •  Revenue  history  opens  more  types  of  debts   •  Pre-­‐payments  from  business  partners   •  Self-­‐interested  support  from  supply  chain     •  Vendors,  partners  and  customers   •  Including  NRE  to  build  joint  product   •  Great  source  of  quick  capital  for  marke@ng  or  sales  collabora@on   •  SBIR  Grants   •  ~$2  Billion  department  specific  funding   •  2  or  3  ‘research’  calls  from  each  department  each  year,  must  be  used  for   research  …  then  you  commercialize  with  other  funding   •  Other  government  funding,  lots  of  “detailed”  sources   •  Mass  Life  Science  &  Sustainable  Energy  –loans  or  conver@ble  notes   15  
  • 16. Debt  Capital:  Repayment   •  Debt  Capital   –  Funding  based  on  a  set  schedule  of  principal  and  interest   payments  that  provide  a  fixed  return  for  the  lender.   Availability  may  be  based  on  asset  value  or  cash  flow  or   personal  guarantee   •  Sources:   –  Personal  Loans  –  Friends/Family   –  Bank  Loans   –  SBA  Loans   –  Expect  debt  classes  from  Jobs  Bill  crowd  funding  portals   –  Credit  Cards   –  Venture  Debt  usually  linked  to  equity   16  
  • 17. Equity  Capital:  Shared  Upside  (VC  /  Angels)   •  Equity  Capital  requires  an  exit:   –  IPO  &  Private  Equity     –  M&A  (most)   •  VCs  invest  other  people’s  money  (from  pension  funds  etc.)   –  Returns  are  measured  on  a  per  fund  basis   –  Focus  is  on  finding  the  best  as  fast  as  possible  and  adding   resources  to  aid  success   –  ~$26.5B  annually,  ~  3,700  new  investments  2012   •  Angels  invest  own  money   –  Prefer  capital  efficient  /  early  exit  opportuni@es   –  ~$23B  annually,  ~  67,000  new  investments  2012   –  24  New  England,  10  greater  Boston   •  Angel  groups  ~10-­‐15%,     •  Informal  networks  &  one-­‐@me-­‐investors  ~15-­‐20%,     •  Super  angels  ~25-­‐30%,     •  Family  offices  ~35-­‐45%   17  
  • 18. Example  VC  &  Angel  Deal  Metrics   •  Time  to  closing     •  Investment  dollar  range     •  Success  rate  –  How  narrow  is  the   funnel?     •  Accept/require  Credit  Support  /   Guarantees   •  Total  #  of  Similar  Sources   •  Affected  by  general  economic   condi@ons?     •  Dry  Powder  /  Secondary  Capital   Reserved?   18  
  • 19. Close  Up:  Extreme  High  Growth  vs  High   Growth   Capital Needs Time High Risk Low Risk Formal Venture Capital M&A or IPO Crystallize Ideas Demonstrate Product Early Scaling Growth Sustained Growth Angel Group (or Micro-cap) Syndication Angels or Accelerators or Micro-cap funds Angels or Accelerators or Micro-cap funds Angels Market Entry M&A Later VC Rounds Extreme High GrowthHigh Growth Friends, Family & Founders Friends, Family & Founders 19  
  • 20. Agenda   •  Funding Sources –  Risk adjusted investing •  Business Stage –  Improving communication •  Experiences (Q&A) •  Backup other sources –  Government, etc 20  
  • 21. “Stage”  &  Equity  Capital  Sources   21   Stage   Crystallize  Idea   and  Early   DemonstraHon   Demonstrate   Product  &   Market   Interest   Market  Entry   and  Early   Growth   Early  Scaling   Growth   Repeatable   Growth   Capital   Source   Founders,   Friends,  Family,   Grants,   Kickstarter,  etc.   Accelerators,   Individual   Angels,  many   others  now   “exploring”   Angel  Groups,   Angel  Group   Syndica@on,   Micro-­‐Cap   Funds   VCs,  Angel   Group   Syndica@on,   Micro-­‐Cap   Funds   VCs   Investment   $25K  -­‐  $100K   $100K  -­‐  $500K   $500K  -­‐  $1M   $5M  –  as   needed   as  needed   These  2  need   sophis@cated  growth  plans     This  is  the   stage  where   advice  can   make  you   eligible  for   outside   funding  later   Accelerators   and  a  few   individual   angels  play   here  …  unless   it  is  a  big  idea   This  is  where   Angel   Groups  do   most  1st   investments ….    
  • 22. 22   What  Investors  (and  others)  Need  to  Know     •  5  P’s  of  investment   –  Product  –  differen@ated  technology  or  service  that  serves  market  need   for  a  significant,  large  market  product   –  PromoHon  –market  entry  strategy,  with  detailed  plan   –  Profits  –  a  business  model  that  has  margins  and  distribu@ons  costs   that  are  profitable   –  People  –  a  team  to  meet  the  needs  of  the  business     –  Plan  –  good  idea  of  the  steps  (&  prioi@es)  needed  to  create  a   repeatable  business  model   •  Some  key  concepts  to  convey:   –  What  our  poten-al  customers  are  saying  to  us:  is  this  a  nice  to  have  or   must  have   –  How  we  plan  to  run  a  series  of  market  entry  tests  delivering   meaningful  metrics   –  How  the  team  matches  the  needs  of  the  business   –  How  we  will  scale  against  a  repeatable  business  model  
  • 23. What  Do  We  Mean  By  “Risk”   Examples  of  things  that  make  a  company  risky  to  a  financial   partner:   •  Your  company  is  early  stage   •  You  need  more  money,  now  or  down  the  road   •  You  are  a  new  entrepreneur   •  You  have  unproven  technology   •  You  need  to  raise  equity  instead  of  asset  backed  debt  with   obliga@on  to  repay   •  You  are  chasing  a  new  unproven  market   •  You  have  less  IP  or  defensibility   •  Your  business  does  not  have  high  growth   •  You  have  a  longer  path  to  exit   •  You  have  fewer  exit  op@ons   23  
  • 24. Crystal:  Idea  to  Business  Plan   •  Goal of Stage: Think out the issues –  No one wants to read a plan … but organizing your thinking in a structured way will help you get things done at the right time •  The Team –  Why do you folks have unique knowledge to understand this market opening •  The Key Stage Specific Information –  Product: How big is the market, the product nice to have or is there a need •  How will we learn the answers –  What do we know about this industry •  What is the margin structure and how buying is done, how competitive, etc. –  At the highest level … how long to reach a shippable product and how much money does that take 24  
  • 25. Crystal:  Idea  to  Business  Plan   25   #2  Is  it  a  big  market,  with   a  big  need  …  when  will   the  product  be  done?   #4      What  are  total   expenses   #3  Can  this  industry  be   penetrated  and  have  we   talked  to  poten@al   customers   #1      How  much   experience  ?  
  • 26. Demonstrate:  Product  &  Market  Entry  Plan   •  Goal of Stage: Think out the issues to drive market –  Show the product works, show your path to market is working •  Traditionally called Beta test –  You want lots use so you can find patterns especially in how to find and match with customers •  The Team –  Path to market is the … key –  Time to fill out team to reach the market … marketing and selling skills •  The Key Stage Specific Information –  Customers  want  it,  …  can  we  fell  customers  leaning  in  …  goal  at  end  of  stage   is  equivalent  of  pipeline   –  Product  Fit…    understand  use  of  product   –  Promo@on  –  start  market  trails  …  develop  a  detail  list  of  ideal  metrics  and   then  start  filling  in  the  grid   26  
  • 27. Demonstrate:  Product  &  Market  Entry  Plan   27   #3  Build  metrics  to  show   sales  and  marke@ng  cost?   #2  Fill  in  team  ..  Start  to   build  external  team   #1      Understand   customer  ….lots  of   market  trials     #4  Market  dynamics  
  • 28. Market  Entry  &  Early  Growth  Stage   Early  Repeatable  Business  Model   •  Goal of Stage: Think out the issues to drive scale –  Show market metrics are scalable –  Goal of the stage: what resources will drive growth … exact metrics for the immediate plan … big ideas for the “add-on” products and markets –  Execution •  The Team –  Can this team scale •  The Key Stage Specific Information –  Refine metrics and build “what-if” plans –  Details plans for varying market conditions based on scaling knowledge –  Work with industry partners –  Find other market gaps 28  
  • 29. Market  Entry  &  Early  Growth  Stage   Early  Repeatable  Business  Model   29   #3  How  to  hit  the  rest  of   the  market   #2  Can  this  team  scale   #4      Asses  profitability  of   business  and  effect  on   capital  needs   #1  Understand  growth   metrics  
  • 30. Factors  defining  a  Business   30   Factors Crystal Stage Demo Stage Growth Product / Service and Market #2 #4 #3 Promotion and Market Strategy #3 #1 #1 Profits and Business Model #3 #4 People #1 #2 #2 Plan #4
  • 31. Funding  Sources   1.  Funding  partners  are  specialists   2.  To  understand  who  to  approach  and  when  to  get  to   them  takes  really  understanding  what  they   specialize  in.    You  need  to  match  your  company  type   to  the  right  type  of  funding  partner   3.  Company  stage  is  shorthand  for  types  of  risks  that   business  faces     – Risk  awareness  is  the  key  to  early  successful   communica@on  with  funders   31  
  • 32. Closing  Thoughts…   32 Leverage the Entrepreneurial Community in Boston! - Greenhorn Connect - The Capital Network - Etc.
  • 33. Grants, etc Funding Options for Early Stage Companies 33  
  • 34. SBIR/STTR  Program   SBIR  +  STTR  =  3%  -­‐  3.6%  of  federal  R&D  Budget     Best  for  research  …  need  other  commercial  $$   •  Pros:     –  It  is  a  contract/grant  –  non  dilu@ve   •  Cons:   –  Long  Solicita@on  Process   –  March-­‐in  Rights     –  Work  with  universi@es  for  exper@se   –  Best  to  incorporate  (but  more  acceptance  of  LLCs)   –  Accoun@ng  systems  must  be  compliant  with  the   government   –  Very  compe@@ve  in  some  agencies   KATZ NANNIS + SOLOMON, PC CERTIFIED PUBLIC ACCOUNTANTS BUSINESS ADVISORS www.knscpa.com 34  
  • 35. KATZ   NANNIS  +   SOLOMON,  PC   CERTIFIED  PUBLIC  ACCOUNTANTS   BUSINESS  ADVISOR    CONSULTANTS   lnannis@knscpa.com   DOD    HHS    NASA   DOEnergy  NSF    USDA   DOC    EPA    DOT   ED    NIST       DHS   DOEducaHon         SBIR/STTR  Par@cipa@ng  Agencies   Web site address at SBA for the agencies’ SBIR links: http://www.sbir.gov/federal_links.htm Innovation Development Institute www.inknowvation.com 35  
  • 36. www.masslifesciences.com •  Small Business Matching Grant Program •  Competitive Program - $500k Matching Funds •  Life Science Accelerator Program •  Loan up to $750k 5 year 10% with warrant coverage www.masscec.com •  Various projects centered around Clean Energy •  $40,000 grants with Tech Transfer Center •  Dealings with ARPA-E program •  Supplementary Funds SBIR/STTR  Par@cipa@ng  Agencies  (cont’d)   36  
  • 37. Massachusetts Technology Transfer Center www.mattcenter.org Mission is to support technology transfer activities between research institutes and companies in Massachusetts. •  Fund researchers at universities •  Move their inventions to development •  Development of the feasibility in specific industry applications •  Small and Medium Massachusetts manufacturers •  Term loans and working capital loans •  Contract and purchase order financing •  Targeted technical assistance-50% paid by MGCC SBIR/STTR  Par@cipa@ng  Agencies  (cont’d)   37  
  • 38. Web site for entrepreneurs is: http://www.sba.gov/starting_business/ index.html Web site for lending programs is: http://www.sba.gov/financing/ index.html 7(a) Loan Program Disaster Recovery CDC / 504 Program Micro Loans Small Business Investment Companies Services Specific Territories Management Consulting Start-up Consulting Business Plan Development Financing Plan Development Low Cost Training Programs Procurement Technical Assistance Center Mass Export Center SBIR/STTR  Par@cipa@ng  Agencies  (cont’d)   38  
  • 39. www.mass-ventures.com •  Normally fills a gap in Angel or Venture Round, Seed / 1st •  Massachusetts-based companies •  $250,000 - $500,000 •  State-funded VC •  START Program- Phase II Matching Grant Program •  Initially $6M as part of bond fund •  10 at $100k; 5 at $200K; 2 at $500K in first year •  2nd year of program – first 100K applications are over SBIR/STTR  Par@cipa@ng  Agencies  (cont’d)   39  
  • 40. Addi@onal  Resources   Commonwealth of Massachusetts www.mass.gov/bizteam Smaller Business Association of New England www.sbane.org Association of Corporate Growth www.acgboston.org City of Boston Resource Guide www.cityofboston.gov/dnd/obd/BRG/A_intro.asp States of NH, CT, RI,VT, ME Doing Business Guides www.nh.gov/businesses/doing.html www.ct.gov then go to “Doing Business” www.ri.gov/business/ vermont.gov/doing_business/business.html www.maine.gov/portal/business/small_bus.html 40  
  • 41. 41  
  • 42. Example  VC  &  Angel  Deal  Metrics   •  Time  to  closing     •  Investment  dollar  range     •  Success  rate  –  How  narrow  is  the   funnel?     •  Accept/require  Credit  Support  /   Guarantees   •  Total  #  of  Similar  Sources   •  Affected  by  general  economic   condi@ons?     •  Dry  Powder  /  Secondary  Capital   Reserved?   42  
  • 43. Return  on  Equity  Return  on  Debt   Income   High  Return   NON  PROFIT   ORGANIZATION   Capital  Source  View   Debt- Pay it back Fixed Amounts Equity – Ownership stake % of Future Value Charity  $$   Impact  /  Tax  Write  off   NORMAL  GROWTH   COMPANY   HIGH   GROWTH   (COMPANY)   EXTREME   HIGH  GROWTH   (COMPANY)   Risk / Return SOCIAL  VENTURE   COMPANY   43  
  • 44. If  You  Cannot  Reduce  Risk,     You’ll  Pay  More  For  Your  Capital   •  Examples  of  ways  riskier  companies  aeract  risk  capital:   –  offer  more  shares  (beeer  price)   –  have  collateral  (pledges,  guaran@es)   –  offer  beeer  conversion  terms  (price)   –  offer  more  control  (board  seats,  vo@ng  agreements)   –  go  a}er  an  extreme  high  growth  market:   •  massive  poten@al   •  possibly  faster  path  to  exit   •  possibly  more  exit  op@ons   44