This presentation walks the Entrepreneur through the steps to raising Angel and Venture Capital. Topics include assessing the ability to raise capital, assessing the company's value, and a checklist for funding success.
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Easy to do
Likely Commoditized
∂ Find Harder Problem
∂ Add sizzle
∂ Or sell the IP
MarketValue
Difficulty to Replicate
Technology in Search of a
Problem
∂ Expand Capabilities
∂ Partner to Create
Value
∂ or Sell the IP
Its All There
∂ Get Funding
∂ Go To Market
∂ Move Quickly
Incomplete
Ho-Hum Value
∂ Shelve It
∂ Reexamine Next Year
∂ or Sell the IP
Keep Your Day Job
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טּ Unique and Protectable IP
טּ Early Mover Advantage
טּ Large Time Requirement to Replicate
טּ Strong Market Position
טּ Strong Team with Unique Skills
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טּ A Track Record of Success
Both the CEO and the Management Team
טּ Friends with Money
Super Angels each Investing $250K+
טּ A Superstar CTO
Well Known in Technology Field
or a World Class University Reputation
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טּ How Important is the Problem Solved?
טּ How Good are the Alternative Solutions?
טּ How Passionate are the Customers?
טּ How Willing are Customers to Pay?
“The only thing that matters is
finding product-market fit before
you run out of cash”
Marc Andreessen
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טּ Time to Replicate Market Position
טּ Time to Replicate Technology
טּ Unique Team Skills
טּ Fast Moving
טּ No Concerns about Cannibalization
טּ Slay the incumbent's cash cow
טּ Manically Focused on a Single Problem
טּ Unless you aren’t focused!
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טּ Limited Cash/High Cost of Capital
טּ Limited Resources
טּ Hard to get Mind Share
טּ No Viral Network Effect Initially
טּ Lack of Access to Key Prospects
טּ Investors can add value here
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Management Appropriate for the Stage
Advisors with Experience & Credentials
Complete Market Research
Complete Business and Financial Model
Blogosphere/Media Awareness
Industry Analysts Accolades
Enthusiastic Customers
Strong Growth
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“I understand my market
and its needs, and my
competitors”
“I have an
idea” Angels,
Super Angels
Sweat equity, friends & family, existing business or consulting revenue
“I’ve have my core
team”
“I have experienced
advisors”“I can
demonstrate its
Value”
Liquidity
Event
IPO,
Acquisition
“I have product
delivery”
VCs and Strategic
Investors
“I have
revenue
traction”
“This venture is
growing very rapidly”
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*businessmodelgeneration.com
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טּ The Model Quantizes Your Business
טּ All Key Elements Addressed
טּ Revenue Sources, Use of Funds, Gross Margins of the
Business
טּ Cash Burn/Runway are Shown
טּ Sensitivity to KPI Variations Shown
טּ Gives You Credibility
It will change, but your model shows you understand the
guts of how the business could be run
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טּ 100% of Startups “Pivot”
טּ The “Coherency” of the Plan Shows You
Understand How the Business Could Work
טּ Does each piece tie together logically and completely?
טּ Investors want to See You Can Adapt
* (but that’s ok)
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Investment Stage Investor Type Typical Amount Raised
Idea/Prototype Ideation Principals’ Credit Cards $25K - $100K
Product through Beta Friends and Family $50K - 200K
First Revenue Angel/Super Angel $100K - $750K
Early Traction – “A” Round Venture Capital $1M - $3M
Market Development Venture Capital $3M - $10M
Seek investors appropriate for your company stage
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טּ Typical Time to Close – 4 to 8 months
טּ Often Follow-on from Angel Financing
טּ Find VCs whose Focus Matches Yours
טּ Find the Partner who Knows Your Space
טּ Get Referred by a Respected Associate
טּ 2 to 4 Page Business Summary is Best Intro
טּ Follow-up with the more Detailed Plan and
Financial Model
טּ Work to get Multiple Advocates in the Firm
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http://youtu.be/zngK13FMgXM
*Well a Parody…
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Elevator
Pitch
Business
Summary
Investor
Pitch(es)
Business
Plan
Term
Sheet
Due
Diligence
Deal
Documents
Closing
Get to know investors before formally pitching to them…
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טּ Your Company must be Differentiated
טּ Totally Understand Your Business
טּ The ability to answer hard questions is essential
טּ Its OK to have a few Missing Pieces
טּ As long as you know what’s missing
טּ Don’t Sour Investors with a Mediocre Pitch
טּ You won’t get a second chance
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טּ Who are You?
טּ What is the Product or Service?
טּ What is Value Proposition?
טּ Why Should I Care?
טּ What is Your Market?
טּ Who are Your Customers?
טּ Differentiate – What is Unique!
All in less than 60 seconds
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טּ Plan on 15 to 30 Minutes plus Questions
טּ Determine your actual time allocation before the meeting
טּ Interaction is More Important than Your Pitch
טּ If you are losing your audience, deviate from your pitch
טּ You’ll Give the Pitch to the other Partners Later
טּ (if you make the cut..)
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טּ Presentation Excellence are “Table Stakes”
טּ Passion is Indispensable
טּ Include the Team (3 to 4 total)
טּ Encourage Interactivity
טּ Show you are “Coachable”
טּ Make every presentation your best
טּ Be Capable of Answering Any Question
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טּ The Problem
טּ Your Solution
טּ Business Model
טּ Underlying Magic/Technology
טּ Marketing and Sales
טּ Competition
טּ Team
טּ Projections and Milestones
טּ Status and Timeline *
טּ Summary and Call-to-Action
* blog.guykawasaki.com/2005/12/the_102030_rule.html
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טּ Value of the Business
טּ Your Market and Competition
טּ Fit for Their Firm
טּ Your Management Team
טּ The Passion
טּ Your Ability to Think-on-Your-Feet
טּ The Mutual Chemistry
טּ Risk
Their Decision is if to Move to the Next Step
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טּ Help the Investor Meet their Goals
טּ Show why You should be in the “Funded 1%”
טּ Make them Excited about You and Your Team
טּ Show You can Answer all their Questions
טּ Give them a Sense of Urgency to Proceed
טּ Disclose Major Issues (showing your trustworthiness)
טּ Secure the Next Meeting
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טּ The Lead Investor Selling the Deal Internally
טּ The Term Sheet & Negotiation
טּ The Due Diligence Process (next slide)
טּ Creating and Finalizing Deal Documents
טּ Two to six weeks despite what they say
טּ You’ll pay all legal costs
טּ The Close
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טּ Founders Experience and Background Checks
טּ Market Opportunity/Size Validation
טּ Competitive Analysis – Current and Future
טּ Barriers to Entry Assessment
טּ Intellectual Property Assessment
טּ Both advantages and risks
טּ Customers and Industry Analyst Opinions
טּ Financial Model and Cash Burn Credibility
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Develop Idea
Scope Total Addressable Market
Develop Market Positioning
Raise “Friends and Family” Cash
Build Team
Create legal entities
Get cap table right!
Build Minimal Viable Product
Get Advisors
Prototype on Real Users
Get Customer Traction
Develop Elevator Pitch
Create Business Plan
Research Ideal Investors
Build Business Model
Create Pitch Deck
Prepare for Due Diligence
Raise investor capital
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Dave Key
cloudstrategies.biz
cloudstrateiges.biz/blog
dave@cloudstrategies.biz
+1 949/887-4401