This document provides an overview of fundraising for startups. It discusses preparing for fundraising by developing financial projections, business models, pitches, and target investor criteria. The fundraising process takes 3-6 months and involves socializing the opportunity with potential investors without asking for money initially. Once interest is generated, the founder would refine their pitch based on feedback and then formally ask investors for funding. Key deal points include valuation, preferred stock or convertible notes, vesting schedules, and board seats. Resources for legal support and pitch deck templates are also provided.
24. GO FOR THE ASK
• Approach your top candidates at the same time
• Run conversations in parallel
• Decide whether / when to tell investors about each
other
25. CREATE URGENCY
• Anchor investor acts as the first domino
• “Triggering events” to get a (or better) term sheet
27. STRUCTURE
• Preferences over common
• Board seat or 2
• Option pool
• Liquidation preference
• Control over sale, new options
• Debt that becomes preferred equity
when you raise it
• No valuation, but the “cap” is a
ceiling
• Interest accrues, rate <10%
• Conversion discount
Equity
Preferred Stock
Debt
Convertible Notes, SAFEs
30. VALUATION & DILUTION
37%
See www.ownyourventure.com
Raise $1M on $5M pre
33%Raise $1M on $3M pre
34%Raise $1.5M on $5M pre
Dilution: what’s your end stake?Valuation ($M)
Seed A B
$15
$6
$1
$30
$12
$5
31. FINAL DEAL POINTS
• Rolling close vs. set close
• Not done until money is in
the bank
Key terms
❑ Board composition
❑ Option pool
❑ Voting rights
❑ Founder vesting
❑ Change of control
❑ Redemption rights
❑ Information rights
❑ Anti-dilution
32. HOW LONG DOES IT TAKE?
• Longer than you expect
• 3-6 months
• Speed limited by access to investors
• Your ability to find them
• Calendar availability (surprisingly hard)
35. 38
A bachelor’s or
advanced degree is
the cost of admission
to the workforce, but
the skyrocketing cost
of education is
putting that price
out of reach.
College Tuition vs Median Income
$52,000
$53,500
$55,000
$56,500
$58,000
$0
$5,000
$10,000
$15,000
$20,000
2005 2006 2007 2008 2009 2010 2011 2012
Cost of College Median Income
1https://college-education.procon.org/view.resource.php?resourceID=005532
36. Feeling the Weight of Loans?
$37,000
The average student debt for
the 7 out of 10 graduates who
leave college with student
loans1.
1 million
Parents each year who take
out loans to send their
children to college2.
55%
Respondents who say that
student loans have impacted
their ability to buy a house3.
55%
Parents who expect their child
will have to rely on student
loans to fund their college
education4.
1Thttps://www.debt.org/students
2http://time.com/money/4846020/popular-college-loans-guide/
3Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans
4 https://www.credible.com/blog/student-loans/parents-expect-kids-will-take-out-student-loans/
37.
38.
39. Good Time to Seek for Jobs
Unemployment Rate
0.0%
2.5%
5.0%
7.5%
10.0%
Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13Sept-13Apr-14 Nov-14 Jun-15 Jan-16 Aug-16 Mar-17 Oct-17 May-18
Unemployment Rate
1https://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref3
40. Job Hopping
44%
Millennials who intend to quit
their jobs within the next two
years1.
3 million
Number of Americans who leave
their jobs voluntarily each
month2.
90%-200%
Percentage of an employees’
annual salary that it costs to
replace them3.
73%
Employees are open to
hearing about new job
opportunities4.
1The Deloitte Millennial Survey 2017
2https://www.bls.gov/news.release/jolts.nr0.htm
3Retaining Talent: A Guide to Analyzing and Managing Employee Turnover; Society of Human Resources Management.
4https://blog.accessperks.com/2017-employee-engagement-loyalty-statistics#1
48. SCENARIO 1: COFFEE SHOP
Instructions for Audience
You love everything the pitcher tells you.
You get so excited that you repeatedly
interrupt them, trying to finish their
sentences.
49. SCENARIO 2: GROCERY STORE
Instructions for Audience
You ripped your pants 5 minutes ago.
So you desperately want to leave and try
to end the conversation with the pitcher
ASAP.
57. TYPICAL PARTS
Overview Problem Solution Market
Traction
Marketing
Strategy
Team
Competition Conclusion
Financial
Projections
(high level)
Money Being
Raised and
Use of Funds
Revenue Model
& Business
Model