Your Presentation Name

Pitching Your PlanRaising Funds for Your StartupBy Melissa Fisher, Managing Partner www.PeakRoadPartners.com

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@MelissaFisher7www.linkedin.com/in/melissafisher7MelissaFisher7@gmail.com

Entrepreneur Conference

Organizing your pitch for investors?

What investor look for when evaluating best pitches?

Is my business appealing to venture investors

Words of wisdom from VCs and Entrepreneurs

In Todays Session We Will Tackle:

Of all the consulting inquiries I receive at Peak Road Partners, fund raising is by far the biggest need of these startups. And, the problem is, not all startups are viable for venture funding for a variety of reasons, which we will discuss. In todays session we will tackle: 1. What investor options you have for your startup2. is myindustry appealing to venture investors; 3. is my business appealing to venture investors; and if so, various ways for attracting capital for your business.

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Options for Funding: Debt / Credit CardsFamily & FriendsCrowdfundingYour CustomersGrants

Seed Accelerator Venture Capital

Angel Investors

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Try not to fall in love with a firm focus more attention on the partner leading the deal. Ultimately that partner will be the person you have to deal with so raising from a great firm but putting someone on your board that you dont love wont end up working out.

Ben Lerer

Once the term sheets start flowing in, how do you ultimately decide who to move forward with?

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Benefits of launchingValidate early hypothesesSocial proof / tractionFeedback from real customersEvidence team can shipDevelop bootstrapper mentalityEasier to raise capitalLaunch & LearnIf you werent embarrassed by the first version you launched too late.- Reid Hoffman

Bring your product to market as quickly as possible so you can start to learn from your users.

Bre Pettis

If technically feasible you should launch a minimum viable product (MVP) before raising capital.

Find A Good Lawyer

Once you determine VC is the right funding option for your company make sure you partner with an experienced law firm.

The ForefrontOrrick

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Seek AdviceBefore you kick off the fundraising process, build an experienced advisory board that can help with strategy, introductions and general advice.InvestorsSuccessful ExecsVenture CapitalProfessorsIndustry ExpertsFoundersInfluencers

FoundersColleaguesAdvisors Accelerators

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GINA BIANCHINIFind a tribe of fellow entrepreneurs a little ahead of you in progress who will give you honest feedback and clear direction on your pitch and more importantly the progress you need to show in order to raise money in the first place. The pitch is nice but the progress is critical. Entrepreneurs Words of Wisdom

MATT LAUZONMake sure you spend whatever time and energy is necessary to involve investors who are aligned with your vision.

MIKE KARNJ Think about your next milestone and work backwards from there to determine how much money you need to raise.

ZACH SIMSWork on something where youre the user youll always have user empathy and youll never tire of solving the problem.

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Location

Expertise / FocusPartnerBrandSupport & RelationshipsStrategy & Stage

Choosing Your BackerWhen selecting your investors there are a variety of factors that should go into the decision making process beyond financial terms.

Create a spreadsheet or use a CRM like Streak.com for targeting and tracking your investor conversations. Heres an example you can use:Firm / AngelWeight (1-5)StageLocationStrategySector / FocusRelevant CompaniesPoint of ContactTitleEmailReferralLast ContactNext StepsInvestment Amt. A16Z1TargetSFA, BMarketplace, SAASFiftyThree, AirwareChris DixonPartnerchris@email.comSteve Jobs12/15/13Follow up150,000NextView1Intro'dBosSeedMobile, SAASDirectr, SunriseRob GoPartnerrob@email.comTom Brady12/12/13Follow up100,000Lerer Ventures2Intro'd NYCSeedMedia, CommerceRapGenius, BuzzfeedEric HippeauPartnerben@email.comJane Jacobs1/5/14Schedule mtg$50,000Floodgate21st PitchSFSeedMarketplace, SAASOutbox, CheggMike MaplesPartnermike@email.comSally Ride1/8/14Send deck$50,000

Structure a ProcessName of FirmWeight Stage of ConversationLocationStrategySector/FocusRelevant Companies

Point of ContactTitleEmailReferralLast ContactNext StepInvestment Ask

Streak.com integrates with Gmail10

Set Your Investment Round SizeEstimating the amount of capital youll need requires more art than science. Here are some tips to keep in mind during your quest.

Runway: Raise enough capital to give yourself 18 months. Keep in mind it will likely take 3-6 months to raise a Series A.

Dilution: Every time you raise a round, try to sell no more than 10-25% of the company.

$ Target: Set a modest raise amount. Its always better to nail your target, say youre oversubscribed and then increase the size of round depending on investor interest and terms / dilution.

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Know Your BrandIn this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are strong because theyre built with the strength of the human spirit, not an ad campaign.

-Howard SchultzStarbucks

Your brand equals the sum total of positive and negative interactions that partners, customers and employees have with your company.

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TINA SHARKEYEntrepreneurs should think about how to unlock the narrative from their product or service. What is the true story they are trying to tell? What types of stories do they want their users to share?Entrepreneurs Words of Wisdom

GEORGE PETSCHNIGGWrite a pitch deck for the people you want to hire first, and investors last. When starting out, the first audience for your deck should be your founding team. Use it to get on the same page. The next audience is your first few hires, they should believe in the vision to join. The final audience is investors and it turns out they are no different from a great hire in terms of what motivates them to believe.

Entrepreneurs should think about how to unlock the narrative from their product or service. What is the true story they are trying to tell? What types of stories do they want their users to share? People share stories about products or services when their interactions are personal, memorable and emotional in one way or another. Stores are what gets shared, amplified and most stories are memorable in ways that facts, features and stats never will be.

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The story behind your company and product is often one of the most important things an investor will want to know. Dont underestimate it. Its not what you do, its why you do it.-Simon Sinek What was the impetus for starting the company?

Why are you obsessed with solving this problem?

How did the founders meet and decide to partner?

Why are you willing to sacrifice years of your life to work on this?

What is your cause, your belief? Crafting Your Story

Source: http://www.chicagobusiness.com/article/20141206/ISSUE02/312069997/six-venture-capitalists-reveal-the-best-pitch-of-2014

VCs Reveal The Best Pitch of 2014GUY TURNERManaging Director, Hyde Park Venture PartnersAdvice: "The progress of the company should match the 'ask,' " Turner says. "If you're asking for $5 million but your company is really at the $1 million seed round, then you're way off the mark. I like to see entrepreneurs with a big vision, but I like that vision to be grounded in reality. And don't show up without your team. Bring the most important one or two other people to the pitch. If you don't, you're telling an incomplete story of your business.

BRENT HILLPartner, Origin VenturesAdvice: "Entrepreneurs can learn to pitch better," Hill says. "Telling a story in a persuasive, engaging, memorable manner can be a developed skill."

CHRISTOPHER JENSENManaging principal, Anderson PacificAdvice: "You have 90 seconds to get someone's attention," Jensen says. "Your initial pitch should give a clear explanation of your business and quickly and clearly convey your pain points. Closing the meeting is important, too. I appreciate it when an entrepreneur ends a meeting with questions like: 'What are next steps? What else do you need? What follow-up items can I prepare for you?' It seems simple, but not everyone does it."

Write a pitch deck for the people you want to hire first, and investors last. When starting out, the first audience for your deck should be your founding team. Use it to get on the same page. The next audience is your first few hires, they should believe in the vision to join. The final audience is investors and it turns out they are no different from a great hire in terms of what motivates them to believe.

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Source: http://www.chicagobusiness.com/article/20141206/ISSUE02/312069997/six-venture-capitalists-reveal-the-best-pitch-of-2014

ADAM KOOPERSMITHPartner, Pritzker Group Venture CapitalAdvice: "Do your homework on the investor," Koopersmith says. "Understand what type of investments they're looking at and if they are a fit for the sector you're working in. The meeting should be a two-way conversation, not a flat-out pitch where you're the only one talking for 20 minutes. You need to inspire some conversation.

MARK ACHLERManaging director, Math Venture PartnersAdvice: "If you want to raise money, talk the language of finance and prove you know how to sell your product," Achler says. "If the founding team does not have those skills in their core DNA, find someone who does.

GEORGE DEEBManaging partner, Red Rocket VenturesAdvice: "Don't ask a VC for money to fund sales and marketing to build proof-of-concept around a product," Deeb says. "You need to walk into the office with proven marketing techniques and some type of traction, either website traffic, pipeline building, revenuesomething that says, 'People are lining up to buy my product.' VCs are trying to de-risk the process. If you have a closed deal, a signed contract or customers in the pipeline, you must be doing something right. It lets investors know you're heading in the right direction."

VCs Reveal The Best Pitch of 2014

Write a pitch deck for the people you want to hire first, and investors last. When starting out, the first audience for your deck should be your founding team. Use it to get on the same page. The next audience is your first few hires, they should believe in the vision to join. The final audience is investors and it turns out they are no different from a great hire in terms of what motivates them to believe.

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Title & Contact InfoProblemVision / MissionMarket Size & TrendsDistribution/AcquisitionProduct / SolutionBuilding Your Pitch Deck

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MonetizationRoadmap / TimelineTraction / MilestonesTeam / AdvisorsProjections / MetricsFundingBuild Your Pitch Deck

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NEIL CAPELGet to the point in the first few slides. Dont wait to get it perfect you wont. Additionally, practice beyond belief. Keep practicing sell a story! Be amazing.

Entrepreneurs Words of Wisdom

NOAH BRIERBe prepared to answer, why are you (and your co-founders) uniquely suited to solve this problem?

DAVID EISENBERGDont be afraid of sharing your flaws in your business, market, strategy or team. Investors would rather back an entrepreneur who is honest, who knows her flaws, and who has a reasonable hypotheses about how she might overcome these challenges with more resources and time.

AYAH BDEIRNever change your pitch to tell an investor what they want to hear. While it might get their attention in the sort term, you quickly wont be able to keep up an alternate story, or if you did, youll end up with the wrong investor.

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Events & ClassesAngelListVenture CapitalYour NetworkAcceleratorsTwitter + BlogsFounder Intros

How To Connect With VCsAngels and VCs are generally networked so it shouldnt be too hard to find them if you look in the right places and hustle.

TYPES OF FUNDING

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Your Pitch

YOUR OBJECTIVE: Fear of Loss & Hope of GainYour goal throughout the process should be to create excitement, demand and scarcity for your round. Investors often move in packs.

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VCs usually form an opinion of the founder and opportunity within first 10 minutes of a pitch. Early stage investors generally look for: TractionYou + TeamSocial ProofProductFirst Impressions Are Key

TYPES OF FUNDING

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1. Get Warm Intro

2. Review Product

3. First Meeting

4. Diligence4. Partner Meeting5. Term Sheet / Close

80%60%15%< 1%Getting to YESEvery investor / firm has a different process. Some make a decision in 30 minutes while others take months of diligence. Heres a typical process:

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TYPES OF FUNDING

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Complementary TeamStory & PurposeDifferentiated ProductSome Traction / ProofEmerging MarketsDistribution

What Most Will Look ForWhen evaluating early stage investments there are a number of things that I look for and place value on. Here are some them:

TYPES OF FUNDING

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Action Not AnalysisStrong CultureVenture CapitalData DrivenHustle / HackingCustomer ObsessionGreat Design

What Most Will Look For (Continued)Here are some additional things that I look for and place value on when meeting with seed stage companies.

TYPES OF FUNDING

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What are the next steps in the process? What concerns do you have? How much time do you typically spend with your companies? Can you walk me through your decision making process? How do you think you can help our company? Do you lead and / or follow? Whats your typical check size? How does your firm think about follow on investments? Is there any additional information youd like to see? Which investors do you enjoy working with? Questions to Ask InvestorsDuring the process make sure you carve out enough time to learn about the firm, its process and how they think about your opportunity.

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As I mentioned earlier every investor is different but there are some general things to avoid throughout the process. Product demos that dont workDerivative product and positioningLong answers filled w/ buzzwordsTrying to have all the answersLong pitch decksDont have clear raise amountAsking for investor intros after one passesOveremphasizing PR and pressNo product team in placePitching different partners in firm after a passBringing non-founders to 1st meetingToo many emails / follow upsThings To Avoid

Quality over quality / long decksExplain product Get to the point

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AFTER YOUR PITCH

Debrief w/ TeamSend VC RequestsReview Your Pitch NotesNote Questions / IssuesEdit Your Pitch DeckUpdate Your VC PipelineYour Action Items

Immediately following each pitch session there are some best practices you can implement which should help you throughout the process.

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Decision To CloseOnce you have a signed term sheet in place, there are a number of final steps you will need to complete before getting back to work.

Build Investor Syndicate

Review Docs

Sign & WireLegal DiligenceUsually 4 - 12weeks

Assume everything that can go wrong will go wrong so have a plan B, C and D. Nothing is ever done until the money is in the bank.

JARED HECHT

TermsNegotiate Term Sheet

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Seed Funding VehiclesWhen a startup raises money, one of three financing instruments are used and which one is always specified in the term sheet.

Preferred Equity

SAFE

Convertible Debt

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Convertible DebtSource: http://www.avc.com/a_vc/2011/07/financing-options-convertible-debt.htmlConvertible debt (A.K.A Convertible Note, A.K.A. Convertible Loan) is when a company borrows money from an investor or a group of investors and the intention of both sides is to convert that debt to equity at some later date.SpeedSimpler terms and less paperwork so can close within weeks

CostCheaper than equity from a legal perspective

ControlFounder retains majority of voting stock

ValuationDelays valuation discussion unless note is cappedSource: http://techcrunch.com/2012/04/07/convertible-note-seed-financings/Key Terms/ElementsWhy Convertible Debt?DiscountThe % reduction in price the debt holders will get when they convert into equity in the future

Valuation CapA valuation ceiling on the conversion price of the debt (common for seed deals)

ConversionPoint in time when holders of the debt will convert their investment into equity (typically occurs in the first equity funding round following the convertible debt issuance)

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Seed PreferredSeed Preferred is a type of equity seed funding instrument that provides certain rights, privileges and preferences to investors. Alignment of InterestsBoth the founder and investor have unlimited upside

Valuation Sets baseline valuation right on closing date

Tax ImplicationsCapital gains clock begins to tick

Industry Standard Many seed deals are currently being funded with seed preferredKey Terms/ElementsWhy Seed Preferred?Source: http://www.avc.com/a_vc/2011/07/financing-options-preferred-stock.htmlSource: http://techcrunch.com/2012/04/07/convertible-note-seed-financings/Price / ValuationPre-money valuation / price-per-shareLiquidation PreferenceAmount VCs receive in sale before proceeds are shared with founders based on ownershipFounder VestingDetermines timing of when founders and employees earn their equity (e.g. 4 years)Pro-Rata Right Right for VCs to invest in future roundsBoard SeatsLead investors usually require board seat privileges to vote in strategic decisions

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S.A.F.ESAFE Simple Agreement for Future Equity is a newly-formed funding instrument meant to replace convertible notes; essentially, SAFE has the benefits of convertible debt without the debt portion (maturity date and accrued interest).No Maturity DateLess pressure on startup to raise further capital in tight timeframe

No Accrued Interest SAFE is not a loan founders will not owe accrued interest

SpeedVery simple terms and quick funding timeline

CostLimited transaction costs due to standardized formsKey Terms/ElementsWhy SAFE?Equity Financing EventSAFE investors will be issued a form of preferred stock, and the SAFE instrument will expire

Liquidity EventSAFE investors will be have the option to receive cash payment or common stock, and the SAFE instrument will expire

Dissolution EventSAFE investors would have preference over capital stock owners in the distribution of assetsSource: http://ycombinator.com/safe/Source: http://techcrunch.com/2013/12/06/yc-safe/

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Monthly Email Update*Strategy SessionsNetwork w/ PortfolioReal-time Crisis ManagementShare Hiring PlanPost InvestmentSo you closed your round and have cash in the bank. Now what? Here are some way to engage with and get value from your investors: *Include whats going well / not well, key metrics, hiring update, financing update, roadmap, help wantedSpecific Intros

Put your VC to work[Any others?]

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Some AdditionalResources

https://www.udemy.com/u/davemcclure/37

Suggested Reading

Before you start the fundraising process, reading these books will help prepare you for dealing w/ VCs and launching your company.

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Suggested VC Blogs In No OrderChris Dixon, A16Z: cdixon.orgSemil Shah, Angel: semilshah.comBrad Feld, Foundry Group: feld.comFirst Round Review: firstround.com/reviewDavid Skok, Matrix: forentrepreneurs.comTom Tunguz, Redpoint: tomtunguz.comHunter Walk, Homebrew: hunterwalk.comPaul Graham, Y Combinator: paulgraham.comMark Suster, Upfront: bothsidesofthetable.comFred Wilson, Union Square Ventures: avc.comRoger Ehrenberg, IA Ventures: informationarbitrage.com

Add brad feldJason mendhelson

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Investors on TwitterAs noted earlier Twitter is a good place to engage with VCs and share ideas openly. Here are some of the most active. Marc Andreessen@pmarca

Chris Sacca@saccaChris Dixon@dixonJosh Ellman@joshelman

Vinod Khosla@vkhosla

Naval Ravikant@navalKevin Rose@kevinrose

Howard Lindzon@howardlindzon

Brad Feld@bfeld

Jeremy Liew@jeremysliewDavid Lee@davidlee

Mark Suster@msusterDave McClure@davemcclureFred Destin@fdestinKeith Rabois@rabois

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In SummaryVC is just one financing option to considerRaise to accelerate growthInvestors come in difference sizes and flavorsPrepare, work your ass off and hustleThe real work begins after you close your roundTake advantage of resources on the web The real work begins after you raiseRaising any amount of capital is never easy. Youll hear no more than youll hear yes. For many of you it will be a long but rewarding process.

No DerivativesLong answersDemos that dont workQuality over quality / long decksExplain product Get to the point

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Raising any amount of capital is never easy. Youll hear no more than youll hear yes. For many of you it will be a long but rewarding process.

IN SUMMARYVC is just one financing option to considerInvestors come in difference sizes and flavorsRaise to accelerate growthPrepare, work your ass off and hustleTake advantage of resources on the web The real work begins after you raise

At the end of the day, you need to follow your gut. Who is going to be the best partner for my business, bringing a Rolodex of relationships to the table? Who is going to be the most pleasant to work with around the board table, especially when things start to go wrong (as they always do)? Who has the deepest pockets to invest additional monies in follow-on rounds? Who is giving me the best valuation? Whose term sheets are more or less onerous than others in terms of liquidation preferences and anti-dilution ratchets? So, hopefully, what you are hearing is, not all venture capital is the same shade of green, and it is important you do your homework upfront, to avoid misery down the road. And, if you are not clear you are making a good decision on your own, ask an advisor to help you.

But, overriding all of this, if you can figure out a way to fund your business, with no outside capital, that is the preferred model. It preserves the founder's 100% control of the company's equity, board control andthe timing of a sale (or not), at terms 100% satisfactory to the founder. Don't get romanced by the idea of raising venture capital, because it certainly has its strings attached, given the reasons already stated. But, if you think you have the next big idea at the scale of a Google, Facebook or Groupon, the venture community will be your best partners, having funded several of those similar businesses and navigated the various pitfalls along the way.

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The magic in business isnt raising money but making money.-The SharksOne Closing Thought

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Good Luck!