ENTREPRENEURSHIP IN ENTERTAINMENT TECHNOLOGY

WELCOME!

TODAY’S AGENDA –FUNDING YOUR STARTUP

Your Needs

Your Options

Professional Investors

Important Terms

FUNDING IS A STEP

NOT A GOAL

NEEDS

FORECASTING YOUR NEEDS

Cash Flow Forecast

Use of Funds

Raise more than you need

Raise less than you need

OPTIONS

TYPES OF FUNDING

Bootstrapping

Debt

Equity

CHOOSE

BOOTSTRAPPING

Pros and Cons

DEBT

Pros and Cons

EQUITY INVESTMENTS

Pros and Cons

Friends and Family

Angel Investors

“Super Angel” Investors

Seed Investors

Venture Capital

PROFESSIONAL INVESTORS

INVESTORS’ BUSINESS MODEL

Step 1 – Find worthy investments

New Submissions 100%

Screening 6.50% 100%

Presenting 5.10% 78%

Due Diligence 3.20% 49%

Invested 2.30% 35%

Source: Angelsoft.net

INVESTORS’ BUSINESS MODEL

Step 2 – Place your bets

INVESTORS’ BUSINESS MODEL

Step 3 – Exit

IMPORTANT TERMS

TERMS

Valuation

Dilution

Preferred Stock

A Sample Term Sheet

VALUATION

Setting a price for investors

DILUTION

Impact of issuing stock

Bring up the spreadsheet!

CLASSES OF STOCK

SAMPLE TERM SHEET

Handout – Sample Doc from Wilson Sonsini

16 pages, and it’s just the Term Sheet

NEXT CLASS

HOMEWORK

For Next Class (Tuesday), Present your Funding Plan

• How much will you need to get to cash flow positive?• Can you derive that from your business model?

• How will you raise that money?• Assuming you’re in the top 2%, who are the top three

investors you’d like to have and why? How did you find them?

• Fill out the dilution worksheet with the number of rounds you think you’ll need and employee stock options.

RESOURCES

RESOURCESResources

• “How to Fund a Startup” http://paulgraham.com/startupfunding.html• Mark Suster “Raising Venture Capital”

http://www.bothsidesofthetable.com/pitching-a-vc/• Seed-stage Valuation Guide

https://jordancooper.wordpress.com/2011/01/12/seed-stage-valuation-guide/

Finding Investors

• AngelList http://angel.co/

First Hand Experience

• Udemy http://www.udemy.com/blog/2010/09/08/udemy-fundraising/• “Flying with Angel Investors”

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1921