Funding options For Growing Technology Compaines
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Transcript of Funding options For Growing Technology Compaines
LIGHTER CAPITAL © COPYRIGHT 2015
Funding OptionsFor Growing Technology CompaniesAWS Loft, San Francisco
BJ Lackland CEO, Lighter Capital@bjlackland
LIGHTER CAPITAL © COPYRIGHT 2015
About BJ LacklandLighter Capital: CEO since 2012
Power Efficiency Corporation: CFO & DirectorPublic energy technology company, raised $20M in equity financing, $5M in various debt financings
Summit Energy Ventures: VP & Director (Partner)$25M venture capital fund focused on Series A & B rounds, PIPEs, convertible debt
Other: Active angel investor and consultant to early stage companies. Senior finance and marketing leader at tech startups, EnCompass Globalization and webStrategic.
MBA and MA in International Studies from University of Washington
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BJ Lackland, CEO Lighter Capital
15+ years financing early stage tech
companies, either as an entrepreneur or investor.
Over $50M raised or invested
LIGHTER CAPITAL © COPYRIGHT 2015
About Lighter Capital
52%25%
21% SaaS
SaaS + Service
Tech-enabled services
Digital Media
›100+ financings across 70+ companies
›Almost 80% are SaaS
›Revenue Based Financing for tech companies
›$50k-$1mm+ funding per company
›Technology + Capital = Better for Entrepreneurs
LIGHTER CAPITAL © COPYRIGHT 2015
› The best of debt and equity – aligned interests with no dilution
› Essentially a royalty agreement until a fixed $$ amount paid
› Monthly payments = fixed % of revenue
› Fits SaaS very well
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What is Revenue-based financing?
1 2 3 4 5 6 7 8 9 10 11 12 13 14Period
Company revenueLoan payment Criteria:
› Revenue: $15k-$1m/ month
› Profitability: Not required, but clear path to profitability
› Multiple Customers
› Recurring Revenue/Customers
› High management ownership
› U.S. focus
LIGHTER CAPITAL © COPYRIGHT 2015
Today’s Agenda
The funding landscape
Your funding paths and options
Preparing for funding
Q&A
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LIGHTER CAPITAL © COPYRIGHT 2015
The Funding Landscape
Cost of Entry
Speed of Innovation
More Startups
Angels/VC
Larger Funds
Series A is The New B
Other Sources
Corporate Venture
Debt + Crowd funding
LIGHTER CAPITAL © COPYRIGHT 2015
VC Backed Non VC
Revenue$5m
Series B
Corporate Venture
Established
Ideation
Launch & Traction
Growth & Scale
Breakout
Series C
Debt
Equity
Tech Banks
Series A Revenue-Based
Financing
Blended
Series A
Series B
Tech Banks
Series C
Revenue-Based Financing
Tech Banks
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Funding Paths
Bootstrap / Friends & Family
Incubator / Angels
LIGHTER CAPITAL © COPYRIGHT 2015
Bank / Debt Revenue-Based Finance
Venture Capital
Guarantees &Controls
Financial CovenantsSometimes Personal
Guarantees
No Financial CovenantsNo Personal Guarantees
Partner in the Business (Board Seat, Voting
Rights)
Added Value Low / None Medium High
Dilution None / Low None High
Payment Flexibility
Low: Fixed Payments
Medium: Variable Payments
High: No Payments
Speed 4-8 months 4 weeksHighly variable. Typical 3-9 months of focused
effort
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Funding Option Comparison
LIGHTER CAPITAL © COPYRIGHT 2015
1. Equity Valuation? What % to give up for the capital?
2. Control/Partnership Who makes key decisions?
3. Value Add More than just money? Accelerate value?
4. Risk Tolerance Personal assets?
5. Timeframe/Distractions How long will raising funds take?
6. Horizon Exit strategy? Build to exit? Build and hold?
7. Culture Is there alignment? p9
Selecting a Funding Path
LIGHTER CAPITAL © COPYRIGHT 2015 p10
Know Your Numbers› Actual historical › Projections & assumptions› Key SaaS metrics› Capitalization
Document Your Company› Executive summary› Investor deck › Supporting slides / deep info› Product demo
Get Ready for Funding – the ChecklistTake Action
› Activate your network › Legal + accounting prep› Keep momentum / sense of
urgency
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Financials› MRR (Monthly Recurring
Revenue)› Burn rate› Zero cash date
Customer Metrics › Acquisition costs: CAC, CAC
Ratio, CAC Payback › Customer value: ACV, LTV› Churn
Key SaaS MetricsGrowth
› Monthly and annual revenue growth rates› MRR/ARR growth rate
› 40% rule: is your growth outpacing your burn?
Market/White Space › Market size / disruption› Competitors
LIGHTER CAPITAL © COPYRIGHT 2015
› $10,000 in AWS credits valid for 2 years › Free access to the AWS Essentials 1 day web-based or instructor-led
training (normally $600/course), plus 8 tokens for self-paced labs (normally $30/lab)
› One year of premium AWS Business Support (up to $5,000)
› Free access to 1:1 virtual office hours with AWS solutions architects
› Special offers from other companies that help startups, including Chef, Bitnami, Amazon Payments, SOASTA, Podio, CopperEgg, CloudCheckr & more.
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Access the AWS Activate Program with Lighter Capital
LIGHTER CAPITAL © COPYRIGHT 2015
Q&A
Visit Our Websitewww.lightercapital.com
Apply Onlinewww.lightercapital.com/apply
See If You Qualifywww.lightercapital.com/how-it-works/see-if-you-qualify
Learn More about Lighter Capital Download the Funding Options Whitepaper
bit.ly/1FBAtFs