EMBA Funding for Ventures, Startups using FinTech

FUNDING AND FINTECH VOODOO FOR YOUR VENTURE

MICHAL GROMEK RESEARCHER ON FINTECH & CROWDFUNDING #SE.LINKEDIN.COM/IN/MGROMEK

EXECUTIVE MASTER OF BUSINESS ADMINISTRATION SESSION ON FINTECH STOCKHOLM, FEBRUARY 9TH, 2017

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

STOCKHOLM GRAB YOUR PHONES

PLEASE VOTE ON

menti.com YOURCODE60 99 70

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

PRESENTATION IS ONLINE ON

SLIDESHARE.COM/MICHALGROMEK

FOR TODAY 

ROADMAP 

EMBA SSE 9TH FEBRUARY2017

9:15- 10:00 FUNDING A VENTURE (TRADITIONAL & FINTECH)

10:00-10:10 Q&A COMMUNICATION WITH INVESTORS

10:10 - 10:30 TEAM ASSIGNMENT (USAGE IN PRACTICE)

10:30 - 10:50 PRESENTATION AND DICUSSIONS

BREAK

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

POTENTIAL QUESTIONS:

I HAVE AN VENTURE SO HOW DO I

RECEIVE FUNDING?

CAN I JUST UPLOAD MY BUSINESS

IDEA ONLINE?

HOW CAN THE STARTUP THAT I

WORK WITH RECEIVE FUNDING?

ROAD MAP FOR OUR 90 MIN TODAY: DIFFERENT TYPES OF FUNDING SOURCES FOR ENTREPRENEURS AND STARTUPS (FIRST 45) WITH AFOCUS ON CROWDFUNDING (SECOND 45 MIN)

NO CANNED

SOLUTION :)

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

STARTUP FINANCING CYCLE (MODEL)

CLICK HERE FOR VIDEO EXPLANATIONPRE-SEED FUNDING

FRIENDS, FAMILLY (AND "FOOLS"), BUSINESS ANGELS, PUBLIC FUNDING LIKE ALMI,

REWARDS BASED CROWDFUNDING, STING

PRE - SEED FUNDING - I HAVE AN IDEA

WHO IS PROVIDING PRE-SEED FUNDING?

WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE

EARLIEST STAGE, DESIGN OF THE PRODUCT, PROVISION OF MARKET FIT, CREATION

OF THE COMPANY.

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

STARTUP FINANCING CYCLE (STAGES OF FUNDING)

PRE-SEED FUNDING

SEED FUNDING

FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK

CLICK HERE FOR VIDEO EXPLANATION ABOUT SEED FUNDING

BUSINESS ANGELS, EQUITY CROWDFUNDING, REWARD CROWDFUNDING,

PUBLIC FUNDING

SEED FUNDING - I HAVE A COMPANY

WHO IS PROVING SEED FUNDING?

WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE

SIZE AROUND 230K EURO UP TO 2M EURO IN ORDER TO BRING THE PRODUCT TO

MARKET, SIGN FIRST BIG CONTRACTS, ADVERTISE TO THE PUBLIC

CLICK HERE FOR A VIDEO EXPLANATIONABOUT STARTUP FUNDING

WE ARE NOW IN OUR C-SERIES SHARE ISSUE PROCESS AND CONSIDER 20M

INVESTMENT.

STAGES OF INVESTMENTS

WHAT DOES THE FOUNDER SAY TO YOU:

WHAT DOES THIS MEAN

THE COMPANY HAS AN SUCCESSFUL PROOF OF

CONCEPT, TEAM, EXPERIENCE IN RISING

FUNDING, SIGNIFICANT INVESTMENT AND

POTENTIAL SOME INT. EXPANSION

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

STARTUP FINANCING CYCLE (STAGES OF FUNDING)

PRE-SEED FUNDING

SEED FUNDING

SERIES A / SERIES B

FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK

CLICK HERE FOR VIDEO EXPLANATION ABOUT SERIES A FUNDING

BUSINESS ANGEL, EQUITY CROWDFUNDING, VENTURE CAPITAL (LATELY VC ARE

LESS LIKELY TO PROVIDE SERIES A FUNDING)

SERIES A - OPTIMISE PRODUCT & USER BASE

WHO IS PROVIDING SERIES A FUNDING

WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE

SCALING THE PRODUCT, EXPLORING THE TRUE MARKET FIT, INTRODUCTION OF

NEW FEATURES. IN THE PAST THE MEDIAN HAS BEEN AROUND 7M EURO. IT WENT

UP SIGNIFICANT IN RECENT YEARS TO 6.5 M-14M EURO

> INTERESTING CASE: AGGREGATE MEDIA - EQUITY FOR ADVERTISEMENT SPACE.

EXAMPLE OF AN VENTURE THAT RAISED SERIES B

VENTURE CAPITAL, (THAT SPECIALISE IN LATER STAGE FUNDING) INSTITUTIONAL

INVESTORS, HEDGE FUNDS FUND REPRESENTATIVES

SERIES B - "B" IS FOR BUILD

WHO IS PROVIDING SERIES B FUNDING?

WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE

THE STARTUP HAS A WORKING BUSINESS MODEL AND WOULD LIKE TO EXPEND ITS

REACH. IT RECEIVES SIGNIFICANT TRACTION AND HAS A TRACK OF RECORD. THE

COMPANY RAISES FUNDING FOR NEW TEAM MEMBERS, FURTHER EXPANSION.

SIZE: USUALLY 7M+ EURO

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

STARTUP FINANCING CYCLE (STAGES OF FUNDING)

PRE-SEED FUNDING

SEED FUNDING

SERIES A / SERIES B

SERIES C

FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK

EXAMPLE OF AN VENTURE THAT RAISED SERIES C200M USD

VENTURE CAPITAL, INSTITUTIONAL INVESTORS, HEDGE FUNDS

FUND REPRESENTATIVES

SERIES C (D, E, F... )

HOW IS PROVIDING SEED FUNDING

WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE

ACCELERATION BEYOND SERIES B, ACQUISITION OF COMPETITORS

OR PARTNERS, INTERNATIONALISATION. INVESTOR INJECT MONEY INTO

SUCCESSFUL BUSINESSES WITH THE

GOAL TO AT LEAST RECEIVE THE DOUBLE AMOUNT BACK.

KEYWORDS:

COMPETETIVE ADVANTAGE, MERGER

AND SYNERGISTIC PARTNERSHIP

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

STARTUP FINANCING CYCLE (STAGES OF FUNDING)

PRE-SEED FUNDING

SEED FUNDING

SERIES A / SERIES B

SERIES C

FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK

WATCH A VIDEO ON MEZANINE FUNDING

IS A TERM WHEN A COMPANY DECIDES TO "GO PUBLIC" AND TO OFFER

THEIR SHARE ON A STOCK EXCHANGE- CLICK HERE FOR A VIDEO

EXPLANATION.

POSSIBLE SCENARIOS FOR YOUR STARTUP

PROJECT (BUT LESS LIKELY:))

IPO - INITIAL PUBLIC OFFERING

MEZANINE FUNDING

FUNDER IS OBTAINING A LOAN WITHOUT A COLLATERAL (AN

MOVABLE OR NONE MOVABLE ASSET THAT BACKS UP THE LOAN.

IN CASE OF A DEFAULT THE LENDER CONVERTS HIS DEBT INTO

SHARES. - CLICK HERE FOR A VIDEO EXPLANATION.

USUALLY USED WITH A TRACK RECORD AND REPUTATION USED

OFTEN TO PERFORM AN IPO. TYPICAL INTREST IS SOMEWHERE

BETWEEN 10% AND 22%

COMPREHENSIVE VIDEO EXPLENATIONALOF CONVIRTABLE LOAN

A COMPANY ISSUES A LOAN TO LENDERS AND AT A SPECIFIC DATE THE

INVESTORS CAN DECIDE IF THEY WOULD LIKE TO RECEIVE THEIR DEBT

REPAID OR CONVERT IT TO OWNERSHIP IN THE COMPANY.

LENDERS USUALLY RECEIVES A DISCOUNT RATE TO CONVERT INTO

VALUATION AT A LATER STAGE.

POSSIBLE SCENARIOS FOR YOUR STARTUP

PROJECT (BUT LESS LIKELY:))

COVERTABLE LOANS: (DEBT)

BRIDGE FINANCING (FORM OF CONVERTABLE DEBT)

IS A LOAN THAT CONVERTS TO EQUITY

THE INVESTOR CAN DECIDE ON THE TRIGGER POINT IF THE

LOAN WITH THE DISCOUNT SHOULD BE CONVERTED

ACCORDING TO AN OLD POST MONEY VALUE OR A NEW

PREMONEY VALUATION FOR NEXT ROUND.

WATCH A VIDEO ON BRIDGE FINANCING

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

STARTUP FINANCING CYCLE (WHAT DO YOU PITCH)

TEAM VISION MISSION TRIGGER EMOTIONS REPUTATION

INSTITUTIONAL FUNDING

HEDGE FUNDS

PUBLIC FUNDING

REWARD BASED

CROWDFUNDING

Pictu

re: http

s://flic.kr/p/d

rV3

LQ

STARTUP FINANCING CYCLE (WHAT DO YOU PITCH)

TRACK RECORD PATENT APPLICATION TRACTION RETENTION DATA, DATA, DATA

INSTITUTIONAL FUNDING

HEDGE FUNDS

PUBLIC FUNDING

PUBLIC FUNDING

FRIENDS FAMILLY FOOLS

THEY JUST FUNDING, DON'T HOPE FOR STRATEGY TIPSCAN BE A NIGHTMARE TO DEAL WITH THEM - SO FAR LITTLEBUSINESS S EXPERIENCE (IT WAS FOR ME) IN CASE BUSINESS FAILS THEY CAN TAKE IT PERSONALLY

DOWNSIDES

COMMUNICATE RISK CLEARLY HAVE A SHAREHOLDER AGREEMENT DON'T ASK FOR MONEY THAT THEY CAN NEED

TIPS:

UPSIGHTS

USE YOUR REPUTATION

DON'T CHECK CREDIBILITY

LESS BURACRATIC

BUSINESS ANGELS

BUSINESS ANGEL CAN BE STRONG INDIVIDUALS, AND SOME GOTWEALTHY BECAUSE OF LUCK AND NOT NECESSARY EXPERIENCE. SOME BUSINESS ANGELS LIKE TO HAVE MORE CONTROL THANWHAT FOUNDER ARE WILLING TO GIVE.

DOWNSIDES

SPEAK TO FOUNDERS OF COMPANIES WHERE BA'SHAS INVESTED INTO. REVIEW THE BA'SPERFORMANCE IN YOUR SECTOR

TIPS:

UPSIGHTSINVEST ON EARLY STAGE, LIKE TO TAKE RISK

CAN OPEN DOORS WITH THEIR INFORMAL NETWORK

MONEY IS NOT A LOAN (USUALLY)

BUSINESSES OPERATE LONGER AND HAVE A HIGHER RATE OF RETURN

LINK TO HOW TO RAISE MONEY FROM ANGEL INVESTORS (PLEASE SKIP FIRST 12 MINUTES)

VENTURE CAPITAL

LONG DUE DILLENGENCE PROCESSTENDENCY 95% DISCOUNTED VALUATION METHOD STRONG PERSONALITIES SINCE 2009 > USUALLY LATE STAGE FINANCE (SERIES A+)

DOWNSIDES

UNDERSTAND HOW VC WORKS (PRESENTATION BELOW)REVIEW WHEN THEY HAVE BEEN RAISING MONEYAND IS THERE OWN PERFORMANCE

TIPS:

UPSIGHTSMAYBE SMART MONEY

STRONG NETWORK

LONGTERM PARTNER 4.2% OF VCEMPLOYEES ARE

FEMALE*

*SOURCE: http://fortune.com/2015/01/30/women-are-not-making-progress-in-male-dominated-vc-world-data-shows/ (ACCESSED 20th OF JANUARY)

LINK TO HARVARD INNOVATION LAB ON HOW VC MAKE DECISION

TO MUCH OF THE FUNDINGDECREASES THE SENSE OFURGENCY AND FOCUS ON SALES "WE DIDNT FEEL THE URGENCY TOFOCUS ON SALES" - CEO FIKABOX

PLANNING FOR FUNDING IS ONLY AS GOOD AS THE QUALITY OF YOUR BUSINESS FORECAST

TO SMALL FUNDING ROUND(PERMANENT FOCUS ONFUNDING -

"IT TOOK ME AROUND 70% OFMY TIME TO FOCUS ON FINANCE"- CEO TIMESULIN

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

Crowdfunding is theaccumulation of smallinvestments in individualprojects bya large number of individuals(“the “crowd”) with the helpof the internet or socialnetworks (De Buyer et al.,2012)

DEFINITION:

CURRENT TYPES OF CROWDFUNDING

DONATION BASEDCROWDFUNDING

REWARD BASED CROWDFUNDING

LENDING BASEDCROWDFUNDING

REAL ESTATECROWDFUNDING

C2B / B2B LENDING CROWDFUNDING

EQUITY BASED CROWDFUNDING

CURRENT TYPES OF CROWDFUNDING

YOU BACK UPPROJECT ANDEXPECT NOTHINGIN RETURN.

DONATION REAL ESTATE COLLECTSFUNDING FORCONSTRUCTIONOF A REAL ESTATE

EQUITY PARTIES AREBUYING SHARESFROM A LTD.(AB IN SWEDEN)

CROWD BACKS UP A PROJECTAND EXPECTS A REWARD INRETURN.

PLATFORMFACILITATESLENDING BETWEENDIFFERENTPARTIES

PARTIES ARESEEKINGFUNDING USINGTHE PLATFORM

REWARD LENDING C2C / C2B / B2B LENDING

CURRENT TYPES OF CROWDFUNDING

YOU BACK UPPROJECT ANDEXPECT NOTHINGIN RETURN.

DONATION REAL ESTATE COLLECTSFUNDING FORCONSTRUCTIONOF A REAL ESTATE

EQUITY PARTIES AREBUYING SHARESFROM A LTD.(AB IN SWEDEN)

CROWD BACKS UP A PROJECTAND EXPECTS A REWARD INRETURN.

PLATFORMFACILITATESLENDING BETWEENDIFFERENTPARTIES

PARTIES ARESEEKINGFUNDING USINGTHE PLATFORM

REWARD LENDING C2B / C2B / B2B LENDING

REWARD BASED CROWDFUNDING

REWARD

IDEA THERE IS ACONNECTION TOTHE CROWD THEENTREPRENEURS TEAMS TRUST 

AVERAGE FUNDING ROUND: LESS THAN 9.5K EURO

REWARD BASED CROWDFUNDING

C2B / C2B / B2B LENDING

Source: https://www.fundedbyme.com/en/campaign/1061/flippin­burgers/?p=v2 (Accessed 5th of February 2017) 

REWARD BASED CROWDFUNDING

C2B / C2B / B2B LENDING

Source: https://www.fundedbyme.com/en/campaign/1061/flippin­burgers/?p=v2 (Accessed 5th of February 2017) 

EQUITY BASED CROWDFUNDING

REWARD

EQUITY

THERE IS A LTDCOMPANY THERE IS AVALUATION TRUST /REPUTATION WHAT IS THE EXITSTRATEGY?

AVERAGE FUNDING ROUND ON ONE OF SE PLATFORMS - 65K EURO

SOU

RC

E: h

ttps://w

ww

.fun

ded

bym

e.com

/ (accessed 5

.2.2

01

7, n

ote: ju

st as ind

icator as n

ot all o

f the co

mp

anies h

ave been

equ

ity camp

aigns)

EQUITY BASED CROWDFUNDING

C2B / C2B / B2B LENDING

Source: https://www.fundedbyme.com/en/campaign/1061/flippin­burgers/?p=v2 (Accessed 5th of February 2017) 

Source: https://www.fundedbyme.com/en/campaign/7707/the-fox/?type=e&p=v2 (ACCESSED 05.02.2017)

CROWDLENDING (C2B / P2P LENDING)

REWARD

EQUITY

LENDING

COMPANYEXISTS FOR ATLEAST 18MONTHSTRACK RECORD COLLATERALS

AVERAGE LOAN SIZE (UK) 170K EURO, INVESTORS PORTFOLIO 20K EURO

SOURCE

: HTTP

S://W

WW

.FUNDINGCIRCLE

.S/BLOG

/PRESS

/ (ACCESSED

05

.02

.2017

)

CROWDLENDING

C2B / C2B / B2B LENDING

Source:https://toborrow.se/sv/projekt/respice­sweden­ab­2/ (Accessed 5th of February 2017) 

WHAT MOTIVATES USERS

SOURCE: PROF KARIM LAKHANI, OPEN INNOVATION HOW CAN I USE THE CROWD, ESBRI 26.02.106PICTURE: HTTP://BLOG.CROWDS.IO/WP-CONTENT/UPLOADS/2015/07/CROWDSOURCING-COMMUNITY-750X410.JPG

3.

PHILANTROPHY EXTERNAL 2.

(EXTRINSIC)

1. INTRISTIC 

(INTERNAL) 

CAPITAL C - NOT ONLY FUNDING

AMBASSADORS

DOOR OPENERS

FREE PR FANS

INFORMALNETWORK

TEST GROUP

SHORT SUMMARY

VENTURE FUNDING IS NOT ONLY ABOUTFUNDING BY PRIMARY ABOUT ADDITIONALNON-FINANCIAL BENEFITS:

CANNED SOLUTIONS DON'T EXIST AS EACHVENTURE HAS DIFFERENT CHELLANGES,REFLECT ON YOUR NEEDS AND MATCHINVESTOR TYPE.

CROWDFUNDING IS AN OLD PHENOMENON.DIFFERENT TYPES OF CROWDFUNDING MATCH DIFFERENT DEVELOPMENT STAGES. ITPROVIDES A RANGE OF NON-FINANCIAL BENEFITS TO COMPANIES.

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

FINTECH IN PRACTICE

EVALUATE ALL FORMS OFFUNDING PRESENTED TODAY.PRESENT TO THE CLASS THEMOST SUITABLE TYPE FORYOUR "PROJECT VENTURE"

WORK IN YOUR PROJECT GROUPS.PRESENTATION PER GROUP 80 SEC - PREPARATION TIME 10 MINUTES

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

10MINUTES

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

5MINUTES

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

2MINUTES

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

1MINUTES

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 7

FUNDING

FINTECH DAY

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 1

FUNDING

FINTECH DAY

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 8

FUNDING

FINTECH DAY

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 5

FUNDING

FINTECH DAY

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 6

FUNDING

FINTECH DAY

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 4

FUNDING

FINTECH DAY

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 2

FUNDING

FINTECH DAY

PICTURE

: HTTPS

://WWW

.FLICKR

.COM

/PHOTOS

/DICK

-SIJTSMA

/

GROUP 3

FUNDING

FINTECH DAY