EMBA Funding for Ventures, Startups using FinTech

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  • 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

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    STOCKHOLM GRAB YOUR PHONES

    PLEASE VOTE ON

    menti.com YOURCODE

    609970

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    PRESENTATION IS ONLINE ON

    SLIDESHARE.COM/MICHALGROMEK

    FORTODAY

    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

    http://www.slideshare.com/michalgromek

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    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 :)

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    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.

    https://www.youtube.com/watch?v=pkZkoGX_-wc

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    STARTUP FINANCING CYCLE (STAGES OF FUNDING)

    PRE-SEED FUNDING

    SEED FUNDING

    FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK

    http://www.slideshare.net/MichalGromek/introduction-to-financial-voodoo-for-startups

  • 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

    https://www.youtube.com/watch?v=1m-_0SmHiHE

  • 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

    https://www.youtube.com/watch?v=677ZtSMr4-4

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    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

    http://www.slideshare.net/MichalGromek/introduction-to-financial-voodoo-for-startups

  • 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.

    http://www.investopedia.com/terms/s/seriesa.asp

  • 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

    https://www.youtube.com/watch?v=_fHfqGlVIE4

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    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

    http://www.slideshare.net/MichalGromek/introduction-to-financial-voodoo-for-startups

  • 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

    https://www.youtube.com/watch?v=Ntt5jXlXucE

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    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

    http://www.slideshare.net/MichalGromek/introduction-to-financial-voodoo-for-startups

  • 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%

    https://www.youtube.com/watch?v=S_dRC9XcDTEhttp://www.investopedia.com/terms/m/mezzaninefinancing.asphttp://www.investopedia.com/terms/m/mezzaninefinancing.asp

  • 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

    https://www.youtube.com/watch?v=_Ni15ewtbRYhttps://www.youtube.com/watch?v=S_dRC9XcDTEhttps://www.youtube.com/watch?v=cN_BndtOD10

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    STARTUP FINANCING CYCLE (WHAT DO YOU PITCH)

    TEAM VISION MISSION TRIGGER EMOTIONS REPUTATION

    INSTITUTIONAL FUNDING

    HEDGE FUNDS

    PUBLIC FUNDING

    REWARD BASED

    CROWDFUNDING

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    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)

    https://www.youtube.com/watch?v=ryHBXTG87es

  • 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

    https://www.youtube.com/watch?v=aNfB4sBBwEc

  • 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

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    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

    IDEATHEREISACONNECTIONTOTHECROWDTHEENTREPRENEURSTEAMSTRUST

    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(Accessed5thofFebruary2017)

  • REWARD BASED CROWDFUNDING

    C2B / C2B / B2B LENDING

    Source:https://www.fundedbyme.com/en/campaign/1061/flippinburgers/?p=v2(Accessed5thofFebruary2017)

  • 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

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  • EQUITY BASED CROWDFUNDING

    C2B / C2B / B2B LENDING

    Source:https://www.fundedbyme.com/en/campaign/1061/flippinburgers/?p=v2(Accessed5thofFebruary2017)

    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

    COMPANYEXISTSFORATLEAST18MONTHSTRACKRECORDCOLLATERALS

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

    SOURCE

    : HTTP

    S://W

    WW

    .FUNDINGCIRCLE

    .S/BLO

    G/PRESS

    / (ACCESSED

    05

    .02

    .2017

    )

  • CROWDLENDING

    C2B / C2B / B2B LENDING

    Source:https://toborrow.se/sv/projekt/respiceswedenab2/(Accessed5thofFebruary2017)

  • 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.

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    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

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    10MINUTES

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    5MINUTES

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    2MINUTES

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    1MINUTES

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    GROUP 7

    FUNDING

    FINTECH DAY

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    GROUP 1

    FUNDING

    FINTECH DAY

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    GROUP 8

    FUNDING

    FINTECH DAY

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    GROUP 5

    FUNDING

    FINTECH DAY

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    GROUP 6

    FUNDING

    FINTECH DAY

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    GROUP 4

    FUNDING

    FINTECH DAY

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    GROUP 2

    FUNDING

    FINTECH DAY

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    GROUP 3

    FUNDING

    FINTECH DAY

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