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The COLOR of moneyAll different means of funding your startup
SOMNATH SENGUPTA, PHD
(443) 820 7798
MAY 16TH, 2018
This presentation reflects the author’s opinions only and must not be construed as a financial advice
Goals of the presentation
An overview of the various means of
financing a business
Correlate type of financing with your
business needs
There is money available for good ideas to blossom into a business; you have to chose the right kind of
money
Why should I listen?
Because:
If you have an idea that would make a difference, you need to learn the
process of raising funds
You will get practical advice from a practitioner
Step 1 for FinancingKNOW YOUR ANSWERS TO THESE QUESTIONS BEFOREHAND
1.What is the problem you are trying to address ( no jargons
please)?
2.How is it solved today?
3.What is the new technical idea and how will you assure its
success?
4.What is the impact if successful?
5.How will the business be organized?
6.How will intermediate results be generated?
7.How will you measure progress?
8.How much will the project cost and how can your idea
present a more-cost effective option to the client?
No fluff – be short and sweet in your message
•Lord’s Prayer
•Gettysburg Address
•Federal order dealing
with the price of
cabbage
66 words
286 words
26,911 words
Short, concise writing takes more skill
https://www.englishclub.com/ref/esl/Quotes/Government/The_Lord_s_Prayer_is_66_words..._2748.htm
The power of words
http://www.youtube.com/watch_popup?v=Hzgzim5m7oU&vq=me
dium
SIMPLE, CLEAR, SINCERE – focusing on developing BIG content
What successful people say
“Your careers will be determined largely by how well you speak, by how well you write, and by the quality of your ideas… in that order.” - Patrick Henry Winston, How to Speak
“With complex problems, this is exceedingly difficult, but to be
an effective communicator and leader you need to be able to
condense complex items down to the core and be able to do
this quickly.” – Tony Blair, former UK Prime Minister
There is a clear link between success and effectively communicating your ideas.
It is a continual process of learning to link your thought process with your
speaking/writing capabilities.
Before Raising Funds
In general, “investors” like to see commitment from your part
Hernán Cortés, the Spanish commander, scuttled his ships, so that his
men would have to conquer or die.
Open your wallet first
Form a team to cover most (if not all) aspects of your business
Get strategic partners
Proves worth of your product/services
Protect your Intellectual Property
Stay in stealth mode as long as you need to
Sharpen your message
Learn from other people’s approaches
Remember; the first investor is investing in YOU
Speaking to investors in THEIR language and
context
If you tell a DoD customer to “Secure a building...”
Speaking investor
lingo is hard! Learn
from other people
how to present
DO YOUR HOMEWORK BEFORE YOU PLUNGE INTO FUND
RAISING
ONCE YOU ARE IN, YOU ARE GOING TO BE FUND RAISING
FOR A WHILE
If you do this stage right, then it will be easy to pick the right source of money for your business
Types of Money
Your money or “Their” money
Pros and Cons of types of Money
Stage of business, Artistic Control, Business Control, Dilution, Investor Management, hard-to-get factor
The MONEY word cloud
LOTS of sources
Pros and Cons of the Word Cloud sources of funding
Stage of business, Artistic Control, Business Control, Dilution, Investor Management, hard-to-get factor
An example of funding a high tech company
Paratek Microwave, Inc.
Differentiator- Novel, patented, electronically tunable materials for antennas, filters, subsystems
History- 5+ years of R&D within the government by the inventors (founders)
BIG IP portfolio
Commitment- Inventors “burnt their boat” and started the company on their own funds
Non-diluting funds
Obtained state grants; DBED
3 paying customers within first year R&D development, too
Diluting Funds- Then came the VCs in the 2nd year of operation
Licensed their own IP from the government
Domestic and International customers
14 years to acquisition Let us discuss the pros and cons
Control, Investor Management, Growth rate
An example of funding a consumer tech company
Motobriiz, LLC
Differentiators- Mix of patents and trade secrets
VERY inventive founder. Sees “problems” to solve
Utilizes local disabled young adults for assembly; provides jobs
Has a reliable parts supply chain
Sells through e-commerce (Amazon, eBay, websites)
History- 5 years in operation
Commitment- Inventor spends a lot of time in networking with inventor/ entrepreneur networks; works almost 24/7
Non-diluting funds
Used his own funds/ sweat equity to start his business
MULTIPLE paying customers from multiple products
Diluting Funds- None Let us discuss the pros and cons
Control, Investor Management, Growth rate
Summary of thoughts
EmbryonicProof of concept
Mature Idea(s)
You have to match it with the best mix of funds to take
it to the next phase
Market
Winning is a continuous learning process
http://www.brainyquote.com/quotes/authors/w/winston_churchill.html
Questions?
