TheFunded Web 2.0 Talk

8/14/2019 TheFunded Web 2.0 Talk

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get funded for

your dream

a crash course raising smart moneya crash course raising smart money

By Adeo Ressi, Founding Member of TheFunded.com



Global Venture Capital StatisticsGlobal Venture Capital Statistics

• $60 Billion USD Annually Invested

• 3,000 Companies Funded Annually

• 3,800 VC Firms

• 17,500 Professional VentureCapitalists





Best Time in History to Start aBest Time in History to Start a

BusinessBusiness

• Disaggregation of traditional businesses

• Lower costs of labor

• Lower costs of real estate

• Increasing amounts of freeinfrastructure

• Steady supply of growth capital



do not

compromise



The Right Investor SelectionThe Right Investor Selection

Average

• Attend Meetings• Responsive

• Provide Research

• Assist with Fundraising

Good

• Lead Future Rounds• Identify Deals

• Build the Team

• Decision Support

• One bad investor will ruin your company.One bad investor will ruin your company.





0. Set-up your Company (right)0. Set-up your Company (right)

• Delaware C Corporation

• Interview fundraising lawyer

– What is the right corporate structure?– How many VC deals have they done?

– How many VC firm intros will they do?

– How will they protect your equity?

• Founder vesting for departures

• Governance protections



1. Demonstrate Traction (traction?)1. Demonstrate Traction (traction?)

• Prove out vision of company

• The definition of traction:

– Committed Team of Experts– Patented Approach or Technology

– Functioning Prototype

– Launched Offering

– Customer Adoption

– Revenue Demonstration



2. Secure Media Exposure2. Secure Media Exposure

• Company Blog

• Industry Blogs

• Trade Journals

• Research Organizations

• Print

• Television



ignore the

incoming calls



3. Prepare your Materials3. Prepare your Materials

• Prepare your materials

– Meeting PowerPoint (15 slides)

– Introductory “One Sheet”

– Capitalization Table

– Working Financial Model

–Competitive Landscape Analysis

– Published Industry Research

– (Audited Financials, Patents, Etc.)



4. Pick your Targets4. Pick your Targets

• Know all local investors

– Socialize at events

– Do background research

– Pick the right ones for you

• Identify connections

– Entrepreneurs

– Venture capitalists

– Bankers, lawayers, vendors

– Unsolicited



5. Make Initial Introductions5. Make Initial Introductions

• The “Magic” Five Sentences

– What do you do?

– What is your market size?

– What makes you unique vs competition?

– Where are you in your development?

– How much capital do you require?

• Less is more – no big emails!



6. Set-up the Meetings6. Set-up the Meetings

Good Signs

• Thoughtful Questions

• Market Understanding

• Set Follow-up Items

• “Interesting”

• Meeting Partners

Bad Signs

• No Questions

• Market Size Ignorance

• No Further Steps

• “Maybe” or “but”

• Handled by Associates

• Are they doing competitive research?



get to the next

encounter



7. Negotiate & Complete Diligence7. Negotiate & Complete Diligence

• Get the first term sheet

– Do not accept it

– Time is on your side

– Expiration is a tactic

• Find the second term sheet

• The details really do matter



Key Secondary TermsKey Secondary Terms

Good Bad

Liq Preference 1x >3x

Participation None Full

Inv Board Seats 1 >1

Founder Vesting None 75%

Option Pool 20% <10%

Dividend Optional Mandatory



What to Expect when Fundraising?What to Expect when Fundraising?

Low High

Management Effort 25% 50%

Time to Close 4 mn’s 12 mn’s

VCs Pitched 10 60

Offers Received 1 5

Equity Dilution 15% 45%

Amount Raised $0.5 MM > $10 MM



Tips from the InsideTips from the Inside

• Do not outsource your fundraising

• Know the legal terms

• There is no “Industry Standard”

• There is no confidentiality





- What do you do?- What do you do?

- What is your market size?- What is your market size?

- What makes you unique?- What makes you unique?

- Where are you in development?- Where are you in development?

- How much capital do you- How much capital do you

require?require?

The “Magic” Five SentencesThe “Magic” Five Sentences

Documents

TheFunded Web 2.0 Talk