FUNDRAISING IDEAS FOR SEED &

SERIES A INVESTMENT ROUNDS

eBOOK

AUGUST 2016

TABLE OF CONTENTS

Introduction

When to Raise Capital

The PITCH DECK

The COMMERCIALS

The DATA ROOM

The TERMS

The LEAD INVESTOR

The SYNDICATE RAISE Conclusion & About CapitalPitch

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Introduction Fundraising Ideas for Seed & Series A Investment Rounds

The way we approach the fundraising journey is to reduce the time and effort required for Startups and Investors, with the aim of making every relationship and transaction a win-win.

We do this by using a systematic approach to raising capital. This involves the Pitch, Commercials, Data Room, Terms, Lead Investor and then syndicating your Raise on our funding platform. If you would like to apply for funding from CapitalPitch Ventures, please do so here.

Using a systematic approach you will reduce the burden, delays and the mistakes in getting your Startup funded, so you can get on with growing your business.

Here are some trends and hacks from the >2,700 startups we’ve seen.

Trends for improved success:● Runway - Have more than 3 months, otherwise you are too late!● Research & Validate the Space / Industry / Market. Is it hot? Is there funding

going into this space? ● Traction & Revenue - Certainty of Execution & Growth over 30, 60 and 90

days● Milestones to Valuation Uplift - What impact will the target raise have on the

Startup’s Valuation, over what time period and why?

Hacking the Raise:● Ensure that you have Smart and Strategic Investors● Know your cost per occupation and life time value● Do you have an exit strategy? How is the investor getting their money back?● Build a brand around your Startup so that you can get meetings with investors● Show clear revenue growth● Create a “fear” of missing out so investors feel compelled to act

WHEN TO RAISE CAPITAL

CHAPTER ONE

When to RAISE Capital What Are The Stages Of Raising Capital And How Should You Look?

Pre-Seed Seed Series A

Revenue $0 $10K per month $100K per month

Product No MVP MVP / Beta / Early release All systems go!

Customer GrowthCustomer Validation / Pilot

completeBeginning 10% per month for 6+ months

Cofounding Team 1-4 Cofounders 2-4 Cofounders full time 2-4 Cofounders full time

Exec Team Founders Founders + 1-3 Founders + 3-6

Board of Directors None 1-2 cofounders2 founders & 1 Serial Entrepreneur

investor or Industry Captain

Runway (how long until

you run out of cash)

No funding yet but you should have

personal cash flow6-18 months 6-18 months

Scalability Future tech build Technology enabled Technology core

Intellectual Property Not Owned Owned Protected

Raise Target Amount $50k - $250k $250k - $1m $1m to $10m

Investors Friends, Fans & Family FFF, Advisors/Mentors & Angels Angels & Funds/VC

THE PITCH DECK

CHAPTER TWO

The PITCH DECKHave The Right Investor Communications

A Pitch Deck is the core of your presentation to an Investor. It is a document you send to an Investor, which gives them more written information. To ensure that your Pitch Deck captures an investor you should make sure it has the following:

● Overview or outline of your business● Quantified, investable points that get cut through with investors● Advertises the commercial opportunity within the business ● Communicates MUCH with very FEW words● Simple enough that your grandmother could understand it● Should get an Investor excited about your business

Remember: You can tell the maturity and investability of a founder by the economy of their language. Cover the Key Points only! Less is more!

IMPORTANT: Design all of the Communications from the Investor's perspective!Download the CapitalPitch 21 Slide Pitch Deck Template HERE and land investable points economically on each slide.

The best Pitch Decks for strategic and sophisticated Investors include the following slides, in this order, at the beginning:

● the WHY, ● TARGET MARKET, ● PROBLEM, ● SOLUTION, ● & MARKET ANALYSIS

Remember:You need to be able to quantify the problem and the solution. Who is kept awake at night by this problem? What are the benefits of your solution? Don't waste time and money on an Information Memorandum (IM) that no one reads!

THE COMMERCIALS

CHAPTER THREE

The COMMERCIALS Financials, Sales & Marketing Models:

Know Your Conversion Metrics! Once you have a validated a product in the market, you will need definitive financial,

Sales and Marketing Models, to understand the viability of your Startup. We provide a comprehensive Financial and Sales & Marketing tool as part of our accelerator and every startup is taken through this as it provides us and our investors great insights into the viability of the Startup. CapitalPitch Ventures also invests in every startup that completes our program and the investment committee requires the data outputted from this model to make decisions. Other investors think similarly.

Here are the key items for your to remember if completing the commercials yourself.

1. Know Your Key Numbers:Do you know your startup’s revenue, profit, loss, margins, assumptions and break even? A Startup needs to know how much it spends or burns per month. Do you have projection scenarios for how the Startup will grow and expand over the next 30, 60 and 90 days to 1, 2 or 3 years?

2. Tested Sales & Marketing Conversion Metrics:Having a Sales and Marketing Matrix based on real data is vital. Do you know what your Customer Lifetime Value (LTV) is? What is your Costs per Acquisition (CPA)? What are the drivers and assumptions underlying the financial model?

3. Financial model based on Tested Assumptions and HistoricalsYour Financial model must include historical data that validates your business case. Have you tested the assumptions? Assumptions are used to look forward for 1, 2 and 3 year projections. It is important to understand where your traction, growth and runway (how much money is left) stands at all times.

4. Valuation Modeling to Support Your RaiseWhat affects the valuation modelling? Do you have at least 3 different valuation models and comparables, from your local market, to validate your valuation?

THE DATA ROOM

CHAPTER FOUR

The DATA ROOMWill Your Data Room Pass Due Diligence

By A Lead Investor? IMPORTANT: be ready, be diligent, be well organized and be well-structured with

your Data Room.

1. Comprehensive Data Room checklistWe provide our Startups with a comprehensive Data Room checklist (all 70 Points!) of what a Sophisticated Investor will be looking for when they come to do Due Diligence on your Startup.

You can download our FREE Comprehensive Checklist from our website HERE

2. One Easy Access PointA sophisticated investor appreciates a well structured data room where documents are easily accessible, well organised and available at any time. This also allows you to produce all this information once rather than respond ad-hoc to requests for different pieces of information.

3. A Data Room that has passed due diligence by a lead investorBeing able to find documents quickly and easily has investors writing to us saying “Wow, this is so impressive! I wish all DD processes where like this!”. So ensure that a lead investor has vetted your data room and given you the “all clear” before opening it up to other investors.

4. Get cut through with InvestorsA well organised Data Room will mean that investors are more engaged and much more interested in investing. Whereas if you look unprepared it can take weeks to pull all the information together and the Investor may lose interest and walk away from the deal.

THE TERMS

CHAPTER FIVE

The TERMSDifferent Valuation Methodologies

Valuation can vary widely for a startup based on the terms of the deal surrounding it.

If the Valuation is too high, it’s going to take longer to close the round and investors will mitigate risk by imposing tough or unfair terms on the investment.

1. Use Modelling & Experts to determine a Data Driven, Market Appropriate Valuation

The number 1 thing that gets in the way of a raise is a high valuation! Use a robust financial model and 3-5 valuation techniques so that you can have a discussion around valuation that is driven by data instead of subjective opinion.

2. Validate your Valuation & Raise Terms with Lead InvestorsAttempting to negotiate valuation with multiple different investors can take 6-12 months. A critical step to succeeding is finding one large, reputable investor that agrees terms. Once you have a strong lead then the negotiations are off the table for following investors and the round can progress quickly.

3. Understand Raise Instruments - Priced Equity Round Vs Convertible noteIt is important to understand the process and instruments by which a transaction is negotiated. One instrument is a Convertible Note which is effectively a loan from an investor that will convert to equity. But there are plenty of other variations.

4. Term sheet prepared by a reputable sourceYou must make sure that documents are prepared by a reputable legal team with significant experience in startup capital raising. You need to be clear on expectations and requirements before signing anything. We provide our startups with fair and equitable terms that have been used in many previous transactions.

THE LEAD INVESTOR

CHAPTER SIX

The LEAD INVESTORTarget Key Investors Of Influence That Can Close The Round

It’s important to find someone that will compel and influence other investors into the deal.

1. Lead Investors will have many of these characteristics: ◆ Experienced at investing in Startups like yours◆ A reputable brand that other investors will want to follow◆ Time to both help & influence the raise and help grow your Startup◆ Networks to bring in more investors into this and future rounds◆ Time to conduct initial Due Diligence◆ Will contribute 20-35% of the target raise

A lead investor with 4+ of the above characteristics will place you in an extremely strong position to close the round.

2. Secure lead investors that commit 35% of the roundOnce you secure 35% of your raise target you have an 85% chance of successfully hitting your target. If you approach the market with 0% raised you have an 85% chance of failing.

3. Target Key Investors of Influence that match your cultureWho is the key person of influence in your space, sector or industry that would make a rockstar addition to your board of directors? Go after them, but make sure you select them to match your culture. You will likely be working closely with them for 5 years.

4. Shortlist investors within your Lead Investor’s networksInvestor development is a serious thing! Setting up five to ten meetings a week and create FOMO (Fear of Missing out) about your business. The best way to close an investor is for them to have a chance of missing the best opportunity they’ve seen.

THE SYNDICATE

CHAPTER SIX

The SYNDICATEA List Of Investors That Can Help You!

How do you build a syndicate of investors in order to generate momentum and a quick close?

1. Create a list of 100 Smart & Strategic industry experienced potential Investors

This may sound like a lot of names but finding investors is a numbers game. You may start with a list of 100, get a response from 50 resulting in 20 face to face meetings and 10 actually invest. Starting with 200 will give you even better odds of success.

2. Work with your lead Investors to leverage private networksYour lead investors & advisory board should bring you credibility in the market and a lot of personal networks to contact. The activity of this inner circle will make a huge difference to your ability to succeed.

3. Leverage technology like LinkedIn, funding platforms & deal roomsLinkedIn and funding platforms are great places to connect with investors and let them know about your startup. Don’t expet them to make a decision immediately. You will need to spend time nurturing them.

4. Investor Relations & Nurturing - Closing the DealInvestor nurturing and continuous communication is very important. Even if someone says no, keep them up to date on weekly or monthly basis on how you are progressiong, the growth of business, raise, investors and customers. Just because an investor says no at the beginning, doesn’t mean its a no for life.

Always be raising!

Conclusion

Always be pitching!!

Always be raising!

Always be closing!

You’ll never know who could be an investor, customer or partner.

Push yourself beyond your comfort zone and pitch your idea, pitch your startup to anyone who will listen.

Be open. Take a perpetual beta approach to life and always be innovating and disrupting yourself.

The minute you say “I know how to do this” is the moment you stopped learning and improving.

If you want to know more about CapitalPitch and how we can assist you, there is further information on like 20 and 21. Or you can check out our website at www.CapitalPitch.com

Apply for FundingCapitalPitch Ventures invests $250k - $3m.

Apply for funding or to join one of our events.

Apply Now

CapitalPitch Pty LtdLevel 2, 50 Bridge Street

Sydney NSW 2000Phone: 02 8188 3809www.CapitalPitch.com

About CapitalPitch

We believe it’s madness that 97.3% of startups fail at fundraising.

CapitalPitch is a platform to optimise investment in Startups. We combine acceleration, venture capital and technology to provide investors a curated source of emerging growth companies. We’ve assisted 8 successful funding rounds totalling $13 million.

We’ve built a venture fund, capital raising accelerator program, series of events and we’ve got syndicates of Investors for our startups.

We aim to become the trusted source of Startup deal flow for other funds, high net worth individuals, family offices, corporate and institutional investors.

This means we must turn Startups into a valuable asset class. So we help businesses and Investors like you to create amazing opportunities so we all can benefit from growth and prosperity.

We have also taken the 1% Pledge. This has support from businesses like Salesforce, Blackbird and Atlassian. This is a pledge to donate 1% of our equity, 1% of our product and 1% of our staff time to a charity. We encourage you to take the pledge as well.

We’re also in the process of setting up a foundation where we will give back to the community that supports and guides entrepreneurs in need globally.

Our Process

4. Terms

A Platform to Accelerate Startup Investment

1. Pitch

2. Commercials

3. Data Room

5. Lead Investor

6. Syndicate

We are passionate tribe of serial entrepreneurs, technologists Investors and capital raising experts with a long term goal is to optimise investing in Startups.

We use a stepped and systematic approach to raising capital. This involves the Pitch, Commercials, Data Room, Terms, Lead Investor and then syndicating your Raise on our funding platform. If you would like to apply for funding from CapitalPitch Ventures, please do so here.