Fundraising

What's your fundraising strategy?

Itay Adam Owner of Adam Tech Ltd.

January 31st, 2016

This is a question for startups CEO's at the stage of seed/A.

What is your strategy for raising funds?

Do you use decks?
Do you present a full already build product, or just a demo?
Do you send your decks to be polished by a designer?
Cold emails or network?
You knock on doors, or you make them come to you?

Share some concepts. Let's discuss.


As a founder, you’re always in fundraising mode (whether active or passive). In this course, we’ll teach you how to successfully raise follow-on capital, establish a valuation for your company, build an investor pipeline for your next round, and more.

John Currie ITERATE Ventures - Accelerating Science & Technology Ventures www.iterateventures.com

January 31st, 2016

Itay,

Let's separate the "How do you get in front of Investors" from "What do you say when you get there?"

The "getting in front of" part requires a warm introduction (intensive networking) and I would also suggest a strong 1-sheet.  The 1-sheet is a vey compact "story" of your pitch deck - Vision, PainPoint, Your Unique Approach, Why Your Customers Buy (or will be Buying), Traction/Evidence, Financials & Execution (Team).  It's a hard exercise, but you have to boil down the essence of your company to fint onto 1-sheet.

When you get there, the std. 10-page deck is all you need. Your objective is to connect and converse. Use the pitch deck as supporting documentation. Investors are buying you and your experiences more than anything. Hope ths helps.

Mindy Barker Passionate executive working with entrepreneurial companies to improve profitability, value and cash flow

February 1st, 2016

Itay - Networking is much better than cold emails. When you do get a chance to forward information to a potential investor, you must have an Executive Summary that describes your product and clearly explains the unique value proposition, specifically states how much money you are raising at what valuation, has a summary of the Founders/Executives background and how much they have invested, macro level analysis of use of funds and specifically state when you expect EBITDA to be positive. If you require the potential investor to dig to get to this information, you risk losing their attention. When you present information to an investor, you should use high level decks for the presentation. You should provide them a business plan with detail prior to the presentation so they have a chance to read and ask questions during the presentation. Best of luck, Mindy Barker Mindy Barker, CPA 904.728.2920 mindybarkerassociates.com *2016 Small Business Leader of the Year - JaxChamber Health Council* *2015 Partner in Philanthropy Honoree, Jacksonville Business Journal*

Martin Omansky Independent Venture Capital & Private Equity Professional

February 1st, 2016

I now represent a few angel investment groups, but I was once an investment banker who drafted and used PPM's all the time. My view of the complexity and expense of PPM's has been reduced in recent times by use of templates on the Net. On the other hand, I think you would agree that many PPM's need the drafting skills of a securities attorney. Your template may reduce the time and expense needed to draft a PPM, but I have seen many such documents based on Net templates that either violate securities laws or do not fairly represent the investment opportunity. Regardless of the communication method, however, I believe that you would agree that deal fundamentals are more important than format. Sent from my iPhone

Martin Omansky Independent Venture Capital & Private Equity Professional

February 1st, 2016

The PPM templates are on the Net but the lawyers who drafted them want to be paid before any downloads. And yeah, we agree that counsel should review all documents. Sent from my iPhone

Jordan Plosky Co-Founder and CEO at ComicBlitz LLC

January 31st, 2016

Itay,
Although it is much more effective to have a warm lead, or introduction from a mutual friend, while you wait, cold e-mails and linked in messages can certainly turn a head or two.  If your company fits into an investors portfolio, or registers intrigue with them at all, they'll start a dialogue.  I am in the middle of a raise as well, and as long as you know that you're doing everything possible, whether it yields results or not, you'll feel productive, and accomplished, and keep a positive outlook.  It's the hardest part of starting a business that I've found by far.  The answer is really just do everything you can, and keep a positive mind set, to keep moving forward.  It will most likely take much longer than you think or expect to raise the money, so make sure you have a runway long enough to support that.  Good luck!

Martin Omansky Independent Venture Capital & Private Equity Professional

February 1st, 2016

Good points made, Charles. Problem is that the documents you use are very expensive, and getting accredited investors on the net is iffy and slow. Your approach only works with start-ups that have spare cash. Private placement memorandum costs $25k to $50k in northeast US law market. Additional costs include accounting and expenses related to dog and pony shows, travel, hotels, entertainment, etc. Sent from my iPhone

Martin-Pierre Goletto-Tankel CEO at TrainerSync

January 31st, 2016

Hi, I'm the CEO of TrainerSync.com - we build software for personal trainers & gyms to manage their business and clients.

Our first meetings with potential investors was last week, so I can share what we are doing. The meetings were a trial run with a couple of small investors, as I didn't want to go in to see a larger investor and be unprepared. Regardless, we have been promised a small five figure sum and we are only wishing to raise ?200,000, so it's made me feel more confident about how we're going about it.

We have bootstrapped up to this point from earnings from my previous business (we built TrainerSync to scratch my own itch as a trainer & nutrition consultant) and are now going out to look for a small funding round using EIS in the UK. We have a working product, are currently in our final beta testing phase, and have had well over 100 trainers sign up and try out our software during beta. At this stage, I am trying to make sure I interview at least one personal trainer or gym owner every work day, to keep the flow of sharing our product with the right people, to get feedback on the work we've done, and to keep finding out what people want from a product like ours going forward. The reason I mention this is because investors want to see any form of traction they can even at a pre-release stage. So get traction any way you can! In our instance, just having talked to and got survey results back from a couple of hundred trainers and gyms has been invaluable, and we've got some really high quality followers out there now in the fitness and nutrition world.

So, we have a full working product, which has been modified in certain areas following beta feedback. For funding, I am using a pitch deck which has 15 or so slides in it (still fiddling with it a bit following initial meetings) and have a business proposal/plan which is about 45 pages long. We made it all in-house without external help. I've started the investor search by reaching out to friends and acquaintances who may know individuals who would be in a position to invest. I have also curated a list of other potential investors I wish to approach (from a range of resources, including angel.co), which we will be doing throughout February. These will mainly be cold emails I suppose and I'm more than happy to go to the investor, as long as they're within a couple of hours of where I am (London). I don't know how necessary that will all be - I want to get the funding over as quickly as possible, as we are currently only a two man team and there are only so many hours in the day - but needs must and being properly prepared helps! It also seems to help that most of the funding is to ensure we bring our tech team in-house while paying the founders a ramen wage, and so I spent a good amount of time in the last 6 months talking with potential CTOs (we have found someone now) and we would want to make two additional hires on the tech side to ensure we continue to build what people want to use and the rest of our operation can continue with sales and marketing.

I digress slightly but if you have any other questions, please do ask.

Charles Dreher Executive Director & Vice-Chairman - Investment Policy Committee

February 1st, 2016

Hello Itay,

We have a completely different approach than entrepreneurs pitching VCs with a pitch deck. Are clients don’t use pitch decks, we use securities offering documents, secured website portals for investor multi-media presentations hire VPs of Corp. Finance from the securities industry and go direct to individual investors.  We by-pass institutional sources of capital because our clientele’ are comprised exclusively of start-up and early stage companies that are all pre-VC or private equity funding stage.


If you would like to know more we invite you to visit our website: https://www.commonwealthcapital.com/Financial_Architect/?atid=4750


All the Best,

Charles

 

Charles Dreher Executive Director & Vice-Chairman - Investment Policy Committee

February 1st, 2016

Hello Martin,

Thank you for your posting. I am not famaliar with NET templates but are customers are told to have their completed document reviewed by their attorney before presenting to a potential investor.

As a former compliance officer and investment banker our CEO presents deal structures that accredited investors are looking for in todays marketplace.

A patent was originally filed for the FINANCIAL ARCHITECT SYSTEM(tm) by Bell, Boyd & Lloyd - Chicago. Our Chief legal counsel is a former Securities & Eschange Commission enforcement attorney.

Our programs would not have been possible without professional legal counsel.

Martin Omansky Independent Venture Capital & Private Equity Professional

January 31st, 2016

(1) Preparation on fundamentals most important. No magic formula for proper strategy. (2) after preparation, I suggest you do the following: (a) get initial $ from people who know and trust you; (b) secure affinity investors (people who are familiar with your industry, technology, and/or markets; (c) secure institutional investments by wringing out as much risk as possible out of your project; (d) identify potential institutional investors by determining their specialties (such specialties are often in the public domain); (e) before approaching any investor, write a cogent business plan and then a summary or abstract; write this for your own use, as well as a vehicle to share your vision with others; (f) best to emphasize the large size of the potential market and the small % of the market you need to capture in order to go cash positive.