dos and donts of raising investment capital

Dos and Don’ts of PositioningYour Company for Investment

TrepHubJune 20, 2013

DON’T: Waste time on investment if you don’t need to . . .The Best Investor is Often No Investor

DO: Know Where it Fits

Venture Capital

Family Offices

Corporate VC

Angels(Individuals and Groups)

Crowdfunding

Corporate VC

Family Offices

Crowdfunding

DO: Know who to approach?

Small $ (<$1MM)

Seed Stage

Open to Smaller Opportunities(Even Lifestyle)

Angel Investors

Larger $ (>$2.5MM)

Growth Stage

ScalableOpportunities

($100MM revenues in 5 yrs)

VC Investors

Lines are Blurring

Small $ (<$1MM)

Seed Stage

Open to Smaller Opportunities(Even Lifestyle)

Angel Investors

Larger $ (>$2.5MM)

Growth Stage

ScalableOpportunities

($100MM revenues in 5 yrs)

VC Investors

Money is Fungible, but it is Not Equal

Some investors are strategic

Some provide mentoring

Some investors expect few strings . . . But may show up for Thanksgiving dinner

Some investors cannot be patient due to fixed fund lives

Banks expect personal guarantees

Grants often have government flow-down provisions

Regulatory costs can be deal killers

DO: Build relationships Before you need $

DO: Have a credible team.Most Investors Invest Foremost

in the Team

DO: Have a Robust Financial Model(era of the spreadsheet jockey)

DON’T: have a 35 Page Business Plan

DO: Have what the Investor wants to see

DO: Understand market for termsTech startup – Seed Stage Equity Priced (not a convertible debt round)

AVC Blog: www.avc.com

Which Entity to Choose and Where?

• Tax Friendly?– LLC (Self employment tax implications)– LLP (Self employment tax implications)– S Corp (limited on number/type of owners)

• VC Friendly– C Corp (can always convert upon funding)

• Where– Delaware is known commodity– Florida is easy and cheap

Knowledge is Power

There is no good reason to make an out-of-market deal…Know what is market and customary

(don’t count on your lawyer to know)

Fred Wilson’s Blog & Archives: www.avc.com

Mark Suster: www.bothsidesofthetable.com

Brad Feld: www.feld.com/wp/

Series Seed: www.seriesseed.com

Techstars: www.techstars.com/docs/

DO: Get Connected

Send me your company’s news for retweets@StartupFL

Register for Startup Digest Melbournehttp://startupdigest.com/melbourne-fl/

Non-profit center for local tech entrepreneurship including Co-working, events & community http://www.trephub.com

Coders, Hacker & Founders http://www.meetup.com/Coders-Hackers-Founders/

Thanks

Mark Mohler markrmohler@gmail.com

(don’t forget the middle initial)