dos and donts of raising investment capital
Post on 17-Oct-2014
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Some things to consider before taking on outside investment, where to find that investment and what you need to get itTRANSCRIPT
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/
