Intro to Fundraising

Tom Soto

Managing Partner

TCW/Craton

A bit of TCW background

• Established in 1971 in Los Angeles, California

• $135.5 billion in assets under management

• Approximately 1,100 institutional and private clients

TCW/Craton is a private equity platform focused on growth investments in technology and/or technology-enabled service companies that promote sustainability and/or social responsibility

What we look for

• Team with experience and domain expertise

• Proven and visible track record

• Technology that solves a problem

• Environmental benefit and/or social impact

• Carbon reduction, resource conservation, social mobility

• Opportunities where we can add strategic value

• Regulatory expertise, capital strategies, business development

Trends impacting early stage investing

• The costs of starting a business have declined

• Startups have become commonplace

As a result, there are more startups and investment opportunities today than ever before.

• Competition is fierce, but rewards are greater

What are the implications?

• Startups are more capital efficient, requiring less investment

• Startups are further developed at an earlier stage with significant user growth, activity, retention and revenue

• Investment decisions based on results instead of perceived opportunity

• Startup founders now often have more leverage than investors

Early stage investments are increasing

Silicon Valley Financing Deal ShareBy Stage, 2009 – Q3 2013

Source: CB Insights

Small business is critical to economy

• SBA defines small business as an enterprise having fewer than 500 employees

• 28 million small businesses in the US

• Over 50% of the working population works in a small business

• Small businesses have generated over 65% of net new jobs since 1995

• Approximately 543,000 new business get started each month – but more employer shutdown than startup

Source: U.S. Small Business Administration

Some DOs and DON’Ts

• DOs:– Know your audience – no one is impressed by hoodies

– Keep presentations simple and concise – NO 40 page PowerPoint

– Send materials in advance to accelerate discussion

– Backup assertions with quantitative results – footnotes & appendices

– Demonstrate domain and market expertise

– Track and understand key metrics at granular level

• DON’Ts:– Cold call investors – network, conferences, social media

– Accept just anyone’s money – must have strategic value add

– Say and/or believe there is no competition – there is always competition

– Get hung up on valuation - big slice of small pie vs. small slice of big pie

– Be unrealistic with market expectations and international opportunity

Appendix: Investor deck outline

1. Concise overview

2. Problem / opportunity

3. Value proposition – competitive advantages

4. Product demonstration

5. Sales & marketing – go to market strategy

6. Competitive landscape

7. Business model

8. Financial forecast

9. Team – domain expertise

10. Status & milestones