plug cambridge international entrepreneur meetup
TRANSCRIPT
Plug CambridgeInternational Entrepreneur Meetup
David ChangJune 15, 2016
David Chang @changds
MyJourney
Doing Biz in Boston
Lessons Learned
David Chang @changds
$80
$4
$42
$7$17
$110
$210
$270
$1
$135
Funding Exit
Venture Returns
Direct Via Syndicate/Fund
My Angel Investments
Doing Biz in Boston
How can Boston help grow your business?
See http://bostontechguide.com
Local Pillar Tech Companies
Big Tech Companies with Local Presence
Industry Clusters of Expertise
Marketing Tech e-commerce Cybersecurity Cloud
Travel Mobile Ed Tech Robotics
Life Sciences Health IT Energy
See http://www.slideshare.net/bussgang/boston-startup-scene-fall-2015
InvestorsSeed
EarlyGrowth
Development Shops
University Resources
Accelerators / Incubators
David Chang @changds
Co-working
Corporate University Independent
Events & Networking
www.greenhornconnect.com/events/
Media
Lessons Learned
Share Your Summit & Basecamp
Leverage Your Natural Presentation Style
Adjust for Your Audience
No Blind Spots
PricingCustomer
Collaborators
Funding
Promotion
Product / Service
Context
Place
Company
Concept
Competition
Pitch Materials for Each Level
•1 Sentence•1 Paragraph•1 Page•1 Light Deck•1 Follow-up Deck
David Chang @changds
Function
Size
Know YourselfLocation
Industry
Start or Join a Company
People Bonds > Company Bonds
Find the Right Co-founders
What Obstacles Stand in Your Way?
Equity Capital Stages
Bootstrap
Angel
Venture Capital
Growth Equity
Equity Capital Dynamics
Unusual return distribution for venture capital
So investors must
• Swing for fences every time
• Own significant stake
• Be able to change the team
Source: @DawnUmlah
Fundraising Campaign
Prep Target Socialize Raise Close
David Chang @changds
Basic Prep
Legal representation
Founders agreements
Cap table
Pitch materials
Financial plan
Raise at Each Stage
How Much?
What For?
Prove Out?
Structure
Preferred Stock
• Preferences over common
• Board seat or 2
• Option pool
• Liquidation preference- they get their $ first
• Control over sale, new options
Convertible Debt
• Debt that becomes preferred equity when you raise it
• No valuation, but the “cap” is a valuation ceiling
• Interest accrues, rate <10%
• Conversion discount
Identify Investor Targets
Stage Location
Sector Business Model
Investment Thesis
Social / Trust Filter
Socialize
• Get warm intros• Find strongest mutual connections to 30+ potential investors• Network over 2-3 months
• Ask for referrals, not money
• Refine pitch• Incorporate feedback, but avoid whiplash changes
“I’m not ready to raise”
“Who would be helpful?”
“Who else should I talk to?”
Raise: Go for the Ask
• Talk to your top candidates ALL AT ONCE• Run conversations in parallel• Decide whether / when to tell investors about each other
• “Triggering events” to get a (or better) term sheet
• How much should you focus on valuation?
Dilution & Valuation
• Professional investors will offer a reasonable range
• Don’t poison the relationship with greed
Example50/50 founder split
Seed: $1M on $xA: $6M on $12MB: $10M on $20M
See www.ownyourventure.com
What’s your share?
x=$3M: 17%x=$5M: 19%x=$7M: 19%$1.5M raise @$3M: 15%
Closing the Deal
• Rolling close vs. set close
• Reference check investors
• Not done until money is in the bank
Key termsq Board compositionq Option poolq Voting rightsq Founder vestingq Change of controlq Redemption rightsq Information rightsq Anti-dilution
Q&A
David Chang @changds