[startup guide] how to get initial funding?

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Startup Guide: HOW TO GET INITIAL FUNDING? By Ph.D Hajime Hotta Chief Technology Officer Cinnamon (Singapore) a publication of

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Startup Guide:

HOW TO GETINITIAL FUNDING?

By Ph.D Hajime HottaChief Technology Officer Cinnamon (Singapore)

a publication of

HAJIME HOTTAExperienced entrepreneur from Japan

CTO at Cinnamon (Singapore)» Koala, selfie messenger

Ph. D in computer science at the age of 25» Got in total 350k grants for my research in AI x Web

Former Chief Architect at Cirius Technologies» The world’s first Location-based ad tech provider» Acquired by Yahoo! Japan

Former CTO at Naked Technology (Japan)» Technology to enable smooth UI on smartphone» Licensed to big enterprises (NTT Docomo, Dentsu, etc)» Software distributed to 10M+ users in Japan» Acquired by Mixi, largest social game provider

How to get Initial Funding? – Hajime Hotta

TWO TYPES OF BUSINESSES

How to get Initial Funding? – Hajime Hotta

SME Small-to-Middle

Enterprise

IDE Innovation-Driven

Enterprise

• Linear growth• Local• Bank/Family finance• Lots of experienced

people exist already

• Exponential growth• National/International• Equity Finance• Less experienced

entrepreneurs

IDE IS EXPECTED TO MAKE FAST GROWTH

How to get Initial Funding? – Hajime Hotta

IDE IS EXPECTED TO MAKE FAST GROWTH

How to get Initial Funding? – Hajime Hotta

SeedMoney

Series AMoneyPreparation

$200k~500k

$1.5M~5M

WHAT IS REQUIRED FOR EACH ROUND?

How to get Initial Funding? – Hajime Hotta

Series ASeed

Team

Biz Plan

Product

TractionMinimum for

Product ValidationEnough to see

exponential growth

Valuation $1.5M-2M $4M-$6M

MVP running Solid

Excellent Level Excellent Level

Excellent Level Excellent Level

WHAT IS REQUIRED FOR EACH ROUND?

How to get Initial Funding? – Hajime Hotta

Series ASeed

Team

Biz Plan

Product

TractionMinimum for

Product ValidationEnough to see

exponential growth

Valuation $1.5M-2M $4M-$6M

MVP running Solid

Excellent Level Excellent Level

Excellent Level Excellent LevelHOW TO MAKE IT?

OPTIONSHave a different profitable business (Outsource)» Unstable resource allocation

Weekend» Lose CEO’s attention to businesses

Personal debt from family and friends» Perfect in case you are in such a lucky situation

Pre-seed Round

How to get Initial Funding? – Hajime Hotta

DIFFERENCE BETWEEN PRE-SEED AND SEED

How to get Initial Funding? – Hajime Hotta

SeedMoney

Series AMoneyPre-Seed

$200k~500k

$1.5M~5M

$20k~50k

DIFFERENCE BETWEEN PRE-SEED AND SEED

How to get Initial Funding? – Hajime Hotta

Seed

ProfessionalInvestors

(Institutes)

ExperiencedEntrepreneursor Accelerators

Investor Profile

Put moneyto scale up

the business

Surely lead toIDE model

Goal of Investment

Pre-Seed

READINESS FOR “PRE-SEED” ROUND

How to get Initial Funding? – Hajime Hotta

Seed

Team

Biz Plan

Product

TractionMinimum for

Product Validation

Valuation $1.5M-2M

MVP running

Excellent Level

Excellent Level

Pre Seed

N/A

$300k-$800k

Proof ofExecution Ability

Market Detection

Excellent Level

QUESTIONS1. Is pre-seed round necessary?

Aren’t advisors enough?2. Who is the right investor on pre-seed round?3. How to reach out to angel investors?4. How to pull their commitment?

How to get Initial Funding? – Hajime Hotta

QUESTIONS

Is pre-seed round necessary? Aren’t just advisors enough?

How to get Initial Funding? – Hajime Hotta

ANSWER

Not necessaryif you are confident enough

as a perfect management team

How to get Initial Funding? – Hajime Hotta

DIFFERENCE BTW RIGHT ANGEL AND ADVISORY

How to get Initial Funding? – Hajime Hotta

ObserveStatus

Find CriticalProblems

FindSolution

Execution

Advisory’sValue Add

Investor’sValue Add

WHAT ARE TYPICAL HIDDEN RISKS?» Polishing the product which CANNOT convince investors

» Do exceeding debt financing and BS/PL look weird

» Hiring too much at the early stage

» Building core team with weird ownership structure / allocate too much ESOP

» Pitch with bad quality or and get declined by VC already (typically no response / keep me updated)

» Chosen bad seed investor (point of no return)

How to get Initial Funding? – Hajime Hotta

QUESTIONS

Who is the right investor on pre-seed round?

How to get Initial Funding? – Hajime Hotta

CHECK SHEET

How to get Initial Funding? – Hajime Hotta

SME

Background

Thought-type IDE

EntrepreneurFinancial

PessimisticOptimistic

Quick WinSight Long-term

Hands-onHelp Hands-off

Expectation-Type

MY RECOMMENDATION

How to get Initial Funding? – Hajime Hotta

SME

Background

Thought-type IDE

EntrepreneurFinancial

PessimisticOptimistic

Quick WinSight Long-term

Hands-onHelp Hands-off

Expectation-Type

+ Chemistry Match

QUESTIONS

How to reach out to angel investors?

How to get Initial Funding? – Hajime Hotta

WHERE ARE THE PRE-SEED INVESTORS?

How to get Initial Funding? – Hajime Hotta

Competition/Programs

AcceleratorsFriends’friends

Startup WeekendEchelon

HATCH! PROGRAMStartup Asia

etc.

JFDIFounder Institute

iAxiletc.

UseLinkedIn / Facebook

to post messages

They are not professional investors, therefore they don’t often say “I am investing”

WHERE ARE THE PRE-SEED INVESTORS?For those who seems to experience startup founders and make some successful stories:

Magic Words: Can we have a short meeting for the feedbacks to our product?

Ideas behind: Advisory type experienced entrepreneurs are very happy to see exciting idea and make feedbacks because they’ve made a lot of mistakes before.

How to get Initial Funding? – Hajime Hotta

QUESTIONS

How to pull their commitment

How to get Initial Funding? – Hajime Hotta

READINESS FOR “PRE-SEED” ROUND

How to get Initial Funding? – Hajime Hotta

Seed

Team

Biz Plan

Product

TractionMinimum for

Product Validation

Valuation $1.5M-2M

MVP running

Excellent Level

Excellent Level

Pre Seed

N/A

$300k-$800k

Proof ofExecution Ability

Market Detection

Excellent Level

SHOW YOUR EXCELLENT TEAMSome of outstanding track record » Ph.D or Stanford/CMU/Harvard class univ grads» Serial Entrepreneur (key role, has to be successful)» Engineer, understanding business quite well» Manage to reach amazing numbers (acquire 1M users, 100 brands connections, etc)» Fluency in English» Winner in competition (Startup Weekend, etc)» Engineer worked for Google / Apple / Facebook» Get strong recommendation by successful people

+ The quality of current product is really nice(less bug, natural/professional UX)

How to get Initial Funding? – Hajime Hotta

Investors’ concerns:» The founders might break up» Might quit soon» Too confident» Less transparent» No value can be conveyed to

the team

Tell your own story to blow those concerns away:» How strongly-tied with your cofounders?

(single founder is not really nice)» The history to show the will» Show the strength and weakness

honestly along with your one successful experience

SHOW YOUR EXCELLENT TEAM

How to get Initial Funding? – Hajime Hotta

MARKET DETECTIONThe markets are already set in investors’ mind

How to get Initial Funding? – Hajime Hotta

Commerce

MobileGame

Uberification

Edu-Tech

Payment

O2O

FinanceTech

IoT SaaS

Crowdsource

Big Data/Analytics

Ad-Tech

THE REALITY OF VC’S MINDWe are AdBoost, the crowdsourcing approach of advertisement optimization XXXXXXXXXXXX

(interested in ad tech / crowdsourcing)Very interesting business model!!Come to tell me more

(interested in e-commerce)Can take a look at this pitch, but basically I don’t believe in crowdsourcing approach….

How to get Initial Funding? – Hajime Hotta

Founder:

VCs:

MY PERCEPTION (PERSONAL)Excellent team+ Excellent Market+ Excellent Plan

Excellent team+ Excellent Market+ Low quality Plan

Excellent team+ Not interesting Market

Excellent team+ No business plan

How to get Initial Funding? – Hajime Hotta

100

MY PERCEPTION (PERSONAL)Excellent team+ Excellent Market+ Excellent Plan

Excellent team+ Excellent Market+ Low quality Plan

Excellent team+ Not interesting Market

Excellent team+ No business plan

How to get Initial Funding? – Hajime Hotta

100

80

40

9060~

TO ENGINEERS WHO WANTS TO START-UP

» You should contact potential angel investors for brainstorming

» and better to have a clear learning roadmap with mentors,

while working for similar startups

How to get Initial Funding? – Hajime Hotta

WORK AND LEARN TO BE ENTREPRENEUR

Email: [email protected]: http://facebook.com/hotta

Facebook GroupSoutheast Asia Startup Engineers and Founders

How to get Initial Funding? – Hajime Hotta

This amazing startup guide is the result of the collaboration between HATCH! PROGRAM and Ph.D Hajime Hotta, CTO at Cinnamon (Singapore).

Would you have any information or wisdom that should be posted?Please feel free to contact us at:

[email protected](+84) 4 6275 7406http://hatch.vn

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