2. Reasons to Fundraise
1. To fund growth
2. To finance a realization event
3. Because you can*
4. Because you have no money
2
* Capital is offered on fair terms
3. When and How Much to Raise
• 3-6 months before need capital in bank
• When business is ready for target investor
• When capital is offered at a fair price
• Always
3
• Enough to meet next major milestones then raise next round
• Ideally want ~18 months of runway
• As much as you can on reasonable terms
When to Raise Capital
How Much to Raise
4. Running a Fundraising Process
4
Create a
Pipeline
Prepare
Materials
Get
Introduced
Follow-up
• Friends
• Relatives
• Grants
• Crowdfunding?
• Angellist
• Crunchbase
• Investors and
executives in
your sector
• CB Insights
• Deck
• One-pager
• E-mail
• Projections
• Market sizing
• References
• Find
connections to
everyone in the
pipeline
• Ask for
introductions
• Take notes in or
after each
conversation
• Ask about
decision
process
• Respond to
questions or
requests
immediately
• Be polite and
persistent
5. Funding Sources
5
• Personal (savings, credit cards, loans)
• Friends & family
• Grants
• Customers
• Small Business Administration
• Crowds
• Angels
• Accelerators
• VCs
• Banks
6. Funding Sources
6
• Personal (savings, credit cards, loans)
• Friends & family
• Grants
• Customers
• Small Business Administration
• Crowds
• Angels
• Accelerators
• VCs
• Banks
Okay to approach
because you have
no money
Approach with solid
money-making
opportunity
7. Funding Sources
7
Work from the top down
• Personal (savings, credit cards, loans)
• Friends & family
• Grants
• Customers
• Small Business Administration
• Crowds
• Angels
• Accelerators
• VCs
• Banks
8. Funding Sources
8
• Personal (savings, credit cards, loans)
• Friends & family
• Grants
• Customers
• Small Business Administration
• Crowds
• Angels
• Accelerators
• VCs
• Banks
9. Angels
9
Definition Wealthy individuals who invest own money in startups
Check Size $25-100k
Financing Profile $100-500k for 10-30% in common stock
Criteria • Chemistry with founder(s)
• Enthusiasm for product/concept
• $1B+ Total Addressable Market (TAM)
• 20-30x return potential
10. Accelerators
10
Definition Three- to six-month boot camp that provides capital,
mentorship, and usually office space
Check Size $20-150k
Financing Profile • Generally invest alone*
• 3-6% for capital and services
Criteria • Well-rounded founding team
• Demonstrable product
• $1B+ Total Addressable Market (TAM)
• ~20x return potential in <7 years
* May include outside investors as part of standard financing
11. Venture Capital*
11
Definition Institutions run by professional investors who invest in startups
on behalf of organizations and wealthy individuals
Check Size $100k-1M
Financing Profile $250k-2M for 10-30% in preferred stock
Criteria • Well-rounded founding team
• Product in some form of release
• Some users or customers
• Scalable business model with 50-80% gross margins
• $1B+ Total Addressable Market (TAM)
• ~10-20x return potential in <7 years
* Slide focuses on Pre-seed and Seed-stage VCs
13. Types of Securities
13
Definition
Convertible Note Stock SAFE
Loan that turns into
stock later
Shares representing
ownership
Simple Agreement
for Future Equity
Key Terms
• Discount (~20%)
• Cap (Valuation)
• Maturity
• Interest
• Valuation
• Preferred vs.
common
• Preference
• Participation
• Control
• Financing event
• Liquidity event
• Dissolution event
Advantages
• Speed
• Cost
• Control
• Valuation
• Rolling close
• Alignment
• Clarity
• Engagement
• Speed
• Cost
• No maturity
• No interest
• Rolling close
Issues • Maturity
• Interest
• Cost
• Speed
• Single close
• Novelty
14. Pitch Meetings
14
Bring • Deck (tablet okay)
• No more than one other co-founder
Ask • Typical investment size?
• Investment criteria?
• Decision-making process?
• Next steps?
Do • Have a conversation but prepare for a presentation
• Rehearse/role play with friends before first pitch
• Listen
• Answer all questions succinctly
• Say “I don’t know”
Do Not • Bring an agent, investor or adviser
• Show up late
• Dress up (unless the venue requires it)
• Act defensive or “sell”
15. Resources
• The Fundraising Rules by Mark Davis
• Venture Deals by Brad Feld
• Mastering the VC Game by Jeff Bussgang
15
• Chris Dixon, A16Z
• Brad Feld, Foundry Group
• First Round Review
• Paul Graham, Y Combinator
• Mark Suster, Upfront
• Hunter Walk, Homebrew
• Fred Wilson, Union Square Ventures
• Convertible note
• Preferred stock
• SAFE
Books
Blogs
Documents
16. About Me
16
• 10+ prior years in venture capital: 18 investments
– Gotham Ventures
– North Hill Ventures
• Sometimes angel investor: 12 investments
Current Roles
Prior Roles
Investing
Interests
Personal
• Partner at CoVenture
• Investor-in-Residence at Cornell Tech
Marketplaces, finance, education, clean web, health,
future of work
• Grew up in Nebraska
• Cornell, Wharton
• Boston sports
17. My Day Job: CoVenture
17
• Seed and pre-seed investments
• Founded 2013
• 16 investments and counting
• Software + capital
– ~$25k cash investments
– Web and mobile design and development
• Team: NYC (3) and Lahore (40)
• Sectors: education, finance, health, commerce
• Criteria
– Founder-market fit
– Market validation
– Venture scale
– Purpose
