This document provides guidance on fundraising for startups. It discusses preparing for a fundraising campaign by developing a pitch deck, legal documents, financial projections, and building an investor pipeline. The fundraising process takes 3-6 months on average and involves socializing the opportunity with potential investors without asking for money initially. Once interest is generated, the formal fundraising campaign begins with approaching top investors simultaneously to close a round. Key deal terms to negotiate include valuation, equity stakes, liquidation preferences, and board seats. Choosing investors carefully based on their characteristics and ability to help the startup succeed is also advised.

1. HBS Field Y
Fundraising 101: How to pitch and land your first investors
D AV I D C H A N G
@ C H A N G D S

2. Fundraising
Basics
How to Raise
a Round
Pitch Tips

3. Background

4. Startup Experiences

5. Angel Investments
Direct Syndicate/Fund
TBD Angels

6. What obstacles stand in your way?

7. What’s the business trajectory?
Lifestyle or social good
Linear growth or revenue fueled
High growth, scalable venture

8. Where to get that first dollar?
Revenue

10. • Active VC List, DocSend
• Investors meeting during
COVID-19
• Plan for longer runway
• Valuations hit 20-30%

11. Venture capital stages
Growth Equity
Early Stage
Angel
Friends & Family

12. How the VC game works
Skewed return distribution
VCs must swing for the fences

13. Raising a Round

14. How Much to Raise
• Basic financial model of
cost drivers and revenue
• Forecast monthly for 2
years
• Fundraise rule of thumb:
12-18 months’ cash

15. Use of Proceeds
• Build product
• Grow team
• Marketing
• Customer acquisition
• Working capital

16. Milestones
See www.techcrunch.com/2015/06/24/running-out-of-money-isnt-a-milestone
Team
Product Development
Market Demand
Product / Market Fit
Business Model
Execution

17. Fundraising
Basics
How to Raise
a Round
Pitch Tips

18. Prep Target Socialize Raise Close
Run a 5-step fundraising campaign

19. Basic Prep
✓ Legal representation
✓ Founders agreements
✓ Financials and budget
✓ Blurb (1 paragraph) / teaser (1 page)
✓ Pitch deck (10 slides)

20. Hone in on target criteria
Stage
Location
Industry
Vertical
Investment
Thesis Business
Model Social /
Trust Filter

21. Tools to build the pipeline

22. University Focused
Corporate VC
bit.ly/boston-area-investors-firms
Local Investors
Angel Groups
Seed
Stage
Growth
Stage
Early
Stage
VC
Tech
VC
Healthcare, Biotech, Energy

23. Socialize
• Prioritize sequence
• Find strongest connections to 30+ targets
• Tactics: lead gen, cold calling, warm intros
• Network over 2-3 months

24. Don’t ask for money!
Improves hit rate Creates data points Doesn’t start the clock
“Who else should I talk to?”
“I’m not ready to raise”
“Who would be helpful?”

25. Refine pitch
• Incorporate feedback
• Double down on consistent themes
• Avoid whiplash changes

26. Go for it! Create FOMO
• Approach your top candidates at the same time
• Decide whether to tell investors about each other
• Land anchor investor as the first domino
• Use triggering events to get or improve term sheets
“I’m closing a round”

27. Structure
Equity

28. • Board seat or 2
• Option pool
• Liquidation preference
• Control over sale, new options
• Debt that becomes preferred equity
when you raise it
• No valuation, but the “cap” is a
ceiling
• Interest accrues, rate <10%
• Conversion discount
Equity

29. • Not done until money is in
the bank
Key terms
❑ Board composition
❑ Option pool
❑ Voting rights
❑ Founder vesting
❑ Change of control
❑ Redemption rights
❑ Information rights
❑ Anti-dilution

30. Seed A B
$15
$6
$1
$30
$12
$5
Valuation & Dilution
?
Dilution: what’s your end stake?
Valuation ($M)
?

31. Valuation & Dilution
37%
See ownyourventure.com
See dlopuch.github.io/venture-dealr
Raise $1M on $5M pre
34%
Raise $1.5M on $5M pre
33%
Raise $1M on $3M pre
Dilution: what’s your end stake?
Valuation ($M)
Seed A B
$15
$6
$1
$30
$12
$5

32. How long does it take?
• Longer than you expect
• 3-6 months
• Speed limited by access to investors
• Your ability to find them
• Calendar availability (surprisingly hard)
How soon to start, how long it takes,
general timeline you can expect, how to
reduce time between the initial outreach
and closing a deal?

33. Choose your investors carefully
What characteristics to look for in a
venture partner?

39. • 1 Paragraph
• 1 Page
• 1 Light Deck
• 1 Follow-up Deck

40. Articulate in 90 seconds
Why you’re the right team
Know numbers and
business model cold
Kevin O’Leary

41. www.garage.com/resources/perfecting-your-pitch
10 slides
20 minutes
30 point font
Guy Kawasaki’s tips

42. pexels.com

43. thenounproject.com

44. Typical Parts
Overview Problem Solution
Market
Opportunity
Go-to-Market Traction
Revenue &
Business Model
Team
Competitive
Landscape
Financial
Projections
Ask & Use of
Proceeds
Conclusion

45. www.nextviewventures.com/blog/free-startup-pitch-decks-template

46. www.bestpitchdecks.com

47. Resources
• Legal
• Goodwin Procter www.foundersworkbench.com
• Foley & Lardner www.foley.com
• Pierce Atwood
• Techstars www.techstars.com/docs
• www.seriesseed.com
• General
• www.jddavids.com
• www.robkornblum.com
bit.ly/startresources

48. Q&A
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