Most entrepreneurs assume that VC is the typical fundraising path for startups. However, most startups go another route. In this presentation I review the pros and cons of several different startup fundraising approaches, using my own seven startups as specific case studies. This presentation was given 2018-03-07 to entrepreneurship students at the University of Wyoming.

1. Startup Fundraising
Bryan Guido Hassin
@guido23

2. Startup fundraising is incredibly
straight-forward

3. Whoops, actually, no it isn’t
Source: AVC.com

4. I have led seven startups with
various fundraising strategies
Antmachine • Bootstrapped
R7 Solutions • Customer finance
TNR • $30M VC
Vinopedia • Bootstrapped
Poken • $6M VC
GIVEWATTS • Crowdfunded
Smart OES • $1.7M Angel

5. Bootstrapping keeps control but
can limit growth
Pros
• Maintain
ownership / control
• Focus on operating
business
Cons
• Can limit growth
• Undiversified
financial risk
• 2/2 [small] exits
• Share financial burden
Lessons learned

6. Customer finance is a great deal if
you can get it
Pros
• Maintain
ownership / control
• Customer
validation
Cons
• Sometimes strings
attached
• Negotiate no-cost value to
provide the customer
Lessons learned

7. Crowdfunding can be powerful for
consumer startups
Pros
• Maintain
ownership / control
• Customer
validation
Cons
• Letting the cat out
of the bag
• 3:1 planning:execution ratio for
success
Lessons learned

8. Debt is a good deal but often
inaccessible to startups
Pros
• Maintain
ownership / control
• Lower cost than
equity
Cons
• Security sometimes
untenable
• Finance inventory with debt
Lessons learned

9. Outside investors can help – but
at a cost
Pros
• Fuel for growth
• Credibility
• Additional value-add
Cons
• Most expensive capital
• Lose ownership /
control
• Asshole risk
• Can limit options
• 2/2 less than awesome
outcomes with VC
Lessons learned

10. Lessons learned from outside
investors
Fundraising is a skill in and of itself
Less is more; don’t overwhelm investors
When you get to “yes,” STFU
Raise from the heart, not the mind
Investors invest in lines, not dots

11. Lessons learned from outside
investors
Plan on at least six months to raise capital
Raise enough to support 18-24 months
• Make sure you can hit a significant milestone in that time
“Pull” rather than “Push.”
Create sense of scarcity/urgency
Plan THEN execute fundraising for momentum
• [Many] investors are sheep
But FF&F are investing in YOU

12. Smart OES has raised three
rounds of angel funding
$8,000
$13,000
$25,000
$11,000
$21,000
$34,000
$55,000
$80,000
$300,000
$150,000
$250,000
$1,308,750
$150K SEED $250K ANGEL 1 $1.3M ANGEL 2
SMART OES INVESTOR SOURCE
Median Mean Max Total
• It takes just as long to close a $5k investor as a
$300k investor.

13. Former colleagues have invested
the most in Smart OES
$55,000
$32,000
$533,250
$43,400
$32,500
$332,500
$35,000
$15,000
$216,500
$10,000
$100,000
$25,000
$6,600
$72,500
$201,500
$150K SEED $250K ANGEL 1 $1.3M ANGEL 2
SMART OES INVESTOR SOURCE
Colleague Rice IMD FFF 2nd Deg
• Significant trust built when working with someone
• Same with former classmates

14. Second Degree connections
become more valuable over time
$55,000
$32,000
$533,250
$43,400
$32,500
$332,500
$35,000
$15,000
$216,500
$10,000
$100,000
$25,000
$6,600
$72,500
$201,500
$150K SEED $250K ANGEL 1 $1.3M ANGEL 2
SMART OES INVESTOR SOURCE
Colleague Rice IMD FFF 2nd Deg
• Engage “connected” investors early on
• They are invested in your success, so leverage them!

15. Repeat investors become more
valuable over time
$0
$30,000
$300,000
$150,000
$220,000
$1,008,750
$150K SEED $250K ANGEL 1 $1.3M ANGEL 2
SMART OES INVESTMENTS
Repeat New
• Engage investors with capability to follow on

16. Lessons learned from Smart OES
angel fundraising
Angel groups are largely useless social clubs
• Make sure to have a champion when pitching them
Seek out smart $$$
• But validate how smart it actually is – dumb money is EXPENSIVE
Never EVER pay to pitch
Never let an asshole invest
There is no “Golden Rule”
Honesty & integrity is the only thing you take with you

17. Startup Fundraising
Bryan Guido Hassin
@guido23