Preparing Your Company for Investment Capital

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So you’re ready to take your startup to the next level with a capital infusion? Are you really ready? Join David Ehrenberg, Founder and CEO of Early Growth Financial Services, and Rob Belcher, VP at Lighter Capital, for a free webinar on preparing your company for funding. David and Rob will outline how to analyze your business model and its economics, the steps to creating your fundraising game plan, and the questions you need to ask to facilitate your next raise. Topics covered include: - The importance of milestone financing - How the fundraising options compare for each stage of the business life cycle - Creating meaningful financial projections - Analyzing your sales cycle and pipeline - Pitch deck essentials - Required due diligence documentation And more…! Bring your questions and get real-life advice for securing your next round of funding.

Text of Preparing Your Company for Investment Capital

  • 1. Preparing Your Company for Investment Capital Getting Your Ducks in a RowDavid Ehrenberg Founder and CEO Early Growth Financial Services LIGHTER CAPITALLIGHTERCAPITAL.COMRob Belcher Vice President Lighter Capital

2. Who We Are: Lighter Capital Based in Seattle, WA Serial entrepreneurs, technologists, angels and ex-VCs Tech-enabled specialty finance company Direct business lender Not a bank, not a VC Employs an innovative revenue-based finance model Uses technology to speed up and simplify loan underwriting and servicing processesLIGHTER CAPITALLIGHTERCAPITAL.COMp2 3. Who We Are: Early Growth Financial Services Outsourced financial services firm providing finance, accounting, valuation, and tax support to early-stage companies Three different platforms of services and support Services include: transactional accounting, strategic financial guidance, CFO services, 409a valuations, taxes, corporate governance, and compliance Extensive experience working with companies at all stages of development 180+ successfully funded clients throughout CA, NYC, Boston, and SeattleLIGHTER CAPITALLIGHTERCAPITAL.COMp3 4. Webinar Agenda Reflection: Analyzing the Business Projection: Business / Fundraising Game Plan Preparation: Pulling It All Together Documentation: Required Documents and Information Q&ALIGHTER CAPITALLIGHTERCAPITAL.COMp4 5. Reflection: Analyzing the BusinessEssential questions for analyzing your business model and economicsLIGHTER CAPITALLIGHTERCAPITAL.COMp5 6. Projection: Business / Fundraising Game Plan When youre ready to raise funds, clarity is key How much money do you need to raise? Whats that money going to be used for? At what cost and with what terms and conditions? What type of capital is the best fit for your company, and why? Where do you find the type of financing you need? Milestone financingLIGHTER CAPITALLIGHTERCAPITAL.COMp6 7. Funding Options and the Business Lifecycle Note: These are tendencies, NOT hard and fast rules. Many financings happen outside these bands!Bootstrap/Self Family & FriendsOperating : Customer and Vendor Terms Crowdfunding Revenue-Based Financing Angels VC (few seed funds, much more money at later stages) Strategic Investors Banks Ideation $0 LIGHTER CAPITALLaunch & Traction $0-$1MLIGHTERCAPITAL.COMGrowth & Scale $1M-$5MBreakout $5M+Establishe d $MMs p7 8. How Do the Options Compare? Bank / DebtRevenue-Based FinanceGuarantees & ControlsFinancial Covenants Personal GuaranteesLimited Financial Covenants No Personal GuaranteesBoard Seat Protective Provisions Drag-alongAdded ValueNoneIntroductions & PRIntroductions & MentoringDilutionNone WarrantsSmall Success FeeModerate to ExtremeFlexibilityInflexible Fixed PaymentsHighly Flexible Variable PaymentsHighly Flexible No PaymentsSpeed4-8 months2 weeks3-6 monthsLIGHTER CAPITALLIGHTERCAPITAL.COMVenture Capitalp8 9. How Does it Work? Loan payments are based on a percent of the companys revenue. Company revenue Loan paymentLIGHTER CAPITALLIGHTERCAPITAL.COMp9 10. Preparation: Pulling It All Together What you need to impress potential investors LIGHTER CAPITALLIGHTERCAPITAL.COMExecutive summary Financial model / budget Product demo Pitch deckp10 11. Key Slides in Your Pitch DeckInclude elements that are most relevant for your company Who are you? Venture concept / problem to be solved Market opportunity Market strategy Competitive advantages and risks Technology Manufacturing/Production Management team Financials Funding requirementsLIGHTER CAPITALLIGHTERCAPITAL.COMp11 12. Business Plan Current business plan Financial projectionsLIGHTER CAPITALLIGHTERCAPITAL.COMp12 13. The Fundraising ProcessHow to tackle fundraising as a business development exerciseBusiness development process Determine your funding round Build your value proposition Identify the right investors given your stage, size, industry, and focus Target key players Rely on your ecosystem Recommended reading: Art of Start, Insider's Guide to Silicon Valley, Early Exit LIGHTER CAPITALLIGHTERCAPITAL.COMp13 14. Documentation: Required DocumentsNecessary documentation and information for due diligenceLIGHTER CAPITALLIGHTERCAPITAL.COMp14 15. Corporate Records and Charter Documents Certificate of Incorporation Articles of Incorporation (and amendments) Certificates of Designations, Rights, etc. Bylaws Minutes of directors' and shareholders' meetings Written consents of directors and shareholdersLIGHTER CAPITALLIGHTERCAPITAL.COMp15 16. Security Issuances Company shareholders and option holders (showing vesting & security exemptions) Outstanding options, warrants, rights Registration rights for company's securities All voting trust instruments, buy-sell agreements, voting proxies or other shareholder agreements All permits and filings regarding securities issued by companyLIGHTER CAPITALLIGHTERCAPITAL.COMp16 17. Material Agreements Obligations / payments in excess of $10,000 Personal property leases Company liabilities Property / asset related documents Loan or advance documents Employment agreements Insurance policies Employee benefit plans Any judgment by which company is bound Form of Proprietary Information and Invention Agreements LIGHTER CAPITALLIGHTERCAPITAL.COMp17 18. Intellectual Property Foreign and domestic patents and patent applications Trademarks, trade names, service marks, domain names or copyrights Proprietary processes Licensing agreements (to and from) Third-party correspondence regarding potential infringement of IP rightsLIGHTER CAPITALLIGHTERCAPITAL.COMp18 19. Disputes and LitigationPending action, suit, proceeding, investigation Allegations of company's infringement of proprietary rights of others Labor agreements or actionsLIGHTER CAPITALLIGHTERCAPITAL.COMp19 20. Other Essential Documentation Securities or ownership interests in other companies Certificates of qualification from all states or foreign countries in which company is qualified to do business All licenses, permits or government authorization Companys bank accounts, lines of credit, etc. Current or past officers, directors, or key employees who own direct beneficial interest in any competitor Powers of attorney executed by company LIGHTER CAPITALLIGHTERCAPITAL.COMp20 21. Q&A and Next Steps Learn More: www.lightercapital.com www.earlygrowthfinancialservices.com@lightercapital Apply / Contact: secure.lightercapital.com earlygrowthfinancialservices.com/contact-us/ Questions: rbelcher@lightercapital.com dehrenberg@earlygrowthfinancialservices.comLIGHTER CAPITALLIGHTERCAPITAL.COM@EarlyGrowthFSp21