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• LAST WEEK’S READING / VIDEO• INTRODUCTION TO RAISING CAPITAL: PART 1• REAL WORLD PERSPECTIVE: MARVIN LIAO, PARTNER, 500 STARTUPS• QUESTIONS• HOMEWORK ASSIGNMENT #2 PRESENTATIONS
IN TODAY’S CLASS...2
Friday, December 12, 14
RAISING CAPITAL: PART 13
PART 1: PART 2: PART 3:
FUNDRAISING OVERVIEW
VC MATH / DEAL
STRUCTURINGPITCHING INVESTORS
Friday, December 12, 14
4
STARTUPS BY THE NUMBERS
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpgFriday, December 12, 14
4
STARTUPS BY THE NUMBERS
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg
ACCORDING TO THE SMALL BUSINESS ADMINISTRATION, ~565,000 STARTUPS ARE LAUNCHED IN THE US EACH MONTH...
6.7M LAUNCHED IN THE US PER YEAR
Friday, December 12, 14
4
STARTUPS BY THE NUMBERS
...<1% GET VENTURE FUNDING
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg
ACCORDING TO THE SMALL BUSINESS ADMINISTRATION, ~565,000 STARTUPS ARE LAUNCHED IN THE US EACH MONTH...
6.7M LAUNCHED IN THE US PER YEAR
Friday, December 12, 14
WHERE ELSE CAN YOU FIND FUNDING?6
• PERSONAL SAVINGS / CREDIT• SIDE CONSULTING JOBS• BANK LOANS• GRANTS• CUSTOMERS• FRIENDS & FAMILY• ANGEL INVESTORS• CROWD-FUNDING
Friday, December 12, 14
8
HOW MUCH ARE YOU LOOKING TO RAISE?
BOOTSTRAPPEDF & F /
BANK LOANS / GRANTS
ANGEL INVESTORS
EARLY STAGEVENTURE
FUNDS
LATE STAGEVENTURE
FUNDS
~$0-$25K ~$25-$150K ~$150-$1M ~$1M-$10M ~$10M+
ROUGHLY ESTIMATED:
Friday, December 12, 14
8
HOW MUCH ARE YOU LOOKING TO RAISE?
BOOTSTRAPPEDF & F /
BANK LOANS / GRANTS
ANGEL INVESTORS
EARLY STAGEVENTURE
FUNDS
LATE STAGEVENTURE
FUNDS
~$0-$25K ~$25-$150K ~$150-$1M ~$1M-$10M ~$10M+
ROUGHLY ESTIMATED:
Friday, December 12, 14
9
HOW MANY GET FUNDED?
~57% OF STARTUPS
~38% OF STARTUPS
~0.91% OF STARTUPS
~0.25%OF STARTUPS
~0.05%OF STARTUPS
~$0-$25K ~$25-$150K ~$150-$1M ~$1M-$10M ~$10M+
BOOTSTRAPPED FAMILY & FRIENDS ANGELS EARLY STAGE VC LATE STAGE VC
IT’S TOUGH OUT THERE:
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg
Friday, December 12, 14
10
BY THE NUMBERS
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg
Friday, December 12, 14
10
BY THE NUMBERS
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg
Friday, December 12, 14
10
BY THE NUMBERS
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg
Friday, December 12, 14
10
BY THE NUMBERS
http://www.entrepreneur.com/dbimages/article/where-startup-funding-really-comes-from-infographic.jpg
Friday, December 12, 14
FUNDING ROUNDS11
EARLY LATE
BOOTSTRAP
FAMILY & FRIENDS
ANGEL
ACCELERATORS
SEED
SERIES A
SERIES B
GROWTH EQUITY (SERIES C AND BEYOND)
PRIVATE EQUITY
Friday, December 12, 14
FUNDING ROUNDS11
EARLY LATE
BOOTSTRAP
FAMILY & FRIENDS
ANGEL
ACCELERATORS
SEED
SERIES A
SERIES B
GROWTH EQUITY (SERIES C AND BEYOND)
PRIVATE EQUITY
RAISING< $2M
RAISING~$2-10M
RAISING~$10-20M
RAISING~$20M+
Friday, December 12, 14
FUNDING ROUNDS11
EARLY LATE
BOOTSTRAP
FAMILY & FRIENDS
ANGEL
ACCELERATORS
SEED
SERIES A
SERIES B
GROWTH EQUITY (SERIES C AND BEYOND)
PRIVATE EQUITY
RAISING< $2M
RAISING~$2-10M
RAISING~$10-20M
RAISING~$20M+
Friday, December 12, 14
12
ANGEL INVESTORS
ANGEL INVESTORS (ACCREDITED) -• HIGH NET WORTH INDIVIDUALS• OFTEN SUCCESSFUL ENTREPRENEURS OR BUSINESS PEOPLE• PASSIONATE ABOUT PEOPLE AND IDEAS• EARLY SUPPORTERS• OFTEN OFFER HANDS ON SUPPORT, MENTORING, *ACCESS*• CURIOUS BY NATURE• DEVELOPING A CLOSE RELATIONSHIP IS KEY
WRITE 16X MORE CHECKS THAN VCS
Friday, December 12, 14
ACCELERATORS13
ACCELERATORS• COMPETITIVE SELECTION• SPECIFIC PROGRAM WITH A DESIGNATED AMOUNT OF TIME (E.G. 3 MONTHS)• PROVIDES SEED CAPITAL• ADDS CREDIBILITY• ACCESS TO LARGE MENTOR NETWORK OF ENTREPRENEURS AND INVESTORS• PROVIDES PRODUCT AND STRATEGIC DEVELOPMENT SUPPORT
Friday, December 12, 14
HOW VC WORKS14
VC FIRM(GENERAL PARTNERS)
LIMITED PARTNERS (“LPs”)• Public/Corporate pension funds• High net worth individuals, Family offices• Endowments, foundations, insurance companies
VC FUND (LIMITED PARTNERSHIPS)2% MANAGEMENT FEE + 20% OF PROFITS
$$ FUND MANAGEMENT
$$ FUND OWNERSHIP
INVESTMENT(OWNERSHIP %)
INVESTMENT(OWNERSHIP %)
INVESTMENT(OWNERSHIP %)
$$ $$ $$
Friday, December 12, 14
EARLY STAGE15
EARLY STAGE VCS• INVEST AT THE EARLIEST PHASES (SEED / SERIES A)• OFTEN INVEST IN THE TEAM, OR MARKET TRENDS• OFTEN HAVE AN INDUSTRY FOCUS (E.G. AD TECH, MOBILE)• OFTEN PROVIDE SUPPORT SERVICES, BUSINESS FEEDBACK, TALENT RECRUITMENT, ETC.• SMALL TEAMS
Friday, December 12, 14
LATE STAGE VC 16
LATE STAGE VCS• INVEST IN PRODUCTS OR SERVICES THAT HAVE GAINED TRACTION• OFTEN SERIES B AND BEYOND (THOUGH THEY MAY INVEST EARLIER)• FOCUSED ON EXIT / SERVICE LPS• OFTEN PROVIDE SUPPORT SERVICES, TALENT RECRUITMENT, MARKETING, M&A
Friday, December 12, 14
WITH VC... KEEP IN MIND:17
AVERAGE EXIT TAKES ~6 YEARS, AND A LOT OF MONEY
YOU’RE ESSENTIALLY HIRING YOUR OWN BOSS...
PICK THE RIGHT PARTNERS!
Friday, December 12, 14
VENTURE CAPITAL: POWER LAWS18
~15 COMPANIES WILL GENERATE 95% OF ALL ECONOMIC RETURNS... EVEN TOP VCS WRITE OFF HALF THEIR DEALS
POWER LAW:
http://a16z.com/2014/07/21/a-dozen-things-ive-learned-from-marc-andreessen/
Friday, December 12, 14
VENTURE CAPITAL: POWER LAWS18
~15 COMPANIES WILL GENERATE 95% OF ALL ECONOMIC RETURNS... EVEN TOP VCS WRITE OFF HALF THEIR DEALS
POWER LAW:
http://a16z.com/2014/07/21/a-dozen-things-ive-learned-from-marc-andreessen/
Friday, December 12, 14
POWER LAWS19
THE MOST BREAKTHROUGH TECHNOLOGIES SEEM CRAZY AT FIRST
THINK ABOUT THE VALUE PROPOSITION
LEARN THINGS MOST PEOPLE DON’T
SEE THINGS DIFFERENTLY
“ENTER AS CLOSE AS YOU CAN TO A ZEN-LIKE BLANK STATE OF HUMILITY AT THE BEGINNING OF THE MEETING AND SAY, “TEACH ME...”
-MARC ANDREESSEN
Friday, December 12, 14
REAL WORLD PERSPECTIVE20
MARVIN LIAO• PARTNER, 500 STARTUPS• SF BASED• MENTOR AT 16 ACCELERATORS ACROSS 10 COUNTRIES• YAHOO VETERAN
PARTNER SPOTLIGHT!
Friday, December 12, 14
• OFFICE HOURS: TUESDAY AFTERNOON• SPECIAL REPORT! INTERNET OF THINGS• KATE STONE, TED SPEAKER AND FOUNDER OF NOVALIA• KEEP WORKING THROUGH DISCOVERY, HOMEWORK #3! (DUE 1/16)
NEXT WEEK...21
Friday, December 12, 14
CONTACT:
JESSICA PELTZ, INVESTMENT [email protected]
JOSH ENGROFF, MANAGING [email protected]
QUESTIONS?22
Friday, December 12, 14