Prepare For & Raise Sufficient Money To Get Through Initial Launch & Next Logical Funding Point

Why is this Important?: You will need funding to take the company through the first launch of your product/service and leave sufficient time to raise additional funding

Key Actions	Things to Consider	Tool Kit
Be sure you are ready to approach investors	A pitch with obvious flaws can sink a venture Ask investors who turn you down for feedback and other investor referrals; listen intently It may be possible, but do not assume that you can again approach investors who have previously turned you down; ask if it would be okay to keep them updated
Identify potential investors Angels/Angel Networks Friends and Family Self Funding Sweat Equity Funding Non-Dilutive Funding: Government grants, etc.	What companies are currently in a venture capital fund’s portfolio? Seek active investors in similar companies, but be wary of investors in direct competitors Network with other CEOs ➔ ask for introductions from those investors you know & trust Do they invest in companies at similar stages & raising similar amounts of money ($2M vs $200M)?	WA Investor Database LSWI SBIR Grant Writing Program
Get legal advice as to requirements, needs, and restrictions for an offering	Is writing an offering memorandum necessary? Make sure you comply with all requirements. Consider Rule 1244 and 1202 eligibility for tax purposes. Pay attention to public disclosure rules
Educate yourself on general terms and instruments used in early stage funding	Understand common financing terms (i.e. pre-money valuation) and those used in term sheets Study various financing vehicles (Notes, Equity) and understand their benefits and drawbacks. Think about both Common and Preferred Equity Avoid “goofy” or non-standard funding approaches	Financial Terms Definitions Term Sheet Template (AOA) Convertible Note and Equity Offering Templates (AOA)
Put together a budget that will get you through Initial Launch and to Series A financing	Try to be a virtual company as long as possible Only spend money on things that create value Avoid items that contribute to ongoing overhead Use consultants where you can	Startup Financials Template
Develop a 10 minute investor pitch(es)	What type of investors are you pitching to? Different investors may need different pitches Should contain all elements of the Business Plan Your goal for the first meeting is to be invited to a second meeting	Pitch Deck Template
Practice investor pitch(es)	Rehearse and then rehearse again Rehearse in front of people who will ask tough questions Be able to present without slides so you can connect and have eye contact with investors Anticipate questions and prepare backup slides with answers	LSWI Pitch Coaching and Consulting LSWI WIN Mentor Program
Raise enough money to get to the next logical fundable milestone and investment round	Don’t try to raise money before you firmly understand your final value proposition Put a realistic valuation on the company; Don’t be too valuation sensitive Ask investors who turn you down for feedback and other investor referrals; listen intently It may be possible, but do not assume that you can again approach investors who have previously turned you down; ask if it would be okay to keep them updated Take money when it is offered and, if possible, take more than you think you need. It generally takes longer and costs more than you think to get to the next stage. Running out of money before you have reached your next investable milestone can result in unhappy investors and loss of credibility Choose investors not just for their money but also how they can help you build the business	Term Sheet Template (AOA) Convertible Note and Equity Offering Templates (AOA)

Key Actions

Things to Consider

Tool Kit

Be sure you are ready to approach investors

A pitch with obvious flaws can sink a venture

Ask investors who turn you down for feedback and other investor referrals; listen intently

It may be possible, but do not assume that you can again approach investors who have previously turned you down; ask if it would be okay to keep them updated

Identify potential investors

Angels/Angel Networks
Friends and Family
Self Funding
Sweat Equity Funding

Non-Dilutive Funding: Government grants, etc.

What companies are currently in a venture capital fund’s portfolio?

Seek active investors in similar companies, but be wary of investors in direct competitors

Network with other CEOs ➔ ask for introductions from those investors you know & trust

Do they invest in companies at similar stages & raising similar amounts of money ($2M vs $200M)?

WA Investor Database

LSWI SBIR Grant Writing Program

Get legal advice as to requirements, needs, and restrictions for an offering

Is writing an offering memorandum necessary?

Make sure you comply with all requirements.
Consider Rule 1244 and 1202 eligibility for tax purposes.

Pay attention to public disclosure rules

Educate yourself on general terms and instruments used in early stage funding

Understand common financing terms (i.e. pre-money valuation) and those used in term sheets

Study various financing vehicles (Notes, Equity) and understand their benefits and drawbacks.

Think about both Common and Preferred Equity
Avoid “goofy” or non-standard funding approaches

Financial Terms Definitions

Term Sheet Template (AOA)

Convertible Note and Equity Offering Templates (AOA)

Put together a budget that will get you through Initial Launch and to Series A financing

Try to be a virtual company as long as possible

Only spend money on things that create value

Avoid items that contribute to ongoing overhead
Use consultants where you can

Startup Financials Template

Develop a 10 minute investor pitch(es)

What type of investors are you pitching to?

Different investors may need different pitches

Should contain all elements of the Business Plan

Your goal for the first meeting is to be invited to a second meeting

Pitch Deck Template

Practice investor pitch(es)

Rehearse and then rehearse again

Rehearse in front of people who will ask tough questions
Be able to present without slides so you can connect and have eye contact with investors

Anticipate questions and prepare backup slides with answers

LSWI Pitch Coaching and Consulting

LSWI WIN Mentor Program

Raise enough money to get to the next logical fundable milestone and investment round

Don’t try to raise money before you firmly understand your final value proposition

Put a realistic valuation on the company; Don’t be too valuation sensitive

Ask investors who turn you down for feedback and other investor referrals; listen intently

It may be possible, but do not assume that you can again approach investors who have previously turned you down; ask if it would be okay to keep them updated

Take money when it is offered and, if possible, take more than you think you need.

It generally takes longer and costs more than you think to get to the next stage.
Running out of money before you have reached your next investable milestone can result in unhappy investors and loss of credibility

Choose investors not just for their money but also how they can help you build the business

Term Sheet Template (AOA)

Convertible Note and Equity Offering Templates (AOA)

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