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

WINGS

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)