Silicon Valley Capital Raising Boot camp

Transcription

1 Silicon Valley Capital Raising Boot camp From start up idea to money in the bank Raise money like startups do in San Francisco/Silicon Valley for students with ideas for start up companies, that would like to raise money but don t know how, this 4- day course gives you the knowledge and tools used by startups in California to convince investors put money in your company s bank account Lecturer: Geoffrey Folkerth, MBA: California biotech entrepreneur who has successfully raised over $100M from VCs in California and Poland Structure and Schedule: 4- one day modules starting November Minimum class size: 20 Ideal for students of Business, Technology, Law, Theater/Communications

2 Module A: Capital Raising Foundation Overview Team: founder(s), technology, presentation, sales, operations, advisors/mentors, securities lawyer, accountant, PR Types of capital: debt, equity, non- dilutive grants Type of investors: angel, venture capital (VC), venture debt, private equity, investment banks Rounds of Financing: seed, convertible note Series A, Series B, Series C, Exit (M&A or IPO) Term Sheets 101 Economics: price, liquidation preferences, pay- to- play, vesting, employee option pool, anti- dilution Control: Board of Directors, protective provisions, tag- along/drag along rights, conversion Other Terms: dividends, redemption rights, penalties, right of first refusal (ROFR), No- shop, indemnification Try to control with your lawyer the creation and circulation of document drafts. Control the time frame of the raise How VC Firms Work: Structure general and limited partners, how firms raise money, 2-3% management fees, carried interest, investment period, reserve, recycling carried interest, claw- backs Table of Capitalization (Cap table) Concepts: premoney, post money valuation, price per share, dilution, up rounds, flat rounds, down rounds, convertible debt, warrants Case Study: Pathway Genomics $2M venture debt round: Students to build copy of real cap table in Excel

3 Module B: Financial Modeling Financial Statements Profit & Loss: o revenue projections, price, volume assumptions, subscription and recurring revenue models, premium/freemium models o Cost of sales, gross margin o Marketing (Cost per customer acquisition (CPA), contribution margin o R&D o General & administrative o EBITDA and net income Balance Sheet o current assets: cash, accounts receivable, inventory o fixed assets (less depreciation) o intangibles & IP (less amortization) o current liabilities: accounts payable, revolving credit lines o long term debt: interest & principle, amortization schedules o o Equity: investor equity, retained earnings, dividends Cash Flow Statement o Cash Flow from Operations: net income + depreciation + amortization + changes in working capital o Cash Flow from Investing: asset purchases, capitalized development o Cash Flow from Financing: selling equity, debt o Beginning, Change and Ending Cash Elements/Notes: sensitivity toggle, bottom s up budgets, value inflection points, cash burn vs. operational runway, break- even, accumulated gain/loss Case Study: Events.com $12M Series B: Students to build a copy of financial model in Excel

4 Module C: Pitch the Deal Materials s that VCs respond to: intrigue The Hollywood movie tagline: Uber for babysitting The 1- page teaser The 20 minute presentation The 10 Slide/20 minutes Format Problem/Solution Format: Hollywood format the bigger the dragon, the greater the hero Set the frame: assess beta traps, capture alpha status Tell the story: vision, struggle, now is the time o Slide 1: Big Idea o Slide 2: Problem o Slide 3: Deepen the problem o Slide 4: Solution o Slide 5: How it works o Slide 6: Case study example o Slide 7: How it makes money o Slide 8: Market size & competition o Slide 9: Investment/use of proceeds o Slide 10: Window of opportunity/why now Ask the investor questions to make them talk about themselves Get out: leave early, keep them wanting more Communication/writing tips: Clear, concise, NO editorializing, logical and reasonable assertions back up by human scale proof points, psychological realism. High contrast, answering the Why Now? Info- graphics Why I hate 5 minute speed dating venture days formats Case Study: Pathway Genomics Series C (California) Case Study: Biogenetica Int l Laboratories, sp. z o.o. (Poland) Case Study: Central Europe Genomics Center sp. z o.o. (Poland)

5 Module D: Live Pitch & Negotiation Social Dynamics Croc Brain versus cortex Hot cognition versus cold analysis We want what we can t have and pursue what moves away from us Alpha and Beta personality types in social business settings Beta traps & tactics o Prizing: your deal or the investor s money? o Time frame o Seizing local star power o Calling it out o Humor o Intrigue o That s a good question/let me think about it Negotiation Creating a market for your deal BATNA (Best Alternative to a Negotiated Deal) Game Theory: single event, multi- event Authenticity (knowing what you want, what you will and will not accept, transparency, owning your positions) Case Study: Live Pitch & critique session from students

6 Suggested Reading List Venture Deals Pitch Anything Investment Banking Institute PDF Schweiser CFA Level 1 Study Materials Suggested Media Diet Crunchbase.com Techcrunch.com AskthVC.com Stanford University Entrepreneur podcast series