Thomas Arctaedius Ph D Nuclear Physics Started 8 companies (3 sold, 2 dead, 3 alive) CEO and chairman Visiting scholar Stanford University

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2 Thomas Arctaedius Ph D Nuclear Physics Started 8 companies (3 sold, 2 dead, 3 alive) CEO and chairman Visiting scholar Stanford University Board member in 5 companies and organis. Chairman VentureCup Founder of CSES Adjunct researcher at Stockholm University DSV

3 Sen VD och grundare av ayond AB Design, Innovation och Utveckling

4 Agenda 0. Intro this 1. The innovation process 2. Financing 3. Bootstrap finance 4. Outro

5 Key questions What types of financing are available? How do they differ? Which financing solution is best for me? How much money do you need? When? How to minimize the need of financing?

6 Part 1 The process

7 The innovation process? Idea Planning Team Prototype Beta test Sell

8 Market risk The way ahead START Capital interested GOAL Technical risk/uncertainty

9 Part 2 Financing

10 Types of financing Equity based-financing Business Angels Venture Capital Crowd funding (equity) Loans and grants Family/Friends and own Banks loan Grants, prizes Crowd funding Public soft-loans (soft-loan: you pay back if you succeed, otherwise not) Customer/supplier Partnership Crowd funding

11 Different financing needs FFF Grants Soft-loan Start-up Planning/Analysis Soft-loan Business Angels Customer / supplier Accelerator MVP/ Prototype dev. Proof of concept First customers Venture Capital Banks Development: Sales Industrialisation Revenue IPO Under water how long can investors hold their breath?

12 Two models Big-money (Venture Capital) Stepwise soft money & Bootstrapping $ time

13 Soft money Almi (new products next year) 25 kkr start money, grant (75 kkr pre-study loan) Must use innovation support organisation 250 kkr Micro loan Business plan Budget ~400++ kkr Innovation loan Business plan Project Plan

14 Soft Money Verifiering för tillväxt»2*250 kkr verification grant»research connection Vinnova Different programs,»eg VINN-NU»Vinn Verifiering Grants/Prizes Uppfinnareföreningen; Stockholms Stad Different competitions and many more

15 Equity basedfinancing Business angels Persons! Invests money and time in early stage companies Approx 600 persons in Sweden, 55+ male Less than 30 females but increasing Invests 300 kkr to ~3.000 kkr Very active Sometimes in groups/networks

16 Equity basedfinancing Venture Capital Invests other peoples money High demands on business plans and structure Approx early stage VC in Sweden Appoints one Investment manager Active, high demands on accounting and forecasts Strict shareholders agreement Money in tranches

17 Example creating value - You need kkr to develop and sell your product Step wise Step 1: Public(Almi) 15kkr + 75kkr Step 2: Innovation loan: 210 kkr Step 3: A grant: 100 kkr Step 4: Customer: 200 kkr Step 5: Business angel You now need 400 kkr, you get a valuation of 4,000 kkr and sell 10% of the company to the BA Big money Step 1: Apply for 1.000kkr from VC/BA You get an valuation of kkr and need to sell 49% of your company

18 Att lyckas med finansiering Kunder! Vad ska pengarna användas till? Vad satsar grundarna? Varför just ert team? Ideas are nothing - execution is everything Tidigare erfarenheter En bra pitch övertyga om marknad och teknik

19 Att misslyckas med finansiering Inga konkurrenter Världsherravälde vi ska ta x% av den X M$ stora världsmarknaden Otydlig affärsmodell vem säljer vad till vem För mycket teknik för lite marknad För mycket namedropping

20 Part 3 Bootstrap

21 How to finance your startup! Bootstrap finance It s not raising money but having the wits and hustle to do without it 21

22 Bhides article in Harward Business Review: Bootstrap Finance: The Art of Start-ups Interviewed 100 private companies, 8 years or younger from the 500 fastest growing companies, Median US$, 80% from FFF Raising money has become a disease. Entrepreneurs are wasting lots of brainpower scheming to raise money Bootstrap finance: A. Bhide, Harward Business Review, November-December 1992

23 Bootstrap Finance In short, "bootstrapping" means: starting a new business without start-up capital. Financing a small firm through highly creative acquisition and use of resources without raising equity from traditional sources or borrowing money from a bank.

24 Strategies for Successful Bootstrapping Get operational quickly. Look for quick, break-even, cashgenerating products Close contacts with customers from day one; start selling what the customer need. Start easy simple and focused. Don t stick to your strategy make money Let the customer s wishes and willingness to pay determine what the company does. Don t hire expensive people

25 Strategier Låt kunder och leverantörer vara med och finansiera Förskott, betala sent Fokusera på likviditet och kassaflöde inte resultat. Inga komplicerade bokföringsgrejor Betala ut lön i början av månaden

26 Bootstrapping handlar om att utnyttja den första tidens unika egenskaper. Var smart, dra nytta av litenheten. Kopiera inte stora bolag. Snåla låna, köp billigt, pruta, förhandla Fokusera det som ger intäkter

27 Part 4 Outro Customer income gives you freedom

28 Support SUP46 ALMI CONNECT. VentureCup, Starthus och inkubatorer STING SU Innovation KTH Innovation KI Innovation CSES Utbildning SSES, SU kurser ex ENTRE vid DSV (7,5hp)

29 advice

30 Comments Questions? Discussion

Venture Capital, Funding & Pitching. Zubin Chagpar, Venture Capital Business Development, Amazon Web Services @phylosopher

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