Plug CambridgeInternational Entrepreneur Meetup

David ChangJune 15, 2016

David Chang @changds

MyJourney

Doing Biz in Boston

Lessons Learned

David Chang @changds

$80

$4

$42

$7$17

$110

$210

$270

$1

$135

Funding Exit

Venture Returns

Direct Via Syndicate/Fund

My Angel Investments

Doing Biz in Boston

How can Boston help grow your business?

See http://bostontechguide.com

Local Pillar Tech Companies

Big Tech Companies with Local Presence

Industry Clusters of Expertise

Marketing Tech e-commerce Cybersecurity Cloud

Travel Mobile Ed Tech Robotics

Life Sciences Health IT Energy

See http://www.slideshare.net/bussgang/boston-startup-scene-fall-2015

InvestorsSeed

EarlyGrowth

Development Shops

University Resources

Accelerators / Incubators

David Chang @changds

Co-working

Corporate University Independent

Events & Networking

www.greenhornconnect.com/events/

Media

Lessons Learned

Share Your Summit & Basecamp

Leverage Your Natural Presentation Style

Adjust for Your Audience

No Blind Spots

PricingCustomer

Collaborators

Funding

Promotion

Product / Service

Context

Place

Company

Concept

Competition

Pitch Materials for Each Level

•1 Sentence•1 Paragraph•1 Page•1 Light Deck•1 Follow-up Deck

David Chang @changds

Function

Size

Know YourselfLocation

Industry

Start or Join a Company

People Bonds > Company Bonds

Find the Right Co-founders

What Obstacles Stand in Your Way?

Equity Capital Stages

Bootstrap

Angel

Venture Capital

Growth Equity

Equity Capital Dynamics

Unusual return distribution for venture capital

So investors must

• Swing for fences every time

• Own significant stake

• Be able to change the team

Source: @DawnUmlah

Fundraising Campaign

Prep Target Socialize Raise Close

David Chang @changds

Basic Prep

Legal representation

Founders agreements

Cap table

Pitch materials

Financial plan

Raise at Each Stage

How Much?

What For?

Prove Out?

Structure

Preferred Stock

• Preferences over common

• Board seat or 2

• Option pool

• Liquidation preference- they get their $ first

• Control over sale, new options

Convertible Debt

• Debt that becomes preferred equity when you raise it

• No valuation, but the “cap” is a valuation ceiling

• Interest accrues, rate <10%

• Conversion discount

Identify Investor Targets

Stage Location

Sector Business Model

Investment Thesis

Social / Trust Filter

Socialize

• Get warm intros• Find strongest mutual connections to 30+ potential investors• Network over 2-3 months

• Ask for referrals, not money

• Refine pitch• Incorporate feedback, but avoid whiplash changes

“I’m not ready to raise”

“Who would be helpful?”

“Who else should I talk to?”

Raise: Go for the Ask

• Talk to your top candidates ALL AT ONCE• Run conversations in parallel• Decide whether / when to tell investors about each other

• “Triggering events” to get a (or better) term sheet

• How much should you focus on valuation?

Dilution & Valuation

• Professional investors will offer a reasonable range

• Don’t poison the relationship with greed

Example50/50 founder split

Seed: $1M on $xA: $6M on $12MB: $10M on $20M

See www.ownyourventure.com

What’s your share?

x=$3M: 17%x=$5M: 19%x=$7M: 19%$1.5M raise @$3M: 15%

Closing the Deal

• Rolling close vs. set close

• Reference check investors

• Not done until money is in the bank

Key termsq Board compositionq Option poolq Voting rightsq Founder vestingq Change of controlq Redemption rightsq Information rightsq Anti-dilution

Q&A

David Chang @changds