Lunch with the ExpertsToday’s Guests
WPEO Connections
Virginia AlmendarezStartUp CoachIFundWomen
Carolyn RodzTech Founder
Small Business AdvocateAlice
Geri StengelPresident
Ventureneer, LLC
AGENDA
12:00pm Welcome & Introductions
12:05pm A Conversation withVirginia Almendarez, Startup Coach, Ifund WomenCarolyn Rodz, Tech Founder, Small Business Advocate, Alice
Moderated byGeri Stengel, President, Ventureneer LLC
12:35pm Q & A facilitated via Zoom Chat Room
Everything You
Wanted to Know
About Financing But
Were Afraid to Ask
April 14, 2020
Presented by Geri Stengel
2 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Your Business Goal Will Shape Your Financing Choices
• Small business
• High growth
• Scaling company
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Deconstruct Your Funding Needs
• The stage of your company
• The size of the market you are
targeting
• The potential of your offering
• How fast do you want to grow?
• How much money you need?
• When will you reach profitability?
• What will you use the money for?
4 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Your Financing Options
Seed Startup Early Growth Sustained Growth
Reg A+, Mini IPO ✓ ✓
Venture Capital ✓ ✓
Angel Investors: Offline or Online ✓ ✓
Alternative financing ✓ ✓ ✓
Loan CDFI CDFI, Direct Lender, SBA Bank, SBA, CDFI, Credit Union, Alternative Finance Bank, SBA, Alternative Finance
Reg CF, Intrastate Crowdfunding ✓ ✓
Rewards-based Crowdfunding ✓ ✓ ✓ ✓
Incubators/Accelerators ✓ ✓
Grants (SBIR, STTR, and local eco dev agencies/Competitions)
✓ ✓
Kiva ✓ ✓ ✓
Credit Cards ✓ ✓
Friends & Family ✓ ✓
Self ✓ ✓ ✓ ✓
5 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Capital: Cost and Ease of RaisingA
fford
abili
ty
High
High
Low
Grants Competitions
Venture Capital
Angels
Accelerators - Equity
Alternative Finance
Credit Cards
Rewards Crowdfunding
Reg CF
$ With Benefits
Personal Savings
Friends & Family
Accelerators +
Incubators - Fees
Mortgages
Bank Loans
SBA Loans
CDFI Loans
$ With Risks
Accessibility
Legend
6 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Grants
• Free money
• Restrictive
• Time and effort
• Slow
• Highly competitive
• Strings attached
Photo: Nicolas Picard on Unsplash
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Competitions
• Free money
• A time to reflect
• Practice makes perfect
• High-quality advice
• Bragging rights
• Time and effort
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Friends and Family
• Motivated by love not profit
• Greater flexibility and lower terms
• Formalize the relationship and terms
• Can you face this person at Thanksgiving if you lose their money?
• Do not give too much equity away at the early stage, as it will make it more difficult to attract later stage investors
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Accelerator Programs
• Some provide money
• Skills development
• Access to mentors,
investors, and customers
• Risk management advice
• Motivation and emotional
support, especially through
peers
• Support after the program
ends
10 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Equity Financing for Scaling Companies
• Equity financing: Shares in
exchange for money. ROI through
acquisition or IPO
• Angels: Accredited investors —
net worth $1 M+. Or, income
$200,000+. It’s the angel’s money
being invested
• Venture capital: Limited partners
invest in a fund. Fund has a
thesis. It’s other people’s money
being invested
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Must Haves: Angel and Venture Capital
• Target a large, lucrative market
• Address a big market opportunity
• Project a maximum return on investment
• Need outside money to scale
• Have market traction
• Differentiate yourself from your competition
Photo by Nina Uhlíková from Pexels
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Pros and Cons: Angels and Venture Capital
✓
• Less financial risk for you
• Business expertise and
connections
• No monthly payments
×
• Giving up ownership
and control of company
• Time and effort
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Where to Find Angels and VCs
• Referrals from trusted sources, such as the founders,
investors, or lawyers
• Demo days and pitch competitions
• Angel club meeting
• Trade conferences
• College alumni investor groups
• Online platforms, such as
AngelList, CircleUp, Gust,
OurCrowd, and SeedInvest
• The Fundery Database of VCs
predominantly investing in women
14 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Tips for Succeeding With Angels and Venture Capitalists
• Put together a top-notch
team
• Be prepared to give up a
board seat
• Connect personally
• Be coachable
• Show your passion
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Types Of Debt
• Lines of credit
• Term loan
• Credit cards
• Mortgage ‒ personal
• And more
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The 5 Cs of Traditional Credit
• Credit score
• Character
• Capital
• Capacity
• Collateral
• Conditions
https://we.nyc/master-your-money/babson-tool/
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Pros and Cons: Debt
✓
• Maintain ownership of
your business
• Tax deduction
×
• Repayment
• Need for cash flow
• Cost of capital varies by
source
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Where to Find Loans and Other Forms of Debt
• Kiva — no interest
• Banks — traditional and
community
• Credit unions
• CDFIs
• Alternative lenders
• Online lenders
• Crowdfunding
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Community Development Financial Institutions (CDFIs)
Fund underrepresented
small businesses
• Women
• Minorities
• Rural communities
• Low income
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SBA Guaranteed Loans
• Provided by banks, CDFIs,
credit unions, and alternative
lenders
• Partially guaranteed by the US
Government
• Need to have cashflow
• Strong plan with projections
and assumptions
• Rejected by a bank
• Takes a longer time to get
approved
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Alternative Finance
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Alternative Financing
• Merchant Cash Advance: Is when a financer provides money in return for a percentage of
the company’s future credit card sales.
• Revenue Cash Advance: Are like merchant cash advances, except for companies that don’t
do much in the way of credit card sales. In this case, companies pay back the financier
through a direct deposit of a relatively small amount daily.
• Receivables Based Financing: You can borrow against either their entire accounts
receivable balance or individual invoices. Receivables based financing is popular
because once you get approved, you can get funding immediately whenever you need to
borrow, and because the interest rates are usually lower than merchant or revenue cash
advances.
• Accounts Receivable Factoring: Factors buy your invoices at a discount, often 5%, and
then your customer pays the factor directly when the invoice is due. The implied annual
interest rate can be high with accounts receivable factoring, but the financial technology now
available means that businesses have a lot more flexibility in choosing when and how much
to borrow.
• Contract financing: Is a way for your business to receive a cash advance on work you have
yet to perform. It is collateralized by a contract between your company and your customer.
• Equipment financing: is the use of a loan or lease to purchase or borrow hard assets for
your business. This type of financing might be used to purchase or borrow any physical
asset, such as a restaurant oven or a company car.
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Pros and Cons: Alternative Financing
✓
• Quick and easy application
process
• Funds can be available
quickly
• You can secure financing
even if you have no credit or
subpar credit
• You can use the funds
however you see fit
• You can develop a
relationship with a lender
and get lower rates over
time
•
ו Interest rates can be high
• You may only be able to
get a large loan
• Lenders may go out of
business
• You may not get any
discount if you repay your
loan early
• There may charge hidden
fees
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Rewards-Based Crowdfunding
• Seeking funding from the people who want your product
and often you’re pre-invoicing for the product
• Better for companies that have products and are aimed at
consumers
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Pros and Cons: Rewards-Based Crowdfunding
✓
• Debt- & equity-free money
• Insight into the market
• Validation
• Customer engagement
• A marketing boost
• Funding for companies
that are pre-seed to
mature
• One financing option
women outperform men
ו It takes time and effort
• It takes money
• There are often unanticipated
costs
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Tips for Succeeding at Rewards-Based Crowdfunding
• Build your network first
• Research which crowdfunding platform is the right fit for you
• Rewards matter
• Do a pitch video
• Put the “Why” into your story
• No one-size fits all. Experiment
• Show momentum
• Provide updates
• Money and effort grease the wheels of a success
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Regulation Crowdfunding (Reg CF)
• Enabled by Title III of the
JOBS Act in 2016
• Raise up to $1M before,
during, or after a VC
round from your
community including Main
St investors
• Best for B2C companies
in consumer tech, health
tech, edtech, AI, AR/VR,
blockchain, food &
beverage, retail, and
cannabis
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Pros and Cons: Rewards-Based Crowdfunding
✓
• Engages and expands
your user/customer base
• Provides a marketing
boost
• May provides future
fundraising leads
• Maintains company control
— one line on cap table (if
using a Crowd Safe), no
voting or information rights
ו There are quite a lot legal
and public disclosure
requirements
• It takes quite a bit of
bandwidth from founders to
execute a successful
campaign
• It takes money
• Some follow on funders diss
Reg CF
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Tips for Succeeding at Regulation Crowdfunding
• Build your network first
• Research which crowdfunding platform is the right fit for you
• Marketing matters
• No one-size fits all. Experiment
• Show momentum
• Provide updates
• Money and effort grease the wheels of a success
30 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Tools of the Trade
• Marketing: Elevator pitch
• Financials: Statements,
Assumptions
• Business Fundamentals:
Investor Deck, Executive
Summary
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Financials
1. Make financial
statements conventional
2. Cover past (if available)
and future
3. Do monthly for first 12
months then annually for
year 2 & 3
4. Project realistic numbers
5. Consider several
scenarios
6. Include what’s important
and summarize the rest
7. Explain your
assumptions
8. Consult a professional
9. Ensure that numbers
reconcile
10.Ensure that numbers
reconcile
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Investor Deck
1. Be brief
2. Be organized
3. Arouse interest
Immediately
4. Provide substance• Define the market and its
potential
• Solve a problem:
• Turn the problem into
opportunity
• Analyze your competition and
state your advantage
• Describe the business
• Marketing strategy
5. Project solid management
expertise:
6. Conclude with a call to
action
7. Make Your presentation
tangible
8. Make your slides readable
9. Prepare and practice
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Questions
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Resources
General
• The Nuts And Bolts Of Starting And Financing A Business
Grants
• Grants.gov — A database of all federally sponsored grants.
• Small Business Innovation Research (SBIR) and Small Business Technology Transfer
(STTR) Federal agencies providing grants: Departments of Agriculture, Department of
Commerce - National Institute of Standards and Technology and National Oceanic and
Atmospheric Administration, Department of Defense, Department of Education,
Department of Energy, Department of Health and Human Services, Department of
Homeland Security, Department of Transportation, Environmental Protection Agency,
National Aeronautics and Space Administration, and National Science Foundation
• State and local. Best to search for grants at the state and municipal levels.
Accelerators
• Seed programs
• University programs
35 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Resources
Equity Financing
• The Next Decade Will Bring More Venture Capital To Female Founders
• Learning The Language Of Investors Enabled This Founder To Raise $15 Million Dollars
• Get Backed: Craft Your Story, Build the Perfect Pitch Deck, and Launch the Venture of Your Dreams by Evan Baehr and Evan Loomis
• Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist by Brad Feld and Jason Mendelson
• How Female Founders Can Crack The Funding Code
• What is a convertible note
• The good and the ugly of convertible debt financing
• SAFE vs KISS, the evolution of the convertible note
• How And Why Professional Angels Invest Time In Meeting Women Entrepreneurs
• 10 Ways To Win An Investment From An Angel
• How Women Angels Are Good For Innovation And The Economy
• Want Venture Capital? Here Are 10 Must-Haves
• The Fundery: The Essential Venture Capital Database for Women Entrepreneurs
• Support Strengthens For Female-Founded Companies And Venture Funds
• How Women Angels Are Good For Innovation And The Economy
36 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Resources
The Downside of Venture
• How Founders Take Back Their Companies Without Angering Investors
• Five Ways Founders Can Avoid Breakups With Their VCs
• How To Ensure An Angel Or VC Is The Right Match For You
Using Multiple Forms of Financing
• How This Founder Went From Serving People With Lyme Disease To Serving The One In Three People With Chronic Conditions
• Grit: The Entrepreneurial Quality Of Successful Black Female Founders
• Female Founder Provides Small Loans To Help College Students Avoid Dropping Out
• How To Raise Capital When Your Company Does Well By Doing Good
Kiva ─ Crowdfunding Light
• Raising Money With a Little Help From Your Friends
Rewards-based Crowdfunding
• How Your Small Business Can Raise Money From Its Community
• How To Blow Past Your Crowdfunding Goal Using Female Empowerment
• 8 Tips For Crowdfunding Success
• Crowdfunding Is A Female Founder's Best Friend
37 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Resources
Regulation D Rule 506(c), Title II of the JOBS Act
• Stand Out in the Crowd: How Women (and Men) Benefit From Equity Crowdfunding
Regulation Crowdfunding (Reg CF)
• This Startup Addresses Social Distancing With An Engaging Experience For Kids And
Their Relatives
• The Government Shutdown Grounds A Drone-Focused Unicorn
• How Reg CF Closes the Financing Gap for Women Entrepreneurs
• How Your Small Business Can Raise Money From Its Community
Bank Financing
• Grasshopper Ain’t Your Grandma’s Commercial Bank
Alternative Financing
• Alternative Financing Helps Health Startup Grow
• Closing The Small Business Financing Gap: Invoice Factoring Basics
• Closing The Small Business Financing Gap: The ABCs Of Merchant Cash Advance
• New Options Close the Financing Gap For Women Entrepreneurs In The Next Decade
Revenue Based Financing (Can be an alternative to equity financing)
• Finding Growth Capital Does Not Have To Be A Challenge For Female Founders
• Growing Companies Have Financing Alternatives
38 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Resources
Online Lenders
• Kabbage: The Care And Feeding Of A Fintech Unicorn
Community Development Financial Institutions (CDFIs) Loans
• CDFI Locator
• How Women Can Get The Loans Their Businesses Need
• When Big And Small Business Pay It Forward, Communities Thrive
• Money's There If Small Businesses Know Where To Look
• Affordable Financing from a Trusted Source to Start and Grow Your Business
• Think You Don’t Qualify for Small Business Financing? Think Again
Interest Free Loans
• Women Become Financiers To Disrupt The Funding Landscape For Entrepreneurs(SheEO)
• How A Woman Entrepreneur Relied On Persistence And A 'SheEO Loan' To Bring Solar Energy To Haiti (SheEO)
• Persistence Is The Key To Entrepreneurial Success (SheEO)
• Raising Money With a Little Help From Your Friends (Kiva)
Women Funding Women
• Five Ways Women Will Get Women The Funding They Need In 2019
• How More Women Are Stepping Up To Fund Women Entrepreneurs In 2018
39 © 2015 Ventureneer. All rights reserved.2019 Ventureneer. All rights reserved.
Connect With Me
• http://www.forbes.com/sites/geristengel/
• @ventureneer
• http://www.linkedin.com/in/geristengel
• http://www.facebook.com/Ventureneer
Why smart women
are crowdfunding
For women who have big ideas, we’re
here to make them happen.
IFundWomen is a startup funding platform providing access to
capital through crowdfunding and grants, expert business coaching
on all the topics entrepreneurs need to know about, and a network
of women business owners that sparks confidence, accelerates
knowledge, and ignites action.
A HOLISTIC APPROACH TO FUNDRAISING
Coaching ConnectionsCreative Crowdfunding
+ Grants
WHAT IS CROWDFUNDING?
Crowdfunding is when you raise
small increments of money, from
lots of people that you know, that
adds up to just enough money to
achieve a specific goal.
WHY SMART WOMEN ARE CROWDFUNDING?
1
2
3
4
5
6
7
8
Prove demand
Build prototype
Pre-tail product/service
Drive sales + marketing
Raise pre-seed round
Build buzz + awareness
Don't want venture capital
Avoid going into debt
THE IFUNDWOMEN METHOD
PITCH
HONING
a clear, concise pitch
that explains the problemyou are solving and your
solution
1
NETWORKMAPPING
know who is going tobuy your product
or services
2
REWARDSSTRATEGY
the products, services,
and content you aregoing to sell
3
ACCOUNTABILITY
TRACKER
stay on task, every singleday of your campaign
4
It's all about the prep
School budgets alone could not
fund our dance program, so we
needed to raise funds in order
to continue our assemblies.
— MARISA HAMAMOTO
SEEKING ALTERNATIVE SOURCES OF FUNDING
We needed to keep our
business open and grow our
programming.
— CLAIRE WASSERMAN
AVOID DEBT OR GOING OUT OF BUSINESS
Now, go get funded.