STARTup AMERICA presents 30 minutes with Professor Sean Wise on the topic: Where to go, when funders say no!

1. Where to Go when:
Funders say no
(and the dough don’t flow)
Prof. Sean Wise, www.SeanWise.com @seanwise

2. A bit about me
Prof. Sean Wise, www.SeanWise.com @seanwise

3. Disclaimer
The views and opinions expressed in this webinar are those of the
authors and do not necessarily reflect the official policy or position
of STARTUP AMERICA, Ryerson University, or any agency of the
U.S. government.
The information contained herein is for informational purposes only
and may not be relied upon as legal advice. It is subject to change
and no representations are made by expressing such.
The information contained herein may be subject to local laws,
regulations and policy. Viewers are encouraged to obtain
independent legal advice before proceeding.
Prof. Sean Wise, www.SeanWise.com @seanwise

4. Definitions
Prof. Sean Wise, www.SeanWise.com @seanwise

5. SME vs. Startup
SMEs Startups
Number of Low (25 or less) Low (25 or less)
Employees
Age Less than 5 years Less than 5 years
Goals Sustainable Employment VS Change the World
Steady Growth $100M or Bust
Indicia Family Owned The J curve
Service Innovation & IP
Local global
e.g. Dry Cleaner Mobile Data Application
*** This discussion only applies to Startups
Prof. Sean Wise, www.SeanWise.com @seanwise

6. Prof. Sean Wise, www.SeanWise.com @seanwise

7. Prof. Sean Wise, www.SeanWise.com @seanwise

8. Prof. Sean Wise, www.SeanWise.com @seanwise

9. Owner vs. Founder
Different Goals
Different Mindset
Prof. Sean Wise, www.SeanWise.com @seanwise

10. VC vs. Angel
VCs Angels
Definition Professional Fund HNWI who invest their own
Managers who invest money
OPM on 5-7 year cycle
Size Dependant on Fund Dependant on Mood
Structure
Often Proof of Concept Smart Money with a Halo
incorrectly VS Effect
considered
Other than Halo effect, Network, Experience, Mentorship
money… Standardization
Deal terms Bigger, more Smaller, faster, more founder
complicated based on like
portfolio approach
Prof. Sean Wise, www.SeanWise.com @seanwise

11. Why Funders say no!
About You Not About You
• Not enough Proof of • Doesn’t fit with last deal
Concept
– Management Risk  • Doesn’t fit with declared
are these the guys? approach
– Magic Risk  is it 10x • Not hot space
better?
– Market Risk  will
anyone care?
• Hard to work with
• Terms don’t fit
Prof. Sean Wise, www.SeanWise.com @seanwise

12. Where to Go when:
Funders say no
(and the dough don’t flow)
Prof. Sean Wise, www.SeanWise.com @seanwise

13. Changes in the Ecosystem
• Cost to Launch:
– 1998: $5,000,000
– 2008: $500,000
– 2012: $50,000
• Recession since 2008
• Two Decades of Growth in High Tech
• The Internet democratizes everything
• Funds now larger but fewer
Prof. Sean Wise, www.SeanWise.com @seanwise

14. Prof. Sean Wise, www.SeanWise.com @seanwise

15. Option #1
Funding from Future Clients
• Funding by Users, Clients, Advertisers
• Funding by Revenue
• Funding by Smart Money
• Often labelled Bootstrapping
Prof. Sean Wise, www.SeanWise.com @seanwise

16. Crowdfunding
• This week new law passed?
Prof. Sean Wise, www.SeanWise.com @seanwise

17. Prof. Sean Wise, www.SeanWise.com @seanwise

18. Prof. Sean Wise, www.SeanWise.com @seanwise

19. Prof. Sean Wise, www.SeanWise.com @seanwise

20. Option #2
Funding from Incubators
• 5-10 startups per cohort
• Mentorship
• Local / Resident
• $25,000 seed funds
• 6 months to DEMO day
Prof. Sean Wise, www.SeanWise.com @seanwise

21. Prof. Sean Wise, www.SeanWise.com @seanwise

22. Prof. Sean Wise, www.SeanWise.com @seanwise

23. Prof. Sean Wise, www.SeanWise.com @seanwise

24. Option #3
Funding from Friends & Family
Prof. Sean Wise, www.SeanWise.com @seanwise

25. Prof. Sean Wise, www.SeanWise.com @seanwise

26. Spectrum of Financing
High
Founder, friends
and family
Business Angels
Level of
Investment Venture Capitalists
Risk seed/early stage/mezz
Assumed
by Investor Corporate VC
Equity Markets
Junior ================> Senior
Low Commercial banks
Seed Start-Up Early Growth Established
Stage of
Business
Prof. Sean Wise, www.SeanWise.com @seanwise

27. Funding from Friends & Family
• Rollup individuals into
a hold corp
• Use a Shareholders’
Agreement
• Maximize Tax Credits
and Minimize Cap
Gains
• Consider not setting
Valuation
Prof. Sean Wise, www.SeanWise.com @seanwise

28. Other Options
• Startup Weekend
• Grants & Tax
Credits
• Economic Stimulus
• Sell Services : Build
Products
Prof. Sean Wise, www.SeanWise.com @seanwise

29. Where to go when the Funders
say no?
1. Future Customers and
Crowdfunding
2. Accelerators & Incubators
3. Friends & Family
Prof. Sean Wise, www.SeanWise.com @seanwise

30. Great Resources
Prof. Sean Wise, www.SeanWise.com @seanwise

31. Great Resources
Prof. Sean Wise, www.SeanWise.com @seanwise

32. FRIDAYS @ 8
Prof. Sean Wise, www.SeanWise.com @seanwise

33. But that’s not all…
Free digital Copy for
all of you, courtesy
of:
www.HOTorNOTtheBOOK.com
Click: FREE BOOK
Enter: PROFIT
Prof. Sean Wise, www.SeanWise.com @seanwise

34. Q and A
More
Questions?
email me:
sean.wise@ryerson.ca
Prof. Sean Wise, www.SeanWise.com @seanwise