1. HOW CAN I FINANCE MY START-UP OR COMPANY?

2. Agenda of the session
- I have the business idea, now what? - How to
finance my project - Documents needed -
Business model description - Barcelona
ecosystem overview - Q&A
- Networking

3. WHO AM I
Connect with me
Joan Carles Piñol
•Bachelor in BA and MBA ESADE, Barcelona.
•IESE Business School, Madrid.
info@sambaaccel.com
•Business Angel Academy, London
www.joancarlespinyol.com
Mentor for start-ups and SMEs seeking private equity, Founder and
Managing Director of Rockstar Spain, and mentor of Samba Accel,
previously founder of Lleida Business Angels. Joan Carles is also @joancarlesp
Head of the Foreign Relations Committee of the Spanish Association
of Business Angels (AEBAN) and Academic Coordinator and
Professor of Venture Academy of UPC (Polytechnic University of eretail
Catalonia). Moreover, he is Past President of the Junior Chamber
International local chapter in Lleida and member of the board.
/JoanCarlesPiñolHualde
Joancarles.pinyol@gmail.com

4. CONTENTS
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

5. Intro
Entrepreneur! You have a business idea, and now what?
Inverstor! Do you know how to invest in start-ups?

6. What does it need to start a project?
A serious and credible business plan, or investors’
pitch.
A human team with experience, implication and
complementary capacities.
Adequate financing for each stage
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7. What else doe you need?
A serious and credible business plan, or investors’
pitch.
A human team with experience, implication and
complementary capacities.
Adequate financing for each stage
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8. Today we will speak about Financing!!!

9. How to obtain money to begin?
• There are four sources of cash:
Bootstrap Equity
Debt Grants

10. Where does the money come from?
EQUITY ADVANTAGES DISADVANTAGES
• Usually limited.
• Sometimes easy to raise. • Icreases family’s financial
Family money
Risk due to its low diversification.
Business Angels/ • ? • ?
Venture Capital
• Sometimes easy to raise
• Requires a big investment in
Mercado de (if indebtedness capacity).
Time and preparation.
Capitales • Tax benefits.
• Only for large companies.
GRANTS • Not adjusted to the needs of
• Cheap. The company.
Public sources • Limited. • Large time.
(non reimbursed) • Not enough.
DEBT • Increases financial risk.
• Sometimes easy to raise • When indebted, the company
(if indebtedness capacity). loses capacity to obtain +debt.
Bank debt • Tax benefits. • The bank is not a collaborator,
And does not understand its
Operational needs.

11. Financial need (or CF+) over time
GENERATES €
NEEDS € Month
s
GENERATES €
Years
NEEDS €

12. High growth potential companies, what happens at each stage
Success
Maturity
Cash Flow
“Death Valley” Moderate success
Growth
Break even
Idea Prototype Start-up
Proof of concept
Market proof
Failure
Failure
Development stage
And time

13. Entrepreneurship ecosystem in Barcelona
FUNDING PROVIDERS Business Convertible
BANs VCs
Accelerators Loans
KNOWLEDGE INSTITUTIONS
B2B SERVICE PROVIDERS
START-UPS
GOVERNMENT AGENCIES
ASSOCIATIONS
EVENTS

14. INCUBATORS
University Public Private
Incubators Incubators Incubators

15. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

16. Investmets 1st quarter 2012 in Spain
Business Angel Networks: 2.075
Total investment: 17.815k
VCs: 11.900
Public convertible notes: 3.190

17. Financial needs according to growth stage
Financial needs Sales
1.500.000€
300.000€
150.000€
Developmet
Stage and time
Foundation Seed Start-up Growth Expansion
Internationalization
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18. Rics according to stage
Financial need Ventas
High risk
1.500.000€
300.000€
150.000€ Low risk
Developmet
Stage and time
Foundation Seed Start-up Growth Expansion
Internationalization
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19. Who finances every stage?
Financial need Sales
IPO
Companies
VCs
1.500.000€
Business Angels
300.000€
FFF, grants,
150.000€
Mentoring
groups Developmet
Stage and time
Foundation Seed Start-up Growth Expansion
Internationalization
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20. Why are investors so demanding
• They enter as minority shareholders without
guaranties or collaterals...
• They pay a higher share price than the one paid
by the promoters of the business, and that the
one that today has the business.
• VCs enter companies in less
• Shares have not liquidity, which difficults exit. favourable terms than other types
of investors.
• Nothing guaranties that the business plan is
going to accomplish… and that anybody will buy • Investors eill usually negotiate to
the shares. include certain clauses in the
• Innovative businesses have high mortality rates. investment agreement to mitigate
certain risks.
• Possible assimetries of information between
promoters and investors.
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21. Which are these clauses
• Political
• Seat on the board.
• Qualified majority for certain decisions.
• Hiring key people.
• Investments of more than certain amount
• Liquidity and exit agreements
• Tal along
• Drag along (conditioned to min or max %, minimum price)
• Preferred right when liquidation or transmition (VCs)
• Mandatory purchase (not common)
• Economic
• Ratchet
• Information
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22. Entrepreneurs
• Highly compromised and with management
Compromised: capacity
• Mandatory that the majority of the time has full
Implication: time dedication.
• Alligned with the current situation of the
Wages: project.
Investment: • The higher, the better valued.
• Different backgrounds and with in-depth
Team: industry knowledge.
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23. Project
• New product, service, disruptive
Innovation: tecnology. Proved abroad.
Competitive • Competitive advantage that makes it
advantage: sustainable in the future.
Industry: • ICT, green technologies, healthcare...
High growth • Ambitious project with
potential: internationalization capacity.
Geographic area: • Nearby
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24. Investment
Inicial phase: • Early stage.
• Accordin to phase and reality of the project. Venture Capital
Valuation: Method.
• The remaining part to cover total financial need, that allows
Share: the project to be sustainable. Investors take into account
• Will be valued:
Third part • Support from public administration, university, advisors,
experts.
guaranties: • Letter of intent of future custommers.
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25. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

26. DEBT
What do we know about credits and loans?

27. DEBT
Company A Company B
ROA = PAT / Net Assets
ROE = PAT / Fondos Propios
Company A Company B
EBIT 10,00 10,00
Intereses 2,5 0
PBT 7,50 10,00
Tax 30% 2,25 3
PAT 5,25 7,00
ROA 5,25% 7,00%
ROE 10,50% 7,00%
Nominal interest: 5%
Financial leverage can be positive for shareholder!

28. Financing your business: Debt
Sources of financing through debt for SMEs
• Loan agreement
• Credit card
• Suppliers
• Long term bank loan
• Leasing
• Public administration programs
2

29. What banks search?
• Personality: Are you trustworthy and have a credit history
solid (personaly and corporate)
• Conditions: How current situation impacts your company and
industry?
• Equity: How much have you invested in your company?
• Capacity: How will the company returd debt?
• Guarantees: What assets are available if company is not able to
return the loan?
2

30. Negotiation
• Negotiation
– Documents
• Historical documentation
• Project presentation
• Compromise of partners and administrators
• Objective, realistic, transparent approach
• Not asking more, or less
• Expose the situation causes and measures
Objective and transparent information, our listener will not be an expert
risk analyst

31. Negotiation
• Documents to present
– Historicañ
• Annual accounts of the last 3 years
• Tax clearing of the last 3 years
• Bank pool
• Company activity description in the last years
• Origin of the situation
• Forecasts for the year to come
We should put in value the history and the responsibility / obligations we
have assumed and respected.

32. Negotiation
• Documents to be submitted
– Presentation of the project
• Viability of the project
• Treasury Plan
• Brief SWOT Analysis and description of project and industry
• Details of sales, production and investment policies
• Appropriate adjustments updates

33. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loans
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

34. What is?
CONCEPTUALLY: A loan
GUARANTY: No requested
INTEREST: fixed or even variable
INTEREST: The amont of interest is variable indexed to
company results (the profits, the more interest rates)

35. Convertible loan
CONCEPTUALLY: A loan
AVAL: No requerido
As a non convertible
loan, but the lender
INTERESES: sólo se devuelven los años que hay beneficios
can decide (after a
period of time),
VALOR DEL INTERÉS: El importe de los intereses es variable en
instead of returning
función de los resultados de la empresa (+ beneficios + interés)
the interest, the loan
converts into equity
of the company

36. Convertible
Loans

37. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

38. Financing your company: EQUITY
• Sources of founding equity:
• Personal savings
• Friends or Family
• Government or Public Administration
• Angel Investors
• Mentoring or investing groups

39. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

40. F, F, F, F
• Founder), Family, Friends, Fools
• Seed finance
• The company has recently been founded. Not yet
begun the process of production / distribution, and
only limited testing of prototypes and "beta”
• High risk!
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41. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

42. Business Angel Networks in Catalonia
400 PRIVATE INVESTORS

43. Angel Investors
HISTORY ...
• Middle Ages: Catholic kings (Cristóbal Colón)
• Begining of XXth century: BROADWAY
• Medium of XXth century: SILICON VALLEY (HP)
• ‘90: EUROPE
• XXIst century: CATALONIA/SPAIN

44. Who where the first investors?
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45. Usual implication from Angel Investors
• Member of the Board of Directors
• Coach / mentor.
• Support in Crisis Management
• Exit in the first financing round
• Passive.

46. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

47. VCs in Catalonia
VCS

48. Business accelerators
Corporate Business Holdings
programs Accelerators Of participated
companies

49. THE 10 MOST COMMON LIES OF VCs
1. “I liked your company, but my partners didn't.”
2. “If you get a lead, we will follow.”
3. “Show us some traction, and we'll invest.”
4. “We love to co-invest with other venture capitalists.”
5. “We're investing in your team.”
6. “I have lots of bandwidth to dedicate to your company.”
7. “This is a vanilla term sheet.”
8. “We can open up doors for you at our client companies.”
9. “We like early-stage investing.”
* Idea original Guy Kawasaki: http://blog.guykawasaki.com/2006/01/the_top_ten_lie.html
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50. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

51. KEBAB ALLIANCES
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52. Example of bootstraping
• Humor sites: Asco de vida, Cuána Razón, Visto
en FB,…
• Initial investment: non existent
• 5 sites
• 300 million pages viewed / month.
Internet allows bootstrap businesses

53. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

54. Alexander’s Osterwalder IP

55. AGENDA
1. Intro
2. Private equity financing
3. Debt and negotiation
4. Convertible loan
5. Equity
- FFF / Grants
- Business Angels
- Venture Capital
- Bootstraping
6. Business Model description
7. Why do companies fail?

56. Why do companies fail?
 The business is under financed
 Corporate expansion not enough planifyed or financed
 Poor management
 The business offers products or services which nobody can buy
 Inability to adapt to a changing environment
 Failure to control expenses
 Poor execution which creates unsatysfied customers
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57. Examples of failures
• Iridium – satellite system from Motorola
If big
companies
failed,
everybody can
fail

58. And, what happens if you fail?
What do you risk? •Time (a lot)
•Money (less)
What can be reinforced? •Professional career
•Personality
•Self esteem
•Learning from mistakes
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59. And if you fail?
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60. Contact with us
Samba Accel
Business Accelerator of scientific
and technological start-ups
Pau Clarís, 95-4-2
08009 Barcelona
info@sambaaccel.com
www.sambaaccel.com
Twitter: @samba_accel
Vimeo: http://vimeo.com/40888891
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