How to raise money for your startup...

1. Nick Holmes a Court
nick@nickhac.com
http://www.nickhac.com
@nickhac
How to raise Investment Money for your Startup Company
Last year i successfully completed an Investment Raise for BuzzNumbers.com.au - A B2B technology
media business focusing on Social Media Monitoring & Intelligence Software as a Service. The
purpose of this document is to record and share my learning’s from the process.
There were some aspects of the investment raising process that i was happy with, and some other
things that after consulting investors and learning a bunch more, in retrospect i could have done in a
more organised fashion that would have made the investment process easier. I wanted to share the
process with other entrepreneurs and from my experience offer insights into how to raise money for
your company.
Note: Every company, investor and investment is different; the methods below are based on my
personal experience and may not be the right path for your company.
Process Overview
Raising investment money for your company should be treated like a project, with a plan which you
execute upon with timeframes, milestones and tasks assigned to team members. This increases the
change of closing your capital raise successfully.
If you like you can put all the timelines and tasks into BaseCamp or Excel or some kind of project
tracking system for maximum efficiency. I like to use Google Docs for all Lists and Documents.
1. Prepare
Company
Information
2. Engage
Investor
Market
3. Execute
Due
Dilligence
Process
4. Close
Investment
Capital
Round
In my experience you should expect this process to take anywhere from 6 weeks to 6 months
depending on the amount of capital you are raising, the complexity of your company, the complexity
of the investment structure, the economic climate, the number of available investors, the number of
available investment deals and the readiness or maturity of your company.
Also prepare yourself mentally for an exhilarating time with a whole heap of stress, high’s and
disappointments. It’s likely than a potential investor who expresses interest early will later pull out,
be sure not to take it to heart. Just like anything, closing investment money is about relentless
persistence. The joy and validation you will experience when you close your first investment round
will likely be as no other experience you have had in your life ☺ Good Luck!

2. Nick Holmes a Court
nick@nickhac.com
http://www.nickhac.com
@nickhac
Step 1 : Prepare Company Information
Before you go to the angel market to raise money, you need to prepare a bunch of information to
ensure your investors quickly understand the opportunity and can work through the investment
decision process to a favourable outcome.
Having all your information prepared in advance will make the process much easier for you, reduce
the time required during the process and will increase your chances of closing an investment round.
Potential investors will see you and your company as organised, efficient and professional thereby
an attractive company to work with.
Company 1 Page Overview
Prepare a company summary as a teaser about your company and the investment opportunity.
[Insert link to Sample 1 Page Template Here]
10 Slide Company PowerPoint
Create an attractive succinct presentation that can be delivered in 10 -15 minutes. Key Slides should
include:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Problem we are solving
Why you should care about this problem
Our solution and why it is unique and defensible
Target customers/industry and any customer wins to date
Business Model / Pricing Model (how we make money)
Market Analysis and Sizing
Go To Market Strategy (Marketing / Sales / User or Customer Acquisition Plans)
About our team and why we are the right team to win this market
Financial Projections (and Historical performance if available)
Investment Offer (Amount Sought, Valuation Range and how you came to that valuation,
Proposed Investment Structure IE Convertible Note or Equity Purchase)
11. Why/how this investment will make an investor money + recent market exits
[Insert link to 10 Slide Presentation Here]
Investor Contact Log
Prepare a List of potential Investors in a spreadsheet with full contact details and keep notes on
dates and meetings and what you have sent when, in my list i had 30 contacts from family to
strangers.
Sample Data might look like:
Investor Name
Contact Details
Bob Smith
CompanyName
bob@smith.com
0411111111
@bob
jane@doe.com
Jane Doe
CompanyName
How you know
them
Met at Sydney
Angels, knows X
Person
Seen on LinkedIn
Investment
Sought
$XXXk
1 Page
Sent
Yes,
17/06
?
No
Presentation
Date
Delivered 04/07:
Notes on
meeting
Not Set
Letter of
Interest?
Received
DD?
Deal?
No
No
Not Sent
No
No

3. Nick Holmes a Court
nick@nickhac.com
http://www.nickhac.com
@nickhac
Step 2: Engage Investment Market
Once you have all your investment material prepared and checked it several times over, you need to
run a process of engagement with all the potential investors.
It’s important to create competitive tension or at least ensure that each investor is aware that this is
nt
a great opportunity and that there are multiple potential investors consisting the opportunity.
Day 1
Send to 1 page teaser to all potential investors
Day 3
Set meetings to view 10 minute 10 slide investment opportunity presentation.
Day 5
Confirm meeting times and locations
Presentations - First Meeting
1st Meeting: Meet and build rapport, 10 slide presentation, discuss opportunity, set next meeting
Information Phase 1 - Second Meeting
Product Demo, Meet Team, View DD Pack Overview, Discuss Investment Opportunity
Information Phase 2
Expression of interest, View Hard Copy of DD Pack, Send DD Pack Overview
Term Sheet
Agree Investment Amount & Terms
Due Dilligence Phase 1
Provide full DD pack with all information
Due Dilligence Phase 2
Investor Requirements: Customer meetings, 3rd Party Audits, Additional information
Close
Execute Legal Contracts

4. Nick Holmes a Court
nick@nickhac.com
http://www.nickhac.com
@nickhac
Step 3: Execute Due Diligence Process with Interested Investors
To move into a Due Diligence phase make it clear to potential investors that you will require a nonbinding written expression of interest. Prepare a 1 page document for your investor to sign which
may include a confidentially & limited time non-disclosure agreement, if the investor in
uncomfortable with that you may just ask for an expression of interest in written email.
Written Expression of Interest
Having written expressions of interest can be used across your investors as a technique to create
competitive tension and a feeling of scarcity or risk of lost opportunity if they don’t act quickly. EG:
You will be able to say: “we have a number of signed expressions of interest, we think you would be
our preferred investment partner and would really like to work with you - if you are interested in
finding more about this investment opportunity and you have the capacity to invest right now it
would be great to move quickly into the next phase of due dilligence”.
This will also filter out any investors who don’t have the capacity to invest or who are just browsing
investments without a real need to act. There are plenty of “Angels” out there who are curious
about deals or don’t personally have the cash to invest in your company and its better to find out
sooner than later.
Due Diligence Pack
Once a potential investor has provided a written expression of interest you should advise the
investor that you would like to move into the due diligence process.
Each investor will have a different set of requirements and if not proactively managed this DD
process can suck a huge amount of your time in responding to a long series of unique questions.
A technique for reducing time in DD is to create a Due Diligence Company Information Pack. This
pack will improve your chances of getting through DD and will make it easier for your angel to invest
in a timely fashion. The DD Pack is essentially proactively prepared information about all possible
aspects of company information that an interested investor might ask about.
Using the language of “Due Diligence Pack” for this as opposed to a “Company Information Pack” or
“Investment Memorandum” or something like this as it works like a sales closing technique. Anyone
can browse a Company Information Pack, but by entering into a “Due Diligence” process your
potential investor is guided towards an outcome.
As you move through the earlier stages of your investment process speak often of your Due
Diligence Pack, and you can offer the potential investor the table of contents of this pack to
demonstrate you are serious about your company and that you are well organised and prepared to
execute a transaction quickly and professionally which is appealing.
I personally like to prepare this in Hard Copy in a nicely bound folder, and when presenting it to
potential investors ill run them through the hard copy in person. I would suggest only releasing this
to an investor in soft copy once you have a signed Term Sheet.

5. Nick Holmes a Court
nick@nickhac.com
http://www.nickhac.com
@nickhac
1. Company Overview (2-3 Pages)
Mission Statement or Mantra
Customer & Market Summary
Technology Summary
Company Summary
Financial Summary
IP Summary
Product Summary
Sales & Marketing Summary
Team Summary
Board Information
Management Team Bio’s and
Personal References
Company Valuation Model
Investment History and Future
Requirements
Accounting Systems
Bank Account Statements
Balance Sheet
Cash Flow Statements
Sales Process Outline
Customer Contracts
CRM Opportunities List
Cold Calling Scripts
Account Setup Process
CRM Leads List
Market Research
Press Releases
Product Brochures
Customer Surveys
Team Structure / Hierarchy
(current and future)
Contractor Contracts
Policies & Procedures
Employment Forms & Contracts
Customer References
Signed Contracts
Roadmap
Product Specifications
Infrastructure Overview
Systems Architecture
Technology Standards
Vendor Contracts
Shareholders Agreements
IP Ownership Contracts
Trademarks
All Historical Contracts
2. Corporate
Shareholder Information with
ASIC Records
3. Finance
3 Year Financial Model
4. Accounting
Overview of Accounting
Standards & Procedures
P&L
5. Sales
Sales Strategy
Customers Order Form
CRM Overview
6. Marketing
Marketing Strategy
Email Marketing History
7. HR
Corporate Culture Summary
New Starter Guides
Confidentiality Agreements
IP Waiver/Assignment Contracts
Current Employee Full Contact
Details and Emergency Contacts
8. Customers
Customers List with Full
Contact Details
9. Technology
Summary
Project Plans
Testing Standards
10. Legals & IP
Corporate Structure
Patents

6. Nick Holmes a Court
nick@nickhac.com
http://www.nickhac.com
@nickhac
Why spend the time to prepare this Due Diligence Pack?
Preparing all the information in this DD Pack may take a 2-3 weeks of founders time so be aware
that it will need to be scheduled in and may also require input from multiple persons.
Not all items and sections in this may be relevant for your company.
Its good corporate practice to have this information prepared and kept up to date throughout the
lifecycle of your business. It not only helps to truely define and understand your company and the
opportunity you are engaging but it also ensures that the business isn’t just all in your head and that
if a bus hit you the company could be run by someone else which is what investors and acquirers are
looking for.
This DD Pack material also prepared is also extremely useful if you ever decide to sell the company
or get an M&A opportunity. If you do have the opportunity to exit the company you will be more
likely to close that exit transaction, you will increase the value of that transaction and make the
company more desirable to be acquired as it is well documented and has all the processes in place.
Step 4: Closing an Investment Round
To close an investment round you need to be at a point where the investor has expressed interest in
writing, has acknowledged ability to commit funds in the required timeframe and there is goodwill
between the parties towards an exciting opportunity and investment return.
Typically you should have a term sheet, which refers to key agreed items like Investment Amount,
Valuation and Investment Structure and specifies that the investment is non-binding and is pending
successful completion of due-diligence and agreement of legal contracts.
You will need a number of key documents, if you have these prepared in advance this can help the
process, although from my experience most investors like to prepare these as it gives them greater
peace of mind that you aren’t doing anything their lawyers don’t approve of.
Expect the cost of legals to be anywhere from 5-10K upwards. If you are a really early stage company
your investor should let you use the money you raise to pay for your 50% of the costs of this.
For equity/share purchases you will require a Sale and Purchase Agreement (SPA) and a
Shareholders Agreement.
For Convertible notes you will require a Convertible Promissory Note Contract, although some
investors may also want a Shareholder’s Agreement.
[Insert Link to Example Sale Purchase Agreement]
[Insert Link to Example Shareholders Agreement]
[Insert Link to Example Convertible Promissory Note Contract]