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Michael J Skok :

Startup Secrets :

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecrets

www.mjskok...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecrets

www.mjskok...
Hi

Harvard innovation lab :

Startup Secrets :

Company Formation

@mjskok

#innovationlab

Michael J Skok :

#startupsec...
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Harvard innovation lab :

Startup Secrets :

Company Formation

@mjskok

#innovationlab

Michael J Skok :

#startupsec...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
Hi

Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

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Harvard innovation lab :

Hi

Startup Secrets :

Company Formation

@mjskok

#innovationlab

Michael J Skok :

#startupsec...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

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Harvard innovation lab :
#innovationlab

Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsecr...
Harvard innovation lab :

Hi

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Michael J Skok :

Startup Secrets :

Company Formation

@mjskok

#startupsec...
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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

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Harvard innovation lab :
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Michael J Skok :

Startup Secrets :

Company Formation

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Funding strategies to go the distance

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This presentation walks you through the different considerations you need to make as an entrepreneur evaluating funding needs. Whether you are seeking funding for a non-profit or establishing a new tech venture, this overview is designed to help you determine the right approach for your particular situation.

Veröffentlicht in: Business, Wirtschaft & Finanzen
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Funding strategies to go the distance

  1. Hi Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok Harvard innovation lab #startupsecrets www.mjskok.com STARTUP SECRETS An insider‘s guide to unfair competitive advantage Funding strategies to go the distance MICHAEL J SKOK North Bridge Venture Partners twitter: @mjskok mjskok.com 1
  2. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Agenda • Many ways to fund your startup – from angels to accelerators • Develop a funding strategy – Your particular needs? • even raise money ? – Explore the options • Initial funding • Trajectory to stay funded • Remove the mystique of VC – Attracting – Process • Case example: Endeca – Steve Papa, founder – Details can be found here 2
  3. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Sex, Relationships & Money This could get complicated, but it needn‘t! 3
  4. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Raising money is like sex • Everyone wants to know about it • Few people talk about it openly 4
  5. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Raising money is like sex • Everyone wants to know about it • Few people talk about it openly • People are afraid to ask… 5
  6. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Everything you always wanted to know about raising money * * but were afraid to ask… 6
  7. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Raising money is like sex • Everyone wants to know about it • Few people talk about it openly • People are afraid to ask… • It‘s fun once you get it! 7
  8. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Typical sources: • Equity – Angel – Accelerators – Seed, Venture Capital • Including Strategic / Corporate investors – Growth, Private Equity – Public Markets • Other – – – – • Bootstrap Friends & Family Debt Grants, subsidies, off balance sheet Alternatives – e.g. Crowdfunding • • Business: e.g. AngelList Products/Services: e.g. Kickstarter 8
  9. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Funding strategy • Should you even raise money? – If you don‘t know = the answer is no! – Do the work first • Example reasons for a ―no‖ – – – – No need! Personal: risk aversion, lifestyle, control Business: Small potential Other: not for profit, or research 9
  10. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Overview Ideation Confirmation Creation Validation Repeatability Scalability Profitability Predictability Decreasing RISK Increasing VALUE 10
  11. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com The 2 best times to raise capital • With all the POTENTIAL… – Or • Plenty of PROOF ! 11
  12. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Overview Ideation Confirmation Creation Validation Repeatability Scalability Profitability Predictability Decreasing RISK Increasing VALUE 12
  13. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Crisis? What crisis ?! 13
  14. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Overview Ideation Confirmation Creation Validation Repeatability Scalability Profitability Predictability Decreasing RISK Increasing VALUE 14
  15. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Overview Ideation Confirmation Creation Validation Repeatability Scalability Increasing VALUE Profitability Predictability 15
  16. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Overview Ideation Confirmation Creation Validation Repeatability Scalability Profitability Predictability Decreasing RISK Increasing VALUE 16
  17. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Angel • $ wide variety: – a few thousand to a few million – Convertible debt or equity • Individuals – Generally affluent – Experienced advice • Angel networks – – – – Networks of connections Professionally organized - cohesive Fund centric model Clarity and speed of process 17
  18. Hi Harvard innovation lab : Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com #innovationlab Evolution of Angel Investing • Accessing Angel Investors: CommonAngels Fund III Who knows you Stage; total capital need – Domain focus / fit – Portfolio diversification $13M ($33M under mgmt) Stage – – Size Seed, early stage Sectors Software, Internet, Digital Media, SaaS, Cloud, Mobile Geography Boston, New England, and NYC Management Two General Partners and an 8person Investment Committee 18
  19. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Portfolio Companies 19
  20. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Seed… • Seed spray and pray Or • Seed to A 20
  21. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Seed Capital • seed2A or seed2BE? • Agile, it‘s not just for engineering • Think like an investor • Local or express - preserving exit options • Software today is different 21
  22. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Seed to A: Confirmation • Problem – ―A problem well stated is a problem half solved‖* • Ideally 4U – see ―Value Proposition‖ • Potential – Market opportunity • Product – Specification • Team – Identification *Charles Kettering, head of research for GM 22
  23. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Accelerators • 4 hats: founder, investor, vendor, donor • Best are exclusive (YC, TechStars) • Short time, short money $18k for 6% equity (optional $100k note) 12 week program • Strong results @reedsturtevant 23
  24. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com TechStars Boston – $2M fund 24
  25. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com TS Boston 2011 • TS invested $500k • 100x follow on, 2 yrs • $46M by others 25
  26. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Strategic Partnering Carmichael Roberts • Identify large companies that need your technology or products – Find the internal champion—this is critical! • Convince them that you can increase the time to market with their help – $$$ and expertise • Carve out an area to work on exclusively with them – Royalty on final products 26
  27. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Government Support • Unemployment remains a huge issue in the U.S. – Local, State and Federal levels • Response: – Programs to stimulate jobs – Via new ideas & companies • Find them: – Grants: money given without any need to repay – Tax Credits: keeps money in your business – Special Loans: like grants with small payback 27
  28. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Non-Profit Businesses 501c3 • Philanthropy - often best capital source – Foundations – HNW individuals – Large companies • Can still build a business similar to a for-profit – Partner with for-profit, if needed – Reward through bonuses not equity • If profitable path needed for a particular product line? – Do not force it! – License out or spin off the business 28
  29. Harvard innovation lab : Hi Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com #innovationlab Strategic / Corporate investors • Their motivations? – Business relationship – Financial return – Hedging? • Your motivations? – Is this on your roadmap? • Or are you being tempted by the $? – What does this enable that you otherwise wouldn‘t have • • • Market access Credibility Whole product – What does this limit? • • • Other strategic partners? Exit Business relationship first – Skin in the game 29
  30. Hi Harvard innovation lab : Startup Secrets : Company Formation @mjskok #innovationlab Michael J Skok : #startupsecrets www.mjskok.com 30 What is right for you? Intense Capital Efficient Small Potential Large 30
  31. Hi Harvard innovation lab : Startup Secrets : Company Formation @mjskok #innovationlab Michael J Skok : #startupsecrets www.mjskok.com 31 What is right for you? Intense Capital Efficient Small Potential Large 31
  32. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Venture Capital • Seed: ~$100k to $1-3m – Seed to A or Pray? • A to IPO – $Millions, Multiple rounds • Stage dependent participation, involvement – Active (board seat) – Passive (follow ―lead‖ investors) 32
  33. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Expectations of your VC? • • • • Operating experience? Investment experience? Hands on / off? Thoughts… – – – – – Team & board building Remove roadblocks Reveal opportunities to accelerate Strategic insight Access to resources, network 33
  34. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Sex, Relationships & Money This could get complicated, but it needn‘t! simplified 34
  35. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com VCs receive ‗000s of plans 35
  36. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com This is what happens to most… 36
  37. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Research…  Fit: Geography, Sector, Stage  Portfolio: Complementary, competitive?  Partnership (brand)  Track record  Capital, free capital, reserves 37
  38. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Target, be selective and focus  Fit: Geography, Sector, Stage  Portfolio: Complementary, competitive?  Partner(s)  Track record  Capital, free capital, reserves 38
  39. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Build a relationship You could be partners for several years… 39
  40. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Triangulate ways to connect • • • • Find someone who knows the VC Get a warm introduction Interact on line Use your initiative! 40
  41. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Process Run your own… 41
  42. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Process framework The VC You • • • • • • • • • Research Connect Meet Motivate Diligence Fit check Pitch Legal Celebrate (briefly!) • • • • • • • • • Thesis Qualify Meet Prioritize Engage Socialize Partner meeting Final diligence Fund 42
  43. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com First connection: Who, what, why? • Make a connection • Establish – Who are you (relevant experience) – What do you do (uniquely well for who) – Why does it matter (market opportunity) • Investors often have ADD – (not value add – Attention Deficit Disorder!) – Limit agenda, control the discussion, get the first meeting !! 43
  44. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com First meeting Tell your story… See ―Getting behind the perfect pitch‖ 44
  45. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Process – build momentum! The VC You • • • • • • • • • Research Connect Meet Motivate Diligence Fit check Pitch Legal Celebrate (briefly!) • • • • • • • • • Thesis Qualify Meet Prioritize Engage Socialize Partner meeting Final diligence Fund 45
  46. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Incomplete stand outs are better than complete stand ups! • We looking for outstanding: – People – Technology or other disruption – Market opportunity • One outstanding of the above literally stands out vs. all good, but none great • We don‘t expect complete – – – – – • Team Product Value prop GTM plan Business Model Entrepreneurs don‘t need all the answers! – Self aware, listening, leaders… 46
  47. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Dating and Validating Why diligence is so important to YOU too! 47
  48. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Dating - evaluating investors: • • • Everyone‘s money is the same color Get to know the partnership and their portfolio This is NOT an arranged marriage! Pick your partner. – Level of insight and experience – Track record is great but it‘s history – Talk to others who have worked with them • • Will they be a balance for you? Good self-aware mentor? – Find someone who is genuinely motivated to set you up for success. – If you don‘t have comfort, and personal chemistry, • • Keep looking! See LinkedIN article – http://www.linkedin.com/today/post/article/20130206211336-1893586-who-arethe-best-venture-capitalists-pure-investors-or-operators?trk=prof-post 48
  49. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Validating - the VC‘s work • Get to know the team – (Time, References etc) • Understand the business – (value prop, biz model) • Check under the hood – (eg Expert opinion on Tech) • Validate assumptions – (GTM, speak to customers, partners) 49
  50. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Process – term sheet timing… The VC You • • • • • • • • • Research Connect Meet Motivate Diligence Fit check Pitch Legal Celebrate (briefly!) • • • Term sheet? • • • Term sheet? • • • Thesis Qualify Meet Prioritize Engage Socialize Partner meeting Final diligence Fund 50
  51. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com The Deal “The process is the deal” Rich D’Amore 51
  52. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Funding strategy questions • First question – How much do you need? 52
  53. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com How much do you need? • • • • Run the numbers Build the assumptions Assess the dependencies Define the milestones 53
  54. Harvard innovation lab : Hi Startup Secrets : Company Formation @mjskok #innovationlab Michael J Skok : #startupsecrets www.mjskok.com Financials • P&L, Cash Flow – • 6 quarters for cash flow, requirement For sizing the business, overall capital requirement (informs investor for their reserves) – Annual P&L, CF up to 5 years thereafter, – Highlighting if applicable – Cash flow positive – Breakeven Suggested information / detail as needed for the above – – – Headcount Bookings Revenue • – – Gross Margin Expenses • – – May need to break out things like Services depending on your business Major categories like R&D, Sales, Marketing, G&A shown as needed Profit/Loss Cash 54
  55. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Realistic optimists? 55
  56. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Funding strategy questions • First question – How much do you need? • Second question – How much do you want? 56
  57. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com How much do you want? • Enough to build real value • Define the milestones • • • • • Key hires Product beta, ship First customers Channel partners Etc… • 18 months of runway typically 57
  58. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Funding strategy questions • First question – How much do you need? • Second question – How much do you want? • Final question – What should you raise? 58
  59. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com What should you raise? • One strategy (dilution sensitive, risk tolerant) – Raise just what you need – Just before you need it ? • Another strategy (dilution insensitive, risk intolerant) – Raise more than you need – Well before you need it • Either way – Timing is everything so plan – Assume the unexpected 59
  60. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Factors • Predictability of your business – – – – Your execution Market adoption Cash flows (business model) Potential outcome (risk / return) • Competitors‘ balance sheets • Valuation… 60
  61. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Valuation The sixty four million dollar question… 61
  62. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Valuation vectors 62
  63. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Don‘t just value – evaluate… Always be one round ahead in your thinking • Proof (Metrics, Milestones per earlier) – Customers, Partners, GTM, BizModel, Product • Allow for – Unknowns – Time to fundraise • Capital to capitalize! 63
  64. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Ultimate exit potential (if you must!) • Potential acquirers – Their motivations • Recent transactions in the space – $ paid and valuations basis • Independent beyond IPO • Comparable valuations – Data for these like revenues, growth rates, market cap 64
  65. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com ―ABC: Always Be Closing‖ • Build relationships between financing rounds • Always ready to close 65
  66. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com The most important capital you‘ll raise… Human capital Invest in it with your option pool! 66
  67. Harvard innovation lab : Hi #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com What really matters • • • • Investor fit Amount of capital raised Human Capital (option pool) Timing (To clear the bar: Clean Terms) 67
  68. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Raising money is like sex • It needn‘t be complicated • It‘s fun when you get it! • So pick your passion not your poison 68
  69. Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok #startupsecrets www.mjskok.com Thank you… • • • • Maia Heymann @MaiaHeymann Reed Sturtevant @ReedSturtevant Jeffrey Beir @jbeir Carmichael Roberts • Steve Papa – Common Angels – TechStars – Seed2A – NB Venture Partners – Endeca *Learn best practices from Endeca Founder Steve Papa here. 69
  70. Hi Hi Harvard innovation lab : #innovationlab Michael J Skok : Startup Secrets : Company Formation @mjskok Harvard innovation lab #startupsecrets www.mjskok.com STARTUP SECRETS An insider‘s guide to unfair competitive advantage Funding strategies to go the distance MICHAEL J SKOK North Bridge Venture Partners twitter: @mjskok mjskok.com 70

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