Startupfest 2019 - How to fundraise
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Jonathan Lowenhar (Founder & Managing Partner, ETW Advisors) Raising capital is a discipline that when mastered can fuel a startup’s potential; and when ignored, can doom a venture before it starts. Contrary to most of what a young entrepreneur reads, there is a method to the madness of fundraising… and it involves a great deal more than just a pitch deck. This talk will cover revealing topics such as the “the 28 questions all investors ask” and what represents a “minimum viable investor funnel” providing the audience with frameworks from which to construct a professional fundraise no matter if your startup is barely off the ground or well beyond product-market-fit.
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Startupfest 2019 - How to fundraise
- 1. ETW’s Guide To Start-Up Fundraising
- 7. Reality Check 1 100 So you want to raise $$$…
- 8. Why Can’t You Raise? 1) Lack Traction For Your Stage 2) Wrong Investor 3) Don’t Know How to Raise Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 9. The Opening! Confidential – ETW Consulting Services Inc. Jonathan Lowenhar Pitch Materials Investors
- 10. • Get yourself in your best mood • Embody “arrogantly likable” • You’re in charge • They are lucky to have a chance to invest in your company • Don’t be afraid to ask questions Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 11. What to ask from the start • Tell me about your fund’s investment thesis? • What is your typical investment size? (bite size) • How much $ is left in the current fund? (dry powder) • When is your next fundraising cycle? • Do you lead? • Do you have any conflicting investments? Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 12. Your Pitch: ~20 slides in 20 min. • Have your story ready • Always open with a simple summary (< 30 seconds) • Be ready to be interrupted (sometimes a lot) • Customize message (and ask) to the type of investor Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 13. • Opening – “Series A enterprise SaaS company…” • Pain – “We eliminate injuries from the workplace…” • Solution – “Remote health and education platform…” • Team – “We are experts in human movement...” • Traction – “We’ve reduced injuries massively...” • Go-To-Market – “Enterprise sales...” Confidential – ETW Consulting Services Inc. Jonathan Lowenhar Your Pitch: ~20 slides in 20 min.
- 14. • TAM – “10k big logistics/shipping companies...” • Competition – “Calisthenics teachers…” • Financials – “$500k-$1M deal sizes…” • Raise – “Raising to reach 20 customers and $8M ARR” • Appendix Confidential – ETW Consulting Services Inc. Jonathan Lowenhar Your Pitch: ~20 slides in 20 min.
- 15. Some tips • Emphasize one key message per slide • Build appendix slides for the predictable questions • Be ready to demo if asked • Answer direct questions directly • Build in big reveals • Excitement & passion are great! Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 16. • Co-founders, don’t interrupt each other! • Questions = Objections • A financial projection matters; not the accuracy • Be ready to pitch without slides (hint: practice!) • It’s ok to say “I don’t know” at Pre-Seed or Seed Confidential – ETW Consulting Services Inc. Jonathan Lowenhar Some tips
- 17. Common Mistakes • Poor Listening – wait for the whole question • Jargon • Reading slides • Too informal • Too secretive • Solution Selling • Thinking only about your business as it looks today Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 18. The Opening! Confidential – ETW Consulting Services Inc. Jonathan Lowenhar Pitch Materials Investors
- 19. Materials • Financial Model • Pitch Deck • Cap Table • Demo • Product Data • 28 Questions Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 20. 1. What is the problem you are attempting to solve? 2. What is your solution to that problem? 3. What makes your team qualified for this opportunity? 4. Who are the co-founders? How do you know each other and how long have you worked together? 5. What skills are missing from the team? Confidential – ETW Consulting Services Inc. Jonathan Lowenhar 28 Questions
- 21. 6. What proof do you have that your solution works? 7. What is the market you sell to? Who is your customer? 8. How do you reach that customer? 9. What are the alternatives for that customer if they don’t buy or use your solution? 10. How do you sustainably generate leads and what are your KPIs? Confidential – ETW Consulting Services Inc. Jonathan Lowenhar 28 Questions
- 22. 11. How do you price your solution? How do you earn $? 12. What is churn today? What are primary causes and how has it trended over time? 13. How do you measure customer engagement? 14. What is required to deploy a new customer? Expense? Resources? Time? Change Management? 15. What are per-unit economics of the business? Confidential – ETW Consulting Services Inc. Jonathan Lowenhar 28 Questions
- 23. 16. What future products do you have on the roadmap? 17. What additional customer segments can you reach? 18. Who are the competitors in this space and how are you (sustainably) different? 19. How much capital have you raised? 20. What does cap table look like? Confidential – ETW Consulting Services Inc. Jonathan Lowenhar 28 Questions
- 24. 21. What are the primary uses of the new funds? 22. How much total capital do you need to reach scale? 23. If you succeed, who might buy your company? 24. Would you be willing to step down as CEO? Confidential – ETW Consulting Services Inc. Jonathan Lowenhar 28 Questions
- 25. 25. What valuation are you seeking for this round? 26. Would you be open to taking more $ this round? 27. What is your timing for closing? 28. Who else are you talking to? Confidential – ETW Consulting Services Inc. Jonathan Lowenhar 28 Questions
- 26. The Opening! Confidential – ETW Consulting Services Inc. Jonathan Lowenhar Pitch Materials Investors
- 27. The best introductions come without disclaimers – build REAL relationships
- 28. Building an Investor List • This is the CEO’s job • Lines not dots • Be wary of investor to investor introductions • There is no substitute for hustle • Get to a list of at least 20 before you raise from VCs • Every investor meeting is a pitch; even when it’s not Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 29. Minimum Viable Funnel 1st Dates 2nd Dates Biz Diligence Partner Meeting TS Legal Diligence Closing Networking Pitch Traction Scarcity/Cap Skeleton-free 20 8 4 2 1 Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 30. Three Curveballs to Watch For… • Customer introductions from prospective investors • Request for your financial plan • Customer reference requests Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 31. Tips For Closing • Cluster your meetings • Set a closing date (likely more than one) • Identify the investors willing to put in $ without a lead • Get your documents ready and wiring information clear • Use investor updates (and/or press) • Think like a home seller Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 32. Example Forcing Functions • Platform is going live • Signing a major customer (or partner) • Over-subscription and board meeting to decide who “gets in” • Name investor involved • Term sheet in hand Confidential – ETW Consulting Services Inc. Jonathan Lowenhar
- 33. What is the single biggest determinant of a successful fundraise? Evidence of a sustainable business. Confidential – ETW Consulting Services Inc. Jonathan Lowenhar