1. 10 Steps to Start up-
“Pitching for StartUp
Investment”

2. Purpose
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• “Pitching for Startup investment”
is part of the “10 Steps to
Startup” series to help aspiring
entrepreneurs get the funding
they need to launch their
business idea.
• This workshop will be taught by
David Beatty, veteran angel
investor, and facilitated by Bryan
Janeczko of StartOut and
founder of Wicked Start.

3. Facilitator- Bryan Janeczko
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• Cofounder of StartOut whose mission is to
build the next generation of entrepreneurs and
business leaders in the LGBT community.
• Corporate refugee turned serial entrepreneur,
founding multiple startups.
• Founded Wicked Start, your online guide for
starting a business. Developed the “10 Steps to
Startup” series. For more information, or for a
free trial to help you start your business today,
visit WickedStart.com.

4. Instructor- David Beatty
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• Board Member of StartOut whose mission is to
build the next generation of entrepreneurs and
business leaders in the LGBT community.
• Entrepreneur, Co-Founding 8 companies
 Exited 3, 2 still operational, 2 bust
 Raised money for 4 of them
• Angel Investor
 Invested in 8 companies in last 2 years
 Founded of AngelExchange,Automating the
investment and reporting process for startup
funded companies..

5. “10 Steps to Startup”
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Step 1: The Starting Block - Building a Case for Your Idea
Step 2: Industry – Know before you go
Step 3: Prototype - Create a Sample of your product
Step 4: Bureaucracy - Structuring your business
Step 5: Business Plan – Charting your course
Step 6: Funding- Fueling your business
Step 7: Preparing for Launch- the Nuts & Bolts
Step 8: Hiring- Building the Team
Step 9: Operations
Step 10: Marketing- Creating a Buzz
This workshop will focus on Step 6: Funding-
Fueling Your Business Idea

6. Overview
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• Why raise funds???
• Obligations that come with funding
• Common sources of startup funding
• Typical deal types for startup investment
• Creating the investor pitch presentation
• Angel Fund Investing

7. Why Raise Funds???
Some common reasons to raise funds
• Time
– You don’t have enough
• To earn it
• To beat competitors
– Technology advance
– Gaining market share
• Capital
– Operating (cash flow), Inventory, Equipment (assets), Human (staff)
• Identity
– Shows employees and customers that investors believe in you.
• Trust
– That others trust you
BUT………..
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8. Funding comes with obligations
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Some common Obligations that come with funding
– You are now dealing with other peoples money
– Investors want an ROI
– Fiduciary responsibilities
– Regular reporting
– Transparency
– Control (of the company and what you do)
– Additional Paperwork that HAS to get done
– Did I say investors want an ROI?
Yes……..LOTS of Obligations

9. The Funding/Investment Cycle
9
Seed
Early
Stage
Series
A or B
Series
C or D
Public mktPhase
Players
Type
Common/
Founders
Stock
Common,
Preferred
or Bridge
Preferred,
Convertible
Preferred,
Mezz’ne,
Debt
Listed
equity/
Debt
Founders,
3Fs,
Grants
3f’s,
Individual
Angels
Angel
Groups,
Early stage
Funds/VC
VC
Strategic
PE
Invstment
managers,
Hedge
funds
Guidelines, NOT rules

10. Who Invests…and at what stage
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Phase
Amounts
raised
From
Seed
Early
Stage
Series
A or B
Series
C or D
Public mkt
Founders,
3Fs
3f’s,
Individual
Angels
Angel
Groups,
Early stage
Funds/VC
VC
Strategic
PE
Invstment
managers,
Hedge
funds
$1,000 –
$250,000
$100k –
$500k
$250k –
$5MM
$3MM
$50MM
($10MM)**
$50MM +
Guidelines, NOT rules

11. Who’s involved and Legal Fee’s
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People
Involved
In raising
Legal Fees
Phase Seed
Early
Stage
Series
A or B
Series
C or D
Public mkt
Founders
Founders,
Board
CEO/CFO,
Consultant,
Board
CEO/CFO,
iBanker
CEO/CFO,
Ibankers,
Analysts
$2,000 –
$20,000
$5k –
$50k
$20k –
$250k
$100’000s $MM’s +

12. Know where you are
• Seed
– Idea stage, typically pre revenue
• Early
– Idea flushed out, management team, revenue/pre
revenue
• Series A, B, etc etc
– Refers to the “round” of funding
– Typically revenue and management team
• IPO/Trade Sale/Mature/Cash cow
– Complex fundraising
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Seed
Early
Stage
Series
A or B
Series
C or D Public mkt

13. 2 forms of raise
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• Convertible Debt
– Debt with option to convert to equity
Debt
• Do not own part of the company
• Must pay back plus interest
• Different levels of “seniority”
• Superior to Equity
• Different types of Debt
Equity
• Shareholders own part of the
company
• Dividends paid at discretion of
board
• Different levels of “seniority”
• Inferior to Debt
• Different types of Equity
Common/
Founders
Stock
Common,
Preferred
or Bridge
Preferred,
Convertible
Preferred,
Mezz’ne,
Debt
Listed
equity/
Debt

14. Some types of Equity
instruments
• Common Stock
• Preferred Stock
– With Coupon
– Preferred convertible
• Options
• Warrants
• Restricted Stock
14
Common/
Founders
Stock
Common,
Preferred
or Bridge
Preferred,
Convertible
Preferred,
Mezz’ne,
Debt
Listed
equity/
Debt

15. Some types of debt
• Loan
– Somebody lends you cash, and repay plus interest
– Put up collateral as guarantee
– Bigger and more secure the company, the lower the risk.
• Overdraft
• Term
• Balloon
• Convertible Loan
– Loan that can convert to equity. Easy way to ensure that company
doesn’t become lifestyle company.
• Invoice Debt
– Sell receivables to a third party. Helps with Cash Flow
• Bonds
– Long terms loans sold on public markets. Big stable companies and
governments only
15
Common/
Founders
Stock
Common,
Preferred
or Bridge
Preferred,
Convertible
Preferred,
Mezz’ne,
Debt
Listed
equity/
Debt

16. Common Sources of Funding
for Start Ups
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• Personal savings
• Friends and family
• Angel Investors
• Angel Funds
• Bank Loans/SBA
(VCs/ Private equity are typically not common
sources for startups)
Founders,
3Fs,
Grants
3f’s,
Individual
Angels
Angel
Groups,
Early stage
Funds/VC
VC
Strategic
PE
Invstment
managers,
Hedge
funds

17. Investors- Who Are They?
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• Friends and Family,
• Typically people you know, often who also want to help.
• Invest their own money
• Angel Investors
• Individuals who invest their own money
– Accredited investors
• >$1MM net worth Ex home or $200K per year
• Invest typically for equity and are looking for a high return, not right for many
investment types
• Often don’t need to work, want to be involved
– Often members of Angel Groups
• Venture Capitalists
• Run funds to invest in (Typically) high growth companies where capital can
fuel growth.
• Work with other peoples money, thus have restrictions and obligations that
can drive decisions.
• Angel Funds
• Government funds, side car funds, etc.
Founders,
3Fs,
Grants
3f’s,
Individual
Angels
Angel
Groups,
Early stage
Funds/VC
VC
Strategic
PE
Invstment
managers,
Hedge
funds

18. Angel Investors /early stage VC’s
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Founders,
3Fs,
Grants
3f’s,
Individual
Angels
Angel
Groups,
Early stage
Funds/VC
VC
Strategic
PE
Invstment
managers,
Hedge
funds
What they have in common How they are different
Play in a similar space on the
investment continuum
VCs have fiduciary responsibility
to their Limited Partners
Look for similar things in a business
plan
Angels risk their own capital
Only invest if outlook is for
> 10X return
Diligence on due diligence varies
Expect to invest in multiple rounds VCs always require control
Portfolio approach: 2+ 7+ 1 Fund cycle affects VC investing
Time horizon is 5+ years Decision time frames vary

19. Common Sources of Funding-
Equity
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0 100,000 200,000 300,000 400,000 500,000
500 Classic VCs
1000-2000 Seed Funds
>50,000 Angels
>200,000 Friends & Family
500,000 Startup Companies

20. Angel Investors-
Expectations
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• From investor’s perspective
– Return on Investment
– Company involvement
• As advisor
• On board
• Part of management
• Or some want to be passive
• From company’s perspective
– Find or provide follow-on investments
– Introduction to potential partners or customers
– Very little interaction

21. A word on Exits and failure
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• Most common exit, if you are lucky enough to
have one, is a trade sale.
• Less than 1/20 Exits are an IPO.
• Most Startup companies go bust, over 60% in the
first 4 years of business
• Top 10 reasons business’s fail
– http://www.squidoo.com/starup_failures

22. Top 10 reasons business Fail
http://www.squidoo.com/starup_failures
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① Poor Execution
② No Viable Market
③ Too Much Leverage
④ Undercapitalizing the Business
⑤ Lack of Competitive Advantages
⑥ Competing Head-to-Head with Industry Leaders
⑦ Picking a Niche That is too Small
⑧ Breakup of the Founding Team
⑨ Poor Pricing Strategy
⑩ Growing too Fast

23. A word on the Law and Tax’s
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• There are LOTS of laws to comply with when
fundraising
• There are LOTS of legal implications to you in
corporate documents
• There are LOTS of tax implications, current and
future, for you and investors
GET ADVICE
$2,000 –
$20,000
$5k –
$50k
$20k –
$250k $100’000s $MM’s +

24. Valuation
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The post-money valuation determines who owns what
Post-money valuation = $4m

25. Valuation Exercise
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Valuation Exercise
• You and your business partner start DIVA, a fabulous
startup. You capitalize the company with $10,000 each
and receive 500,000 shares each. Diva then raises
$250,000 by selling 250,000 shares of the company to
Lady Gaga, who also thinks you are fabulous
QUESTIONS
• What was the post money valuation of Diva after your
initial investment.
• How many shares of the company do you have after
the investment with Lady Gaga closes
• What is the Pre money Valuation of DIVA
• What is the Post money Valuation of DIVA

26. Creating the Investor Pitch-
Start with the business plan
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Elevator Pitch
Two minute verbal summary
Product, opportunity, differentiation
Attract interest – not closing
Executive Summary
2-4 page written summary
Balanced presentation
Attract interest – not closing
PowerPoint
20 minute verbal presentation
Cover whole plan
Find serious investors
Full business plan
(write full plan first)
20-50 pages plus appendices
Validation scorecard (due diligence)
Basis for all other plan forms

27. Investors
What do they want?
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ROI

28. Investors
What do (I think) they want?
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• The Need
– Product or service that solves a real problem
• Quick Growth
– product service that is scalable
• Plan and Strategy
– Shown in superior presentation and business plan
• WWWWWH (details of plan, not high concept)
– Who, Why What, Where, When, How
– Achievable with the resources, not pie in the sky
• Very large market opportunity
• Team
• exit strategy

29. Presentation
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• Like a resume, its designed to get you the interview,
not the funding (job)
• Part of the business plan
– Business plan (a living document)
– Executive summary
– Presentation
• 20 minutes
– 10 for presentation and 10 for questions

30. Presentation
• Offer (what is your fundamental offer in the marketplace)
– What is it
– What is the need
– How your product solves it
• Strategy
– What is your plan of action
• Financial
– Cash (no fancy financing, you are a startup)
– Past and future
– Fundament business model. How does it make money
• Team
– Who are they and what are their accomplishments
– Have they worked together before
– Remember, many investors back the jockey, not the horse.
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31. Presentation (cont)
• Market
• What is the target market (segment)
• How big is the market
• Who is the competition
• What are your barriers to entry
• Why is it better (value proposition)
• Sales
– What sales have you MADE, how are they going to happen in future
• Distribution
– How is is going to happen
• Production
– Who is going to go it
– How is it going to be done
– Where is it going to be done
– Why do it there
– What is going to be produced and what is needed to produce it
– When will production happen
END WITH A CALL FOR ACTION
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32. Investors
Workshop Exercise
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• Fundraising is ALL about your network.
• Write down the names of people who you think might be
interested in investing …..
Name of person
What they do
Where they work
Your relationship with them
Who do they know (What network are they in)
How do you get to them (if you don’t know them)

33. 1/29/2015 33
Questions?

34. Appendix
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35. Wicked Start: Founder
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Bryan Janeczko, Founder
“As the Wicked mastermind, I founded Wicked Start to help small business
owners and early-stage entrepreneurs realize their dreams of starting a
business.
I was raised in Wisconsin but moved to New York over 15 years ago, bringing
with me a commitment to hard work, good humor but no cow-tipping – ever. I
have over 15 years' experience in finance and entrepreneurship, successfully
founding multiple businesses. Prior to Wicked Start, I co-founded Nu-Kitchen,
an online food retailer, serving healthy & delicious prepared meals. Starting
from the ground up in New York City, I built the company into a multimillion-
dollar business serving influential residents & celebrities who helped solidify
NuKitchen’s reputation. In late 2008, I sold the business to Nutrisystem, a
national weight-loss company.
I’ve devoted my life to small business and entrepreneurial growth and am a
recognized expert in the field. Through my efforts in the non-profit world, I’ve
been able to help build and grow businesses across this nation as an active
board member of the Entrepreneur’s Organization (EO) and StartOut.”
Watch Video Bio

36. Wicked Start
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This is your online “guide” for starting a
business that’s easy-to-manage
– Providing you with a customized 10 step roadmap of
concrete action items
– Giving you resources
and a community to
guide you through the
startup process
– Free trial available

37. Angel Investors- Where to find
angel funds?
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• Referral from someone the angel knows and trusts (Hint:
lots of networking)
• Web site matching
www.vfinance.com, http://activecapital.org,
www.gensx.com, www.fundinguniverse.com
• Find local angel group
• Directories of angel groups:
www.angelcapitaleducation.org
www.angelcapitalassociation.org