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How do I find funding?

So you’ve got a great idea, you have started the company. You scrapped, scrabbled and saved. You have worked like a dog, run up credits cards, borrowed equity on your house and hit your friends up for cash. Your business is on the verge of taking off; it just needs the next infusion of capital to hit the big time. What do you do?

Here is a short list of things you’ll need to know. These are opinions. They are not gospel. They could be very right. They could be very wrong.

(The notes below are from a lecture given by Steve Fleming of Georgia Tech’s Venture Lab , one seriously smart guy from the venture cap biz)

What flavors does funding come in?

• $10k credit card (debt)
• $30k 2nd mortgage (debt)
• $100k angel investor (debt/equity
• $300k angel & seed (equity)
• $1m seed venture (equity)
• $3m early stage (equity)
• $10m later stage (equity)
• $30m public markets (equity)
• $100m – corp bonds (equity)

debt

• no loss of owership
• must pay back
• short time horizon – 3 yr
• monthly payments
• interests not aligned

equity

• 1 out of 10 to deliver 20 to 30:1
• no monthly payments
• large amounts available
• interests aligned
• long time horizon 7 year exit
• you lose some ownership
• you will have bosses
• investors focused on exit

grants

• no monthly payments
• no loss of ownership
• variety of sources- SBIR, STTR, ATP
• early-stage friendly
• highly competitive
• limited to certain technologies

bootstrapping

• no monthly payments
• no loss of ownership
• domestic tranquility
• difficult to make capital

pick your investors carefully

• location
• preferred stage
• industry target
• deal size
• track record
• potential synergies
• chemistry

evergreen fund

• requires 3:1 match
• incoming funds used to finance new

approach

• find/use intermediary
• limit to 10 page biz plan
• spelling, grammar count
• do not use 3D charts
• do homework on the person
• understand how it fits portfolio, stage, industry model
• investor pitch is not sales pitch
• talk about markets, mngt team, unique idea
• sell company not product

seven deadly sins (or how NOT to get your plan read)

• insist on NDA
• focus on technoloy, not market, competion and customers
• practice top-down forecasting
• use 4 significant digits
• position investors as mushrooms
• fill plan with typos, errors, chartjunk and repetition
• expect to be acquired by Cisco

so you finally get a term sheet, what now?

• pick your battles
• understand everything
• Delaware C-corp, not LLC
• haggle but take the money & get to work

other great resources

• Art of the Start – Guy Kawasaki
• The Top Ten Lies of Entrepreneurs – Guy Kawasaki
• “Startup” – Jerry Kaplen

read everything above?

still interested?

hot to trot?

• check out Savannah Angel Partners