How To Raise Capital – Emerging Business Seminar Debrief

Key takeaways:

VC investing significantly increased in Q2 2011

Angel investors are “cautiously pessimistic” but investments dollars are available

Local sourcing trends: boundaries are blurring, more collaborations, expectations and appetites depend on economy, tax policy matters

Raise enough capital to get off the fundraising trail and achieve the next significant company milestone

Do you have a business or just a hobby?  A business can generate profits.

Create a business plan that tells your story – what is the problem in the marketplace? what solution does your business offer? what is the go-to-market strategy?  how does your solution make money (i.e., implementation)?  how is your solution different from the competition?  how do you grow the business?  how do you exit the business?

Identify sources of capital appropriate for your company’s stage (e.g., seed, angel, VC, etc.), and be prepared as the founder to fund the company (together with family/friends) to (some) proof of concept.

Understand the terms of the offering beyond pre-money valuation (i.e., how much equity do you give up for the investment) – economic, management, information rights, etc.

Comply with federal and state securities laws in sourcing and raising capital

Tips for increasing your chances of success:

• Fundamentals: capital is scarce, investment opportunities are not; investors seek opportunities that fit their interests / risk criteria
• Approach: know each investor’s interests; build for the long term but plan the exit; know your limitations; know the holes in your team and how you will fill them
• The Pitch:  pitch what investors want to know, not what you like; arrogance doesn’t work; listen carefully
• What ATIF looks for:  the business, not the technology; what is the pain point? how acute is it?  the customers – who are they? how many of them are there? how do you get them? why will they pay for your solution?
• What matters most: valuation and derisking the deal – deal terms, due diligence, taking care of the team, governance