plug cambridge international entrepreneur meetup
TRANSCRIPT
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Plug CambridgeInternational Entrepreneur Meetup
David ChangJune 15, 2016
David Chang @changds
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MyJourney
Doing Biz in Boston
Lessons Learned
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David Chang @changds
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$80
$4
$42
$7$17
$110
$210
$270
$1
$135
Funding Exit
Venture Returns
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Direct Via Syndicate/Fund
My Angel Investments
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Doing Biz in Boston
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How can Boston help grow your business?
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See http://bostontechguide.com
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Local Pillar Tech Companies
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Big Tech Companies with Local Presence
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Industry Clusters of Expertise
Marketing Tech e-commerce Cybersecurity Cloud
Travel Mobile Ed Tech Robotics
Life Sciences Health IT Energy
See http://www.slideshare.net/bussgang/boston-startup-scene-fall-2015
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InvestorsSeed
EarlyGrowth
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Development Shops
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University Resources
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Accelerators / Incubators
David Chang @changds
Co-working
Corporate University Independent
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Events & Networking
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www.greenhornconnect.com/events/
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Media
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Lessons Learned
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Share Your Summit & Basecamp
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Leverage Your Natural Presentation Style
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Adjust for Your Audience
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No Blind Spots
PricingCustomer
Collaborators
Funding
Promotion
Product / Service
Context
Place
Company
Concept
Competition
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Pitch Materials for Each Level
•1 Sentence•1 Paragraph•1 Page•1 Light Deck•1 Follow-up Deck
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David Chang @changds
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Function
Size
Know YourselfLocation
Industry
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Start or Join a Company
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People Bonds > Company Bonds
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Find the Right Co-founders
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What Obstacles Stand in Your Way?
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Equity Capital Stages
Bootstrap
Angel
Venture Capital
Growth Equity
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Equity Capital Dynamics
Unusual return distribution for venture capital
So investors must
• Swing for fences every time
• Own significant stake
• Be able to change the team
Source: @DawnUmlah
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Fundraising Campaign
Prep Target Socialize Raise Close
David Chang @changds
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Basic Prep
Legal representation
Founders agreements
Cap table
Pitch materials
Financial plan
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Raise at Each Stage
How Much?
What For?
Prove Out?
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Structure
Preferred Stock
• Preferences over common
• Board seat or 2
• Option pool
• Liquidation preference- they get their $ first
• Control over sale, new options
Convertible Debt
• Debt that becomes preferred equity when you raise it
• No valuation, but the “cap” is a valuation ceiling
• Interest accrues, rate <10%
• Conversion discount
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Identify Investor Targets
Stage Location
Sector Business Model
Investment Thesis
Social / Trust Filter
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Socialize
• Get warm intros• Find strongest mutual connections to 30+ potential investors• Network over 2-3 months
• Ask for referrals, not money
• Refine pitch• Incorporate feedback, but avoid whiplash changes
“I’m not ready to raise”
“Who would be helpful?”
“Who else should I talk to?”
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Raise: Go for the Ask
• Talk to your top candidates ALL AT ONCE• Run conversations in parallel• Decide whether / when to tell investors about each other
• “Triggering events” to get a (or better) term sheet
• How much should you focus on valuation?
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Dilution & Valuation
• Professional investors will offer a reasonable range
• Don’t poison the relationship with greed
Example50/50 founder split
Seed: $1M on $xA: $6M on $12MB: $10M on $20M
See www.ownyourventure.com
What’s your share?
x=$3M: 17%x=$5M: 19%x=$7M: 19%$1.5M raise @$3M: 15%
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Closing the Deal
• Rolling close vs. set close
• Reference check investors
• Not done until money is in the bank
Key termsq Board compositionq Option poolq Voting rightsq Founder vestingq Change of controlq Redemption rightsq Information rightsq Anti-dilution
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Q&A
David Chang @changds