raising money

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Post on 29-Nov-2014

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How to raise money. A useful guide to learn the basics about raising money.

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  • 1. How to raise money If you need it.
  • 2. menu What | Why | When | Who | Where
  • 3. But first You will hear a thousand times You can not make it, it's boring, not enough of X, Y, Z, there are plenty like you You will only make it real if you stand by it But you need to have touch points to know if you are on the right track. Investors are one of those (a very important one).
  • 4. It's Better to have an investor It's better to have a 10% of something big than the 90% of nothing Take the money and share the value An investor is: Money A vote of confidence A link to another network of investors A person who will help you and give you a new point of view
  • 5. Amazon Bezos: I needed to raise $1 million, and I ended up giving away 20 percent of the company. I raised it from 22 people at approximately $50,000 a person. That was 1995, and the first question every investor asked me was: Whats the Internet? Now that 20% = $35 billion Todays Bezos stake =
  • 6. What investors want
  • 7. What investors want An investor is as good as their exits. What exit means. Founders buy back the shares Another investor buys their shares Company A is bought by company B at a profit Company goes public This exit plan should be done in a time frame of 3-5 years.
  • 8. Create value Create value = Disrupt a market In a reasonable time frame An investor does not invest in a business to obtain a 5%, they invest in people who can create value
  • 9. A business and a entrepreneur It's not the same
  • 10. I want to create a new SAP Do I need an investor? No. Why? Because there is little chance to enter the market and there is little chance to succeed making something like SAP. You can do something like SAP inside a big company.
  • 11. I want to make cupcakes Do I need an investor? No. Why? Because unless you present a breaking model for the sector, you are just a business. You are not an entrepreneur.
  • 12. I have a recipe to make sweet beer Do I need an investor? Yes. Why? Because if everything goes well you can break the market by introducing a new category that doesnt exist right now and you can become an acquisition target.
  • 13. I have a sensor that can prevent obesity Do I need an investor? Yes. Why? You will need resources to make it happen. You have a good chance for failing but if you succeed you will make history.
  • 14. If you want to work with investors THINK BIG
  • 15. Why you need to think big? An investor will go through hundreds of ideas, business plans, projects in a year You can be project number 86 or something else You also need to offer a clear path to the exit At the end we will see how to present to an investor
  • 16. Why do you need the money
  • 17. why You need the money to eat You need money to pay the rent I need to buy a computer If that's your case, you need a job. First find a job, then try to start your company. Investors don't pay to make ends meet.
  • 18. why I have the best idea in the world but I need a team to build it. You don't need money. You need to convince your team to make a prototype.
  • 19. why I have a prototype, we have done some testing and it's working. We need to launch an advertising campaign and hire some sales people. If that's the case investors don't want you. Sales people go by incentives. If you have a product easy to sell you don't need an investor.
  • 20. why We are doing well in Spain but we need some money to make our infrastructure more reliable and be able to expand to other countries. We will double our business by opening in Mexico in the next year. Then you may have a good chance to have an investor.
  • 21. why We are doing well in Spain (KPIs) but we need some money to make our infrastructure more reliable and be able to expand to other countries. We will double our business (a number) by opening in Mexico in the next year (a time frame). Then you may have a good chance to have an investor.
  • 22. When you need to ask for money
  • 23. when
  • 24. when They don't trust you You need them You dont need them
  • 25. when Before raising money Work in a company for a while. Learn a little about how work is done On your own do some projects for others consultancy, development. Learn things like deadline, compromise, results Finally, start your own thing. Probably you will fail in the first two or three attempts. So don't rush for money.
  • 26. Who is going to give you money
  • 27. who Fools (Friends and family) Angel investor Professional investor - VCs Banks
  • 28. fools You can raise the first 5.000 / 10.000 No conditions, no contracts They want to help Tell them how much are they getting from the company (normally 10%)
  • 29. Angels You can raise 25.000 / 50.000 from each one They will need contracts and some conditions KPIs are softer and easier to achieve Timing normally is generous
  • 30. Profesionals - VCs From 100.000 to 500.000 The need KPIS You will have a contract and conditions You need to deliver results every quarter
  • 31. Your numbers Having your numbers in good shape and in clean sheets is always good If you can not measure, you can not grow The basics KPIs Overall cost of your operations per month Overall income per month Profits (if any)
  • 32. KPIs Key Performance Indicator You need to have a few indicators that will allow you to explain your business Traditional KPIs