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Funded

Book Description

The venture capital world is often intimidating and hard to navigate, even for the most seasoned entrepreneurs. But it doesn’t have to be. Entrepreneurs who run effective fundraising processes don’t do it by accident. With this book, you’ll learn what it takes to successfully raise a round of funding for your company. Author Katherine Hague explains how the venture capital industry works, and walks you through each step necessary to plan, execute, and optimize your own fundraising round. Packed full of exercises, checklists, and templates, this book guides you through the process from start to finish.

Table of Contents

  1. Preface
    1. Why Funded?
    2. Is This Book for You?
    3. What You’ll Find Inside
    4. TheEntrepreneursGuide.com
    5. Safari® Books Online
    6. How to Contact Us
    7. Acknowledgments
  2. I. Building a Foundational Knowledge
  3. 1. What Makes a Startup Fundable?
    1. How Investors Make Money
    2. The Unicorn
    3. Investor Expectations as You Grow
    4. Tier 1 Venture Funds
    5. Conclusion
  4. 2. Venture Capital: The Pros, Cons, and Alternatives
    1. Arguments in Favor of Venture Capital
      1. Accelerated Growth
      2. Network
      3. Credibility
      4. Exposure
      5. Benchmarking
      6. Funding Research and Development
    2. Arguments Against Venture Capital
      1. Loss of Equity and Control
      2. Distraction
      3. Changed Exit Opportunities
    3. Five Alternatives to Venture Capital
      1. Reward-Based Crowdfunding
      2. Commercial Loans
      3. Government Grants
      4. Government Subsidies and Tax Incentives
      5. Bootstrapping
    4. Conclusion
  5. 3. Ownership and Valuations
    1. Understanding Ownership
    2. Share Classes
      1. Common Shares
      2. Preferred Shares
      3. Stock Options
      4. Warrants
    3. Calculating Valuations
    4. Factors Affecting Valuation
      1. Market Interest
      2. Experience
      3. Location
      4. Company Stage
    5. Is There a More Scientific Way to Calculate a Valuation?
    6. Types of Investment Vehicles
      1. Priced Rounds
      2. Convertible Notes
      3. SAFEs
    7. Conclusion
  6. 4. Structuring Your Raise
    1. Timing Your Raise
      1. Have at Least Six Months of Runway
      2. Understand Your Seasonality
      3. Plan Around Industry Events
      4. Plan Around Company Milestones
      5. Avoid Holidays
    2. How Much to Raise
    3. Structuring a Funding Round
    4. Conclusion
  7. II. Preparing for the Fundraising Trail
  8. 5. What Investors Are Looking For
    1. Team
    2. Market
      1. Market Size
      2. Product/Market Fit
      3. Red Flags
    3. Product
    4. Traction
    5. Other Factors Relating to Fundability
      1. Social Proof
      2. Geography
      3. The State of Your Corporate Records
    6. Conclusion
  9. 6. Building the Pitch
    1. Cleaning Up Your Online Brand
      1. LinkedIn
      2. URL and Email
      3. Social
      4. Media
      5. Website
      6. Photos
    2. Elevator Pitch
    3. The Pitch Deck
    4. What to Do When Preparing Your Deck
      1. Use Data
      2. Paint the Big Picture
      3. Iterate
      4. Put Time into Design
    5. What Not to Do When Preparing Your Deck
      1. Don’t List a Valuation
      2. Don’t Include Everything
      3. Don’t Be Unrealistic
    6. Conclusion
  10. 7. Preparing for Due Diligence
    1. How Due Diligence Is Conducted
    2. Responding to a Due Diligence Request
    3. How to Prepare for Due Diligence
    4. Conclusion
  11. 8. Drafting Financial Projections
    1. How to Properly Prepare a Financial Statement
      1. List Deferred Revenue Separate from Other Revenue
      2. List One-Time Revenue Separate from Other Revenue
      3. List Booked Revenue Separate from Other Revenue
      4. Pay Close Attention to Cash Flow
      5. Be Conscious of Overspending
      6. Properly Handle Assumptions
      7. Understand the Cost of Goods Sold
      8. Address Bad Debt Expenses
      9. Show Loan Payments
      10. Include Taxes and Benefits
      11. Include Wiggle Room
      12. Provide Breakeven Analysis
      13. Include the Founder’s Salary
      14. Include Both Historical and Projected Data
      15. Output Key Metrics
    2. Conclusion
  12. III. Executing Your Fundraise
  13. 9. The Investor Pipeline
    1. Types of Target Investors
      1. Venture Capitalists
      2. Angel Investors
    2. Creating a Target Investor List
    3. Evaluating Investor Fit
      1. Personality Fit
      2. Domain Expertise
      3. Activity
      4. Track Record
      5. Strategic Fit
      6. Stage
      7. Tenure
      8. Fund Hierarchy
      9. East Coast Versus West Coast
    4. Making Initial Contact with Investors You Don’t Know
      1. Join an Accelerator
      2. Enter Pitch Competitions
      3. Get Warm Intros
      4. Attend Events
      5. Do Cold Outreach
    5. Increasing Response Rates and Building Rapport
      1. Find Common Ground
      2. Add Value
      3. Multiple Points of Contact
      4. Stay in Touch
    6. Timing Your Outreach
    7. The Initial Pitch Meeting
    8. Conclusion
  14. 10. The Anatomy of a Term Sheet
    1. Understanding the Term Sheet
    2. How Term Sheets Are Structured
      1. The Deal and Key Players
      2. Rights and Responsibilities
      3. Housekeeping
    3. Negotiating a Term Sheet
    4. Conclusion
  15. 11. Closing the Deal
    1. Securing a Lead
    2. Due Diligence and Drafting
    3. Filling the Round
    4. Drafting
    5. Signing and Closing
    6. Managing Investors
    7. Conclusion
  16. IV. The Top Tens
  17. 12. The Top 10 Tips for Equity Crowdfunding
    1. 1. Prepare Yourself Legally
    2. 2. Pick the Right Platform for You
    3. 3. Follow Other Deals
    4. 4. Work Directly with the Platform
    5. 5. Create a Great Deal Room
    6. 6. Time the Crowdfunding Portion of Your Raise Carefully
    7. 7. Get Backed by Influencers on the Platform
    8. 8. Take Advantage of Syndicates
    9. 9. Line Up Your Initial Backers
    10. 10. Be Data Focused
  18. 13. The Top 10 Fundraising Mistakes
    1. 1. Waiting Too Long to Raise
    2. 2. Raising with Nothing More Than an Idea
    3. 3. Putting All Your Eggs in One Basket
    4. 4. Overemphasizing the Importance of Valuation and Overoptimizing Terms
    5. 5. Not Hearing No
    6. 6. Not Doing Your Research
    7. 7. Not Having a Lead Investor
    8. 8. Pitching Poorly
    9. 9. Prioritizing Money over the Right Investor
    10. 10. Not Understanding Your Own Business
    11. Bonus: Raising Too Much or Too Little Money
  19. 14. The Top 10 Fundraising Hacks
    1. 1. Set a Deadline to Create Urgency
    2. 2. Network Your Way to Investors Through Entrepreneurs
    3. 3. Time Media Around a Raise
    4. 4. Inflate Demand
    5. 5. Play Investors Against One Another
    6. 6. Use Software to Get to Know Investors
    7. 7. Use Social Media to Turn Cold Outreaches into Warm Leads
    8. 8. Make Local Investors Think You Have Valley Interest
    9. 9. Say When You’ll Be in Town, Even if You Don’t Know Yet
    10. 10. Act Like You’re Based in the Valley—At Least Part-Time
  20. Conclusion
  21. Index