Startup Intervention: Need to Raise Seed Capital

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Module 4.2.2.2 Intervention
Need to Raise Seed Capital
February 2019
COACH METHODOLOGY TRAINING

INTERVENTION NEED:
Raise Seed Capital
2

Why Raise Capital?
3

Company Confidential. DO NOT DISTRIBUTEM O R G A N H I L L P A R T N E R S C O P Y R I G H T 2 0 1 8 - 2 0 1 9 4
FUNDRAISING: THE WHY?
Cash not only allows startups to live
and grow, but a war chest is also often
a competitive advantage when
developing talent, product, revenue,
and ops. Thus, most startups will need
to raise capital.
A few startup companies do
successfully bootstrap (self-fund)
themselves, but they are the exception.

Good News
Lots of investors hoping to give the
right startup money.
FUNDRAISING: GOOD / BAD NEWS
Bad News
Fundraising is brutal!
- Long
- Complex
- Ego-deflating
- Requirements
5

Good News
Lots of investors hoping to give the
right startup money.
Bad News
Fundraising is brutal!
- Long
- Complex
- Ego-deflating
- Requirements
FUNDRAISING: GOOD / BAD NEWS
6

Investment Strategy 1:
Fundraising Stages
7

Structure a plan that allows a
company to fuel it's growth
intelligently. In this stage we
want to take a long term view on
fundraising and determine what
is best for the company at two
points:
- Concept Stage
- Seed Stage
INVESTMENT 1: STAGES

Concept Stage – Investors at this stage are looking to
back a great team that can execute on a great idea.
Because the business is just launching, investors are likely
betting more on the team than the concept. At this time,
your most likely sources of funding are friends and family;
nonetheless, entrepreneurs should begin forming a basic
funding package during this time as it will serve as the
foundation for future funding rounds.
Seed Stage – It’s at this stage that the concept begins the
process of being vetted and if appropriate,
validated. While friends and family are typically still the
primary investors, some angels and angel groups are
willing to back seed stage investment opportunities. It's at
this point where the pitch and data room must become
more polished, fundraising must become a process, and
entrepreneurs must become more sophisticated in their
interactions with investors.
9

Concept Stage – Investors at this stage are looking to
back a great team that can execute on a great idea.
Because the business is just launching, investors are likely
betting more on the team than the concept. At this time,
your most likely sources of funding are friends and family;
nonetheless, entrepreneurs should begin forming a basic
funding package during this time as it will serve as the
foundation for future funding rounds.
Seed Stage – It’s at this stage that the concept begins the
process of being vetted and if appropriate,
validated. While friends and family are typically still the
primary investors, some angels and angel groups are
willing to back seed stage investment opportunities. It's at
this point where the pitch and data room must become
more polished, fundraising must become a process, and
entrepreneurs must become more sophisticated in their
interactions with investors.

Investment Strategy 1:
Raising Seed Stage Capital
11

INVESTMENT 1 (SEED): REQUIREMENTS
How developed should a product be to raise a Seed Round?
A prototype is helpful, but the level of
traction needed to de-risk the full product
potential is not usually possible at this stage.
Focus the pitch and communication efforts
on de-risking the team and market.
- Huge market potential
- Team/talent to capture the market
12

INVESTMENT 1 (SEED): REQUIREMENTS
Investment Strategy 1: Inputs -> Workshops -> Outputs…
but at the end of the day we need:
q Great deck
q Great pitch
q v1 financial model
q Data room for early investors
q Appropriate company structure for investment
q Investment vehicle (Convertible Debt, SAFE, or other)
q Standard legal docs to do the fundraise
q Meat behind the bones (e.g., market research, strategic plan)
13

INVESTMENT 1 (SEED): INPUTS
Baseline & Alignment 1 - Discovery
- Understanding of SWOT
- Understand Team and Capabilities
Market 1 – Market Assessment
- Market Size, TAM, Trends, Segments
- Target Customer Profile / Persona / List
- Comparable Companies & Competitors
- Relevant Capital Sources
Admin & Legal 1 – Corporate Structure & Baseline
- Corporate Entity Structure
- V1 Financial Model
Strategy 1 – Lean Canvas Plus (Strategy Lite)
- Strategic Cornerstones: Mission, Vision, Values
- Agree upon 5 Strategic Goals
- 30, 90, 360 Day Plan
- Functional Business Model (Pro-Forma)
14

STOP!
Do You Have All Inputs?
If so, continue on…
(if not, gather before we proceed)
15

Workshops / Outputs
16

INVESTMENT 1 (SEED): WORKSHOPS / OUTPUTS
Workshops
1) How to Make an Effective Pitch Deck
2) MHP Pitch Evaluator
3) Investment Process: Seed Stage
4) Deal Room Intro & Preparation
5) Legal Document Generator
Outputs
1) Investment 1 Pitch Deck & Narrative
2) Fully Prepared Pitch
3) Investor Pipeline
4) Deal Room
5) Funding Instruments & Docs

Workshops
1) How to Make an Effective Pitch Deck
2) MHP Pitch Evaluator
3) Investment Process: Seed Stage
4) Deal Room Intro & Preparation
5) Legal Document Generator
Outputs
1) Investment 1 Pitch Deck & Narrative
2) Fully Prepared Pitch
3) Investor Pipeline
4) Deal Room
5) Funding Instruments & Docs
INVESTMENT 1 (SEED): THE DECK

The most important part in any
fundraising effort is your
narrative, which breaks down
into three acts:
INVESTMENT 1 (SEED): YOUR DECK = YOUR NARRATIVE
1) The world is a certain way. What is the
problem you are solving? How did you get
exposure to it? Why are you an expert? Why
is it big and important?
2) Something changes. What is your solution?
Why is now the time to do it?
3) The world is a new way. How does the
company (and therefore the investor) benefit
from bringing this solution to market?

Your seed stage pitch deck
should follow your narrative.
1) Problem
2) Scope of problem
3) Why now
4) Solution
5) Traction (if any)
6) Team
INVESTMENT 1 (SEED): YOUR DECK = YOUR NARRATIVE

Workshops
- How to Make an Effective Pitch Deck
- MHP Pitch Evaluator
- Investment Process: Seed Stage
- Deal Room Intro & Preparation
- Legal Document Generator
Outputs
- Investment 1 Pitch Deck
- Fully Prepared Pitch
- Investor Pipeline
- Deal Room
- Funding Instruments & Docs
INVESTMENT 1 (SEED): THE PITCH

INVESTMENT 1 (SEED): THE PITCH

Workshops
Outputs
- Investor Pipeline
- Deal Room
INVESTMENT 1 (SEED): PROCESS & PIPELINE

INVESTMENT 1 (SEED): THE PROCESS & PIPELINE

Workshops
Outputs
- Investor Pipeline
- Deal Room
INVESTMENT 1 (SEED): DEAL ROOM

INVESTMENT 2 (EARLY STAGE): DEAL ROOM

Workshops
Outputs
- Investor Pipeline
- Deal Room
INVESTMENT 1 (SEED): FUNDING INSTRUMENT / DOCS

Summary
30

Investment Strategy 1 (Seed): Inputs -> Workshops -> Outputs…
q Great deck
q Great pitch
q V1 Financial model
q Data room for early investors
q Appropriate company structure for investment
q Investment vehicle (SAFE, or other)
q Standard legal docs to do the fundraise
q Meat behind the bones = inputs (e.g., market 1, strategy 1)
INVESTMENT 1 (SEED): CHECKLIST / OUTCOMES

INVESTMENT 1 (SEED): ADDITIONAL TAKEAWAYS
Discipline is key for seed
round fundraising:

Questions?
33

Startup Intervention: Need to Raise Seed Capital

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