When it comes to startups, SVB has been around the block. Many times. They've helped countless founders and CEOs negotiate the ups and downs of startup financing. Confused about the how to choose the right funding strategy? Don't be. On November 12th, SVB’s Dan Allred and Smith Anderson will break it down for you. They'll introduce five of the most important and popular avenues for startup funding: Bootstrapping Crowdfunding Angel Investors Venture Capital Debt

1. presents
Get Funded: Expert
Advice From the People
Who Know
Dan Allred
Smith Anderson

2. Get Funded: Financing your Startup
November 12th, 2013
Dan Allred
Silicon Valley Bank
(617) 796-6904
dallred@svb.com
Twitter: @dgallred
http://danallred.tumblr.com
Smith Anderson
Silicon Valley Bank
(617) 796-6958
Smanderson@svb.com
Twitter: @SmithTown561

3. The
Ringers
Jason Jacobs
RunKeeper
CEO and Founder
Brent Grinna
Evertrue
Founder and CEO
Aman
Advani
Ministry
of
Supply
Co-­‐Founder

4. Why We’re Here
Sources of Financing Overview
Bootstrapping: Making it last

5. Financing partners take risk together

6. Bootstrapping
• Vendor
financing
Trade
credit
Stretching
payables
• Customer
financing
Prepayments,
deferred
revenue
• Self
financing
Working
without
pay
Getting
others
to
do
the
same
Personal
credit,
credit
cards,
etc.

7. Bootstrapping
• Amount
of
capital
Relatively
small
amounts
• Use
of
capital
Working
capital
(brings
future
cash
inflow
forward
OR
delays
current
cash
outflow)
• Stage
of
company
Useful
at
all
stages,
especially
startup.
• Who
bears
the
risk
&
what
type
Personal
risk
early,
bankruptcy
risk
later
Working
capital
risk
(risk
of
insolvency)

8. Crowdfunding: The Basics

9. Crowdfunding:
Today
and
Beyond
•
•
Product/Project
Currently
thriving
– Pledgie
(2006)
– Sellaband
(2006)
– IndieGoGo
(2008)
– GiveForward
(2008)
– Kickstarter
(2009)
– RocketHub
(2009)
– Fundly
(2009)
– GoFundMe
(2010)
– Appsplit
(2010)
– Microventures
(2010)
– Fundageek
(2011)
– Dragon
Innovation
(2013)
Incredibly
powerful
momentum
in
the
last
few
years.
•
•
•
Equity
Not
legal…yet
JOBS
Act
passed
July
10th
Accredited
vs.
non-­‐accredited.

10. Crowdfunding
MoS:
A
story
of
Shirt,
socks
and
the
power
of
a
crowd.
• Not
a
new
concept.
To
CrowdFund?
Not
to
Crowdfund?
• Demand/market
validation
done
before
you
go
to
market.
• Almost
zero
risk
market
• Marketing
story
done
for
you.
• Almost
immediate
access
to
cash
➢ No
secrets
to
hide
from
competition.
➢ Price
point
➢ Go
to
Market
Strategy
➢ Runway
➢ Timing
➢ Funding
Commitments

11. Is
it
right
for
you?
Probably
• Hardware
with
a
specific
cost
for
prototype.
• Consumer
facing
projects
• Micro-­‐market
products
• Market
unknown
products.
• One-­‐off
garage
projects
• Artists
• Philanthropists
Probably
Not
• Large
companies
• Complex
products
with
intricate
sales
cycles
• Infrastructure
or
enterprise
products
that
are
unlikely
to
touch
consumers.

12. Angel Investors

13. The
funding
Lines
are
getting
blurry
Traditional
VC
Funds
Seed
Funds
Super
Angels
Angels

14. Angels
• Class
of
capital
Equity
(ownership
in
company)
• Structure/organization
High
net
worth
(HNW)
individuals
Some
groups
and
clubs
Some
“super
angel”
funds
• Motivation/incentives
Upside
–
stock
appreciation
Most
look
for
an
“exit”
(i.e.
liquidity
event

15. Angels
• Amount
of
capital
$100k
to
$2mm
• Use
of
capital
Growth
capital
(i.e.
new
cash
for
growth)
• Stage
of
company
Early-­‐stage,
product/market
development
• Who
bears
the
risk
&
what
type
Angel
investor
bears
risk
Product/market
risk,
execution
risk

16. Angels
• Structure
of
investment
Purchase
of
common
or
preferred
stock
Sometimes
convertible
debt
initially
• Price
of
investment
25-­‐50%
of
company’s
stock
Convertible
debt
~25%
min
ownership
• Monitoring
the
investment
Reporting
Some
angels
(or
groups)
want
BOD
seat
• Value
add
$$$,
industry
expertise,
connections

17. Venture Capital

18. Venture
Capital
• Class
of
capital
Equity
(ownership
in
company)
• Structure/organization
Limited
partnership
10
year
funds
(invest,
grow
&
harvest)
• Motivation/incentives
Upside
(30%
IRR
and
3x
overall
for
fund)
Looking
for
an
“exit”
(i.e.
liquidity
event)

19. Venture
Capital
• Amount
of
capital
$1mm-­‐20mm
Some
seed
activity
as
well
• Use
of
capital
Extreme
growth
capital
• Stage
of
company
Early-­‐stage
and
growth
stage
• Who
bears
the
risk
&
what
type
Limited
partners
and
general
partners
Product,
market,
tech
&
execution
risk

20. Venture
Capital
• Structure
of
investment
Purchase
of
preferred
stock
Sometimes
convertible
debt
initially
• Price
of
investment
20-­‐40%
of
company’s
stock
• Monitoring
the
investment
Reporting
BOD
seats
Redemption
rights,
registration
rights
• Value
add
$$$,
industry
expertise,
capital
markets

21. Debt

22. Debt
• Class
of
capital
Debt
(senior
debt
as
discussed
here)
• Structure/organization
Banks
(regulated
to
accept
deposits)
Finance
companies
(corporations)
Debt
funds
(limited
partnerships)
• Motivation/incentives
Banks
–
interest
&
fee
income
Finance
companies,
funds
–
interest
Venture
debt
–
warrant
income

23. Debt
• Amount
of
capital
$1mm-­‐100mm
• Use
of
capital
Working
capital
Growth
capital
Acquisition
capital
• Stage
of
company
All
stages
• Who
bears
the
risk
&
what
type
The
lender

24. Debt
• Structure
of
investment
Senior
secured
credit
• Price
of
investment
Interest
and
fees
for
established
co’s
Plus
warrants
for
pre-­‐profit
co’s
• Monitoring
the
investment
Reporting
Financial
covenants
Affirmative
&
negative
covenants
• Value
add
$$$,
connections,
pattern
recognition

25. Questions?

26. The
Ringers
Jason Jacobs
RunKeeper
CEO and Founder
Brent Grinna
Evertrue
Founder and CEO
Aman
Advani
Ministry
of
Supply
COO
and
Co-­‐Founder

27. Q & A Panel of Experts

28. Course Title
Course Title
INSTRUCTOR NAME