Beyond bootstrapping raising capital is critical to launch or grow most ventures. Here's a lean overview of common funding options. Here's to your future success!
4. 4Are you ready to raise capital?
Set your valuation appropriately
• Look for comparable businesses
• Geographic and investor group dependent
• Discounted cash flow. Make your projections realistic.
would you be willing to take your compensation as a % of
forecast?
• Ultimately a negotiation between investors and the business
• Expect 10% - 30% dilution per round
• Use preferred shares, convertible notes, SAFE / SAFT if
uncertain or to avoid significant dilution
How much time can you devote to funding?
• Do not do this half ass. If after a defined period (ie 1 year) you’ve been
unsuccessful then face facts (markets are highly efficient)
• Understand potential impact to ego / brand equity and team motivation
• Leverage templates. Be resourceful. Seek expertise.
5. 5Are you ready to raise capital?
How much money should we raise?
• Determine key milestones that impact business’ value
• IP strategy, Prototype
• Sales and Revenue (ie repeat customers/month
• Product/market fit or key development milestones
• Human resources and team building (growth)
• Raise what you need to get you to the next milestone
(iterate and prove)
Bootstrapping: advance your situation using existing resources
Lean start-up: get to market and revenue positive as quickly as
possible
What non-dilutive sources of capital are
available at each step?
6. 6Are you ready to raise capital?
Understand your initial capital structure (and dilution)
• Founders (80-90%), Leadership team (10-15%), Advisors (1-3%)
• Skin in the game
• Put in writing and use vested agreements
• Source cap table excel sheets online
7. 7
Where can I find Investors?
• Identify potential investors and sources of funding (keep doors open):
• Government grants / funds
• Corporate sponsorships and grant programs
• Friends and family, Loans and credit
• Crowdfunding (Equity, debt/lending, reward, ICOs/tokens,
Royalty)
• Angel investors
• Venture capital
• Dealer-brokers, agents, intermediaries
• Private equity interested in side-car investments
• Ask for introductions
• Global markets
Sources of Private Capital
8. 8
Be strategic with your approach
• Make a list of contacts that can realistically help (assign probability
and amount you are seeking from them)
• Seek to develop long term relationships and understand what you
can offer them and vice versa.
• Learning loop: Listen – learn – track and improve (alignment,
probability)
• Start building your funding networks yesterday
• Online – personal & company profiles
• Offline - Events, conferences, pitch forums, investor networks
• Understand the timing of your ask relative to the ‘funding window’
and type of investor
• Stay on top of funding research and news to find similar companies
to learn from / with.
• Ask for introductions
• Turn advocates into loyal customers and investors
Get in Funding Mode
9. 9
What are investors looking for?
• A product/services that addresses a large market need (not a nice to
have)
• Team that can execute who has a solid understanding of business
and challenges
• Validation/proof (de-risk)
• Some are seeking social impact or to balance impact with profits
The Investment Process
• Pitch deck is bare essential
• Meet and greet is only the first step
• All investment basics must be met
• Due diligence review
• Terms negotiated
• Close (in person)
What are investors looking for?
10. 10
Deal Breakers and Tips
• Avoid one man team, no skin in the game, unrealistic valuations,
serious character flaws
• Raise equity capital with no clear purpose, to replace debt, pay big
salaries, to develop an idea and not a business
• Face to face meetings (3-5x more capital $ than email or call)
• Securing initial key/lead investor will make raising $ significantly
easier
• Only invest if they know you, know the business and like the
investment opportunity
What you Need to get Started
13. 13
• Wide distribution over the internet
• Low cost, efficient, transparent capital
• The `great equalizer`
• Media/PR, awareness
• Increase customer engagement and
• Evangelize backers into investors
(customer acquisition)
• Reduce risk by getting feedback on
new launches (product or ventures)
• Market research
Access to Capital
Marketing Platform
Validation
• Raising funds via crowdfunding markets is a
very public and transparent
• Protect your IP and speak to a lawyer
• Crowdfunding takes a lot of effort and
commitment
• The majority of Ideas fail to reach their
funding goal
• How will this affect your companies
brand?
Expose your Idea
Resourcing
Failure
Crowdfunding Pros/Cons
Benefits Risks
For Companies
14. 14Examples
Source: Kickstarter Campaign page
Innovation – Social – Incentives – Economic Growth
Quidni Estate Winery (NCFA Director)
• Just completed $100K equity raise (for 3%
equity ownership)
• Took over a winery. Went digital (including
online wine sales). Converted virtual wine
tasters into investors
Impak Finance (Equity Offering)
• Raised $1.2 million (goal was $500K for 6%)
from 1450 shareholders to create first
socially responsible Canadian bank
• $500,000 in the first 24 hours!
• Inclusive & accessible: $100 shares for
$100
15. 15NCFA Canadian Online Funding Directory
Reward/Donation:
Equity-based via Dealer:
• Steady growth in portals
• Equity, Debt & Royalties all emerging
• Fintech is all the rage
• Real estate and entertainment,
film/media crowdfunding emerging
Consumer and
Small Business Loans:
16. 16
Crowdfunding Framework
Planning & Strategy
• The greater your planning efforts, the
greater your chance of achieving your
funding goal
• Do not launch a crowdfunding
campaign if you are not ready.
(3 months)
(40 days – 90 days)
(Ongoing)
Post-campaign
• Your campaign is done but now you have to
deliver on your promise
• Fulfillment
• Ongoing customer engagement
Campaign Execution
• Daily execution of tasks outlined in the
campaign plan
• Control, monitor and adapt
Feedback
Loop
17. 17
Success Factors
SUCCESS
2. Network Strength
• Sizeable online network and
social media presence?
• Will media/PR and influential
bloggers cover your story?
1. Quality Idea & Pitch
• Unique, enterprising and clear value proposition
(conveyed online in a simple manner)
• Get others excited about your story?
• Clear funding target and specific goals?
4. Key Docs
and Content
• Compliant and
necessary for investor
review
3. Strong Committed Team
• Is your team credible, committed and
willing to deploy the resources and
time to execute effectively?
• Time management
HARD WORK!
5. Marketing
Campaign &
Incentives
• Planning and strategy
with ability to execute
through launch to post
campaign
18. Common Mistakes
• We underestimated the time commitment involved
• We didn’t test our campaign sufficiently
• We launched before we were ready
• We didn’t develop an accurate budget
• We didn’t consult legal counsel or professional providers
• We didn’t account for taxes
• We tried to do everything on a shoestring
• We didn’t realize how important the video was
• We didn’t understand liability exposure (eg.
misrepresentation) and intellectual property
• We had little to no traction so we gave up
• We blamed it on the portal
19.
20. Join Us
Education & Research
Market Access
Crowdfunding Infrastructure
Capital Raising Prep Services
Support and Leadership
Advocacy
GET IT IN
TOUCH
Fintech & Funding Association
ncfacanada.org
crowdfundingsummit.ca