Two startup fundraising experts discuss the different funding options available to tech entrepreneurs today, and what's the best way to build an investor pipeline and approach investors.

1. How to Get Funded in 2017
Presented By:
BJ Lackland, CEO of Lighter Capital
Nathan Beckord, CEO of Foundersuite

2. Today’s Agenda
What to raise
How to raise it
Tips on optimizing your capital raise
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As an investor:
› VC at Summit Energy Ventures
› Former member of Element8Angels
› Funded 150 companies at Lighter Capital
As a startup operator:
› CEO of Lighter Capital
› CFO of Power Efficiency Corporation
Speaker introduction

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As a startup operator:
› CEO of Foundersuite & VentureArchetypes.com
› $120M raised by startups using Foundersuite.com
› Prev: 100+ startup clients over the past 10 years
› Kickstarter,Clicker,Autonet,Zerply,GetHired,Launchrock
Previously:
› Technology valuation, investment banking, venture capital
› CFA& MBA
Speaker introduction

5. Today’s agenda
What to raise:
A look at your capital stack
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Capital stack for startups
Senior Debt
Mezzanine Debt
Convertible
debt / Preferred
Stock
Common Stock
Bank
Venture Debt
/ RBF
Angel / VC
Entrepreneur
• Lowest risk & cost
• Highest priority in liquidation
• Highest risk & cost
• Lowest priority in liquidation

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Capital stack for startups - debt
• Term loan / LOC
• 8-12% IRR
• Pros: cheap & predictable
• Cons: covenants, PG
• High yield term loan + warrants
• 15-30% IRR (1.4–2X borrowed)
• Pros: no PG
• Cons: mon. payments, warrants
• Term loan with flexible pmts based on revenue
• 15-30% IRR (1.4–2X borrowed)
• Pros: flexible, no PG
• Cons: mon. payments
Senior Debt
Mezzanine Debt /
Venture Debt
Mezzanine Debt /
Revenue-Based
Financing

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Capital stack for startups - equity
• Debt that converts to equity at the
next fundraising event
• Zero to 10-20X over amount
borrowed + accrued interest
• Pros: easy to negotiate
• Cons: chasing small checks
• Special class of equity
• Zero to 10-20X over amount
invested
• Pros: large check size, mentorship
• Cons: loss of control
• Simple equity
• Zero to 5-10X over amount invested
• Pros: easy to raise
• Cons: last paid (highest risk)
Convertible Debt Preferred Stock
Common Stock (Founders)

9. VC Backed Non VC
Revenue
$5m
Series B
Corporate Venture
Established
Ideation
Launch &
Traction
Growth &
Scale
Breakout
Series C
Debt
Equity
Tech Banks/
Venture Debt
Series A Revenue-Based Financing
Blended
Series A
Series B
Tech Banks
Series C
Tech Banks /
Venture Debt
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Funding paths
Bootstrap / Friends & Family
Incubator / Angels

10. › Equity: Valuation? What % is worth taking on investment?
› Control: Are you the driver? Who makes key decisions?
› Value-add: More than just money?
› Risk Tolerance: Personal assets?
› Timeframe: How long will raising funds take?
› Horizon: Exit strategy? Build toexit? Build and hold?
› Culture: Isthere alignment?
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Before you raise, ask yourself:

11. Today’s Agenda
How to raise:
Building your investor pipeline
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When fundraising, don’t do this

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Instead, treat fundraising as what it really is:
SALES 101:
Lead-Gen -> Qualify->Engage -> Closing

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Step 1: Build your funnel
Fundraising
is a numbers
game…
...aim for
150+ names
minimum. 100 pitches to
get 3-5
commitments is
not unusual.

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Step 2: Filter & qualify your leads
FOCUS here on
filtering down to
about 100 - 125
direct targets.
Filtering Criteria:
•Invested in competitors
•No dry powder (funds)
•No recent deals
•Wrong sector / stage
focus
•Wrong geo. location
•Has bad reputation
Tips:
http://blog.foundersuite.com
/seven-ways-to-pre-screen-
your-investors/
Diligently cut down your
list now for a better
hit rate later.

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Step 3: Map your contacts with

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…while you’re in add more leads

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Step 4: Create tracking system (google)

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Step 4: Create tracking system (foundersuite)

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Step 5: Start the conversation(s)

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Step 5: Start the conversation(s)
…this email is super-easy for Jeff to forward along.

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Step 6: Hustle like you’ve never hustled
before
Intros:
•Do intros in parallel
•Aim for concentrated
‘blitzkrieg’ approach
•Key goal: get momentum!
Pitch:
•A/B test your pitch
•Continually refine &
improve
Process:
•Leverage VCs off each
other
•Send regular progress
updates (use Foundersuite’s
Investor Updater tool :)

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Step 7: Go for the close
•Ask for interest level + ask
for next steps
•Make them chase you a bit
•Expect 3-6 meetings before
term sheet (more TS = more
leverage, faster close)
•Follow up frequently (it can
be hard to get an actual “no”)
•Use PG’s “handshake deal
protocol” when they say yes
https://www.ycombinator.com/handshake/
•Don’t let up until the money
is actually in the bank

24. 1. Run your fundraise as a sales process
2. Work your network (but do it efficiently)
3. Run it as a numbers game (but always
qualify leads)
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Optimizing your capital raise: Nathan

25. 1. Skip a round of equity
2. Be capital efficient
3. Don’t limit yourself to VC
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Optimizing your capital raise: BJ

26. QUESTIONS?
Visit Our Websites
www.lightercapital.com
www.foundersuite.com
Contact us
info@lightercapital.com
nathan@foundersuite.com