Fundraising
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Fundraising
- 1. Fundraising in Pakistan v2.01 Follow Along: http://www.slideshare.net/Nashadelic/fundraisin g-69537228 (username: Nashadelic)
- 2. Muhammad Nasrullah aka Nash Co-founded e-Business, Pring VP Customer Solutions @ Convo 2
- 3. Follow Along • Slides online here: • http://www.slideshare.net/Nashadelic/fundrai sing-69537228 (username: Nashadelic) • Tweeting? Use #OPENIsb16 • I’m @nash on Twitter • Email me: nasrullah@gmail.com 3
- 4. Fundraising • Raised in excess of $2M to date from PK • 4 companies, 2 exits • I work engineering, design and sales • Summary of my experience 4
- 6. 6 Every rule here has an exception
- 7. Key Ingredients of Fundraising • Wealth vs Control • Empathize with investors • Dot vs Line • Understand your growth • Valuations 7 1 2 3 4 5
- 8. Wealth vs Control 81 2 3 4 5
- 9. Control Wealth SMB/Sole Proprietor Slow growth Organic Pvt Ltd Fast growth Big bang 9
- 10. Book recommendation: The Founder’s Dilemma’s 10
- 11. Empathize with Investors 111 2 3 4 5
- 12. Your Typical Investor • 40+ • Old wealth or self-made • Disposable, riskable liquidity • Believes in market potential 12
- 13. 13 Which box would you choose?
- 14. Box 1: Put in $100k get $150k in 3 years Box 2: Put in $100k get $1M in 3 years 14
- 16. Box 1: Put in $100k get $150k in 3 years with 90% probability Box 2: Put in $100k with 10% probability to get $1M in 3 years 90% probability of getting nothing and losing $100k 16
- 17. Dot vs Line 171 2 3 4 5 Idea by Mark Suster. Read here.
- 18. First Meeting: You’re just a dot Time Progress You 18
- 19. Second Meeting Now you’re a line Time Progress 19
- 20. But are you a good Line? Time Progress Better Than Planned On Plan No Progress Worse than Before 20
- 21. Understand your Growth 211 2 3 4 5
- 22. • Say you’re worth 0 today • According to your plan, in 1,000 days (~3 years), you want to be worth $1M 22
- 23. Everyday you’re on plan, your company’s value grows by $1,000 1,000 days x $1,000 = $1,000,000 Time Progress 23
- 24. Corollary: Startups = Velocity = Growth Can you do in 500 days instead of 1,000? Time Progress 24
- 25. In truth, your growth is a crazy function Time Progress 25
- 26. Remember the 90% risk of failure? Work to reduce your risks first Time Progress 26
- 27. Valuations • How much are you worth? • DCF (Discounted Cash Flow) • Comparative (same type of startup) • Multiple of revenue 271 2 3 4 5
- 29. Where are you on the Maturity Curve? • Just an idea • Working Prototype • Some users • Some users with traction (Product-Market Fit) • Paying Customers Better 29
- 30. A Note on Creditability How do you build credibility/rapport with someone who doesn’t now you? • By associating yourself with something that the investor respects • Schools: I studied at Stanford, GIKI, LUMS… • Incubators: I went to LCE, TIC… • Competition (yuck): I won the TC50… • Job: I work at Google, Careem… • Work: I’ve done sale contracts with Samsung, Coke… • Intro: “Someone you respect recommends that you talk to me” • Press: NYTimes, Dawn wrote about me/my work • Media: You’ve already seen our work somewhere 30
- 31. Intermission Slide Elon Musk’s True Innovation: Reverse Hair Fall 31 2000 2015
- 32. Okay, back to business 32
- 33. Initial Fundraising • Use money from family, friends and fools • Build a working prototype • Get user traction and demand • Once you have the traction figured out, fundraise for scale 33
- 34. Think Revenues • People, Products and Profits • If you plan on staying in Pakistan, reach breakeven as soon as possible 34
- 35. Why Breakeven? • If you’re working on funding, there is always an end-date to that funding • Once it ends you’ll have to raise more again. You’ll be at the mercy of investors and worse, you will be desperate • If you are breaking even or profitable you can fundraise at your time at your benefit 35
- 36. Who do you fundraise from? • Look at successful people in your field • Self-made entrepreneurs will understand your pain the most and will empathize with you the most 36
- 37. Look for SmartMoney • Dumb money: is just money • Better: money from someone who can be a great mentor • Even better: someone who has the connections to make your startup successful • Even better-er: Connections, know-how, self- made entrepreneur, well respected in the market and has money 37
- 38. Go Breadth-first rather than Depth-first • Talk to everyone at the same time • Do not do approach one-by-one, you will never build up momentum • The best way to speed any negotiation is to introduce competition • It’s fine to be talking to upto 30 parties. I did 40 at one time. 38
- 39. Fundraising dirty little secret: It’s heard mentality • The toughest part is getting the first yes • Once you have one person saying yes, the other investors will be keener and more interested • This works well if the first funder is well- known • No, not a verbal yes, a check is great 39
- 40. How Much? • Capital in Pakistan is expensive • After the FFF round, the next is a larger round but you will probably will have to raise more money later. • But do not give away more than 50%, do not lose control. • Corollary: avoid investors who ask for too much equity and control. It’s a huge warning sign. • What’s your exit strategy? How many rounds of funding will it take to get there? Keep at least >20% when you reach there. YMMV 40
- 41. How? • Get a good intro before meeting the investor • Go in for an informal talk and leave with a one-pager executive summary • Some investors will require a slide deck, keep it handy 41
- 42. What should I talk about? • Elevator Pitch • The Problem • Solution (Demo) • Business Model and Market Size • Secret Sauce (aka competitive advantage) • Competition, marketing • Team • Deal Terms (Money, equity etc) 42
- 43. Great Deck Samples & Guides • Sequoia: http://www.sequoiacap.com/grove/posts/6bz x/writing-a-business-plan • Dave McClure: http://www.slideshare.net/slidesthatrock/ho w-to-pitch-a-vc-redesigned • Pitch decks of popular companies: http://PitchEnvy.com 43
- 44. Parting Thoughts • The number one job of the entrepreneur is problem solving • Fundraising is a problem and a unique one in Pakistan • Your company’s success relies upon you hacking fundraising • You will get constantly rejected. Don’t take it personally. Build emotional resilience. • Very few say ‘no’, most give the long silence 44
Notes de l'éditeur
- I'm passionate about building engineering teams, design and sales
- It’s a necessary evil in most cases It's a distraction but it's an important skill to have
- Everything I will talk about today is just a guide, you can break any rule you like
- - This is what millions of people have done and they continue to do - Startup = fast growth, - Taking money from people adds them for oversight as well - You have to understand you will be giving up control
- The best way to understand how to deal with investors is to think like them, be in their shoes
- Just like in Marketing, Sales and Design you need to know who you’re target user is. In this case it’s a customer.
- Let's think like an investor
- It's hard for an investor to judge you in one meeting You're just one data point You come in and you share your plans. At the start, you might be good on execution, you might be bad, it hard to know
- Collary: Meet investors early and setup yourself as a dot in their mind Show incredible progress My recommendation: early in your startup, talk to investors, tell them your plans or where you want to be and meet with them a few months later
- This is what excites me about startups… moving fast!
- Better = Higher valuations
- These will only be enough to have the other party to listen to you
- This initial investment might be done by you with your savings, or on the side