Entrepreneurs who understand the funding landscape and are diligent about internal company planning are better at attracting capital. There's a lot to learn before you start asking for investment. Know what you are getting into. Start here. This presentation is for the early stage founder who isn't sure what kind of capital they will need.

1. CAPITAL SAVVY
and attractive to investors
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2. Understand
funding
Internal
planning
Attract
capital

3. INTERNAL PLANNING
Clean up your laundry

4. FUNDING OPTIONS
Do your homework

5. ATTRACT CAPITAL
Get out there

7. GET
Education
EDUCATED
This is your textbook

9. DIFFERENT KINDS OF
BUSINESSES
have completely different funding and growth strategies
Don’t try to mix and match
Education

10. YOUR BUSINESS
• Small business
• High growth technology business
• Physical product company
• Consulting business

11. SMALL BUSINESS

12. SMALL BUSINESS
• Ex. Cupcake shop, plumbing company, retail store
• One or two owners who run it for a long time
• Maybe expand to multiple locations
• Profitable within the first or second year
• Up front capital pays for equipment or real estate

13. HIGH GROWTH TECH

14. HIGH GROWTH TECH
• Generally includes software or other technology
• One to five years of work before anything can be
sold
• Requires $500k to $2M to create the product
• Capital generally pays developers and engineers

15. PHYSICAL PRODUCT

16. PHYSICAL PRODUCT
COMPANY
• Product is a tangible thing
• The invention is unique
• Upfront capital goes to design, patents, and
manufacturing

17. CONSULTING

18. CONSULTING BUSINESS
• You sell your employees’ time and expertise
• Very little overhead necessary
• Profitable soon after opening

19. CAPITAL
is not all created equal
Education

20. CAPITAL OVERVIEW
• Grants and Awards
• Bootstrapping
• Debt and Loans
• Angel and Venture Capital

21. GRANTS AND AWARDS
source: governments and foundations

22. GRANTS AND AWARDS
Pros Cons
• Non-dilutive capital
• Social or Political
capital
• Exposure
• Applying is time
consuming
• Use of funds can be
limiting
• Winning is a gamble

23. BOOTSTRAPPING
using your own money

24. BOOTSTRAPPING
Pros Cons
• Freedom of use
• Non-dilutive
• Shows founder buy-in
• Fails to prove external
validation
• Often involves family
issues
• Amount can be limited

25. DEBT AND LOANS
more than just banks and loan sharks

26. DEBT AND LOANS
Pros Cons
• Non-dilutive
• Lender has no voting
rights in the business
• Temporary relationship
with lender
• Hard to find
• Must pay back plus
interest
• Interest rates can be
really high

27. ANGEL AND VENTURE
equity partners

28. ANGEL AND VENTURE
Pros Cons
• Adult supervision
• Large sums possible
• Permanent
relationship
• A lot of work to
secure
• Butting of heads
• Must sell company in
10 years or fewer
Equity Capital

29. ANGELS
• Rich people
• Probably untrained
• Various motivations
• Investing their own money
• Usually $15k to $100k
• But really it could be any
amount

30. VENTURE CAPITALISTS
• Investing other people’s
money
• Raised a fund that they now
deploy
• $100k to $50M
• Work alone or syndicate
• Will be active members of
the board

31. GUIDING FACTORS FOR
EQUITY FUNDING
• Scalability
• The right people
• A large market
• Unfair advantage
Is equity capital for me?

32. Analysis
SCALABILITY
The economics of your
business now vs your business
when it is grown.

33. A SCALABLE BUSINESS
• The cost of selling the
product or service
plummets as the number of
units sold rises
• Software is inherently
scalable
• And other things are too

34. UNSCALABLE BUSINESSES
• Consulting is always unscalable
• Anything custom
• Retail stores (unless on a grand scale)
• Food and commodities

35. MARKET
Analysis

36. MARKET
ANALYSIS
Must include bottom up and
top down.

37. TOP DOWN
• How much ice cream is
sold in a cone?
• In the US?

38. BOTTOM UP
• How many of these can I
sell in the first year through
the relationships I already
have?
• In the second year?

39. Analysis
THE MAGIC #
How long does it take for
your business to get to
$100M in revenue?

40. FUNDING PLAN
Finding the true hard parts

41. TWO LAYERS OF INFO
Planning
1. The major milestones that lead to increased
company value
2. The capital needed to make those things happen

42. ADDING VALUE
• Own property
• Buy the rest of the
monopoly
• Add a house
• Add multiple houses
• Add a hotel

43. EQUITY
CAPITAL
Take capital only when the
raise will get you to the next
value-increasing milestone.

44. FIND THE EDGES
And use them to plan real projections
Planning

45. THE “NOW” EDGE
• With no more business development, how much
can you sell right now, per year?
• How much will it cost to make and sell exactly
that? This is your minimum raise.

46. “WILD SUCCESS” EDGE
• If you had all the money in the world, what is the
next limiting factor?
• Use this to calculate your financials under the
circumstance of wild success.
• Use these numbers to determine your max raise.

47. BOUNDARIES
Live between the edges

48. ATTRACTING INVESTORS
by selling a dream
Communicating

49. INVESTOR NIGHTMARES
• Looking like a chump
• Losing money
• Extended frustration

50. YOUR EARLY ASSETS
• Founding team (advisors and board included)
• Patents (and other IP)
• Specific knowledge or thought leadership
• Relationships
• R&D/Prototype/Product
• Sales

51. PITCH DECK
Communicating
Primary means of communication with investors

52. THE INVESTOR PITCH
• What do you do?
• How do you make money?
• How far have you gotten?
• What does the future look like?
• How much money will you need
to get there?
• What’s the current deal look like?
• Who is involved?

53. LEARN MORE
www.NicoleGravanga.com
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@NicoleGravagna