Fundraising Landscape in Boston

1. Funding Overview:
Boston
The Angel/Entrepreneur
Jean-Marie Vallet
@LaunchpadVG
The VC
Tetyana Astashkina
@astashkina
@b_to_v
The Angel/Entrepreneur
Jessica McLear
@jessmclear
@LaunchpadVG
@TCNUpdate

2. What Type of Company Are You?
Before you can get funded,
you have to know
where to look
Before you know where to look,
you need to understand
what you are

3. What Type of Company Are You?
•The type of company you have will shape the type
of funding available to you
• Consumer mobile social software company vs
Chemistry-based life science technology product vs Equipment for
emergency deployment in disaster zones
•Changes in business model can change the funding
required
• IP licensing of new battery technology to existing players vs
build a battery distribution company with outsource manufacturing or
build a manufacturing company with, or without distribution

4. NORMAL
GROWTH
COMPANY
HIGH
GROWTH
COMPANY
EXTREME
HIGH GROWTH
COMPANY
SOCIAL VENTURE
COMPANY
• Includes all
service
businesses
• Exploiting a local
market need
• Team has ‘great
jobs’
• Growth by adding
resources one by
one
• Exit will be based
on value of cash
flow (mature biz.)
• Growth profile
ultra-scalable
• Team focus is exit
• Revenue $40M+
with lots of room for
growth (5 yr.)
• Based on $20M+
investment
• Exit targeted to IPO
or by ‘large’ M&A
event
• Goal is to fulfill a
social need
• Has mission
orientation
• Team needs to
support mission
• Growth profile
often one
resource at a
time
• Exit …much
harder to find fit
• Company can
grow fast (on-line)
or has a scalable
system
• Team often
motivated by exit
• $7-10M revenue in
4-5 yrs & market
size allows
significant
additional growth
• Capital efficient
total
investment$2-4M
• Exit by M&A
What Type of Company Are You?

5. What Kind of Funding
NORMAL
GROWTH
COMPANY
HIGH
GROWTH
COMPANY
EXTREME
HIGH GROWTH
COMPANY
SOCIAL
VENTURE
COMPANY
• Friends, family,
founders
• Debt, Bank, and
other
• (Future) Crowd
funding (portal
style)
Early on
• Accelerators
• Individual Angels
• Micro Cap VCs
• Seed from VC
Later stages
• Venture Funds
• Strategic VCs
• Angel Syndication
• Friends family,
founders
• Charity$$
• Crowd funding
(Kickstarter, etc)
• Impact Angels
• (Future) Crowd
funding (portal
style)
• Angels
• Angel Groups
• Angel Group
Syndication
• Angel List
• Micro-cap Funds
• (Future) Crowd
funding (portal
style)
• Increasingly
Strategic
Corporate VCs

6. Capital Sources: Size & Cost
Investment Size
Traditional VC
Micro VC
Equipment Financing
Angel Groups
Angels
Equity Crowdfunding
Angel List, Circle Up, etc
Corporate / Strategic
Venture
Customers
Jobs Bill Portals
Vendors
Founder
Friends & Family
Crowdfunding: etc.
Grants
Venture Debt
Bank
Loans
Personal
Loans
Private Equity
B’Plan Competition
Accelerators
Investment“Cost”

7. Revenue
Debt
• Bank
• Friends/Family
• Non-convertible note
Customer/Vendor/Partner
• Prepaid product purchases from customers
• Pay later services from vendors
• Non-recoverable engineering costs from
partners
Grants
• SBIR & other Government Grants
• Business competitions
Capital Sources
Dilutive Non-Dilutive
Equity
• Convertible Note
• Stock
• Friends, Family Investors
• Common vs Preferred

8. Capital Sources
Size of Capital
Raise: High
Time
High Risk
Low Risk
Crystallize
Ideas
Demonstrate
Product
Early Scaling Growth Sustained
Growth
Market Entry
Size of Capital Raise: Low
As you develop your company, you reduce risk for your financial partners

9. Capital Sources: Equity
Stage
Crystallize Idea
and Early
Demonstration
Demonstrate
Product &
Market Interest
Market Entry
and Early
Growth
Early Scaling
Growth
Repeatable
Growth
Capital
Source
Founders, Friends,
Family, Grants,
Kickstarter, etc.
Government
grants, eg., SBIR
Accelerators,
Individual Angels,
many others now
“exploring”
government
grants, eg., SBIR
Angel Groups,
Angel Group
Syndication,
Micro-Cap Funds
government
grants, eg., SBIR
VCs, Angel
Group
Syndication,
Micro-Cap
Funds
VCs
Investment $25K - $100K $100K - $500K $500K - $1M
$5M – as
needed
as needed
These 2 need sophisticated
growth plans
This is the stage
where advice can
make you eligible
for outside
funding later
Accelerators and
a few individual
angels play here
… unless it is a
big idea
This is where
Angel Groups
do most 1st
investments

10. Equity: VC vs Angel
Angels
• Invest their own money
• Motivated to help entrepreneurs,
stay engaged
• But Return on Investment is still the
controlling metric
• Likes big returns but will often be
happy with more modest returns in a
shorter amount of time3-5 year
outlook on investments unless VCs
get involved
VC Funds
• Invest other people’s money (pension
funds, …)
• Have multi-million $ funds they need to
put to work
• Invest big and must get big returns for
their investors
• 7+ year outlook for exit returns
(10-year funds)

11. What’s the process?
1. Prescreening &
Screening
Referral is the key to
entering the process
2. Pitching
10-20 min presentations +
Q&A
3. Due Diligence
Varies between
groups & deal leads
4. Term Sheet
Negotiation
This is setting a market
price NOT a valuation
5. Syndication &
Funding
6. Repeat

12. Equity: VC vs Angel
Angels
$24.6B in 2015 ~ 305,000 investors
71,000 deals:
(18,000 Seed & 32,000 Early Stage)
NE sees 12% of all US deals
Types of angels
○ Individuals
○ Organized: Funds: 16%; Network:
63% (avg 10 deals / year)
○ AngelList
○ Informal networks & 1 time investors
○ Family offices
Mostly invest locally
VCs
$59B in 2015,~ 4,300 Deals
(186 seed & 2200 early stage)
12 Companies accounted for more
than 10B
Angel Syndicates (relatively new)
• Individual angels, or several angel groups investing as a unit
• AngelList syndicates
• VC-backed syndicates

13. Source: ACA
● Angel Investor Forum - East Hartford,
CT
● Boston Harbor Angels - Boston, MA
● Boynton Angels - Worcester, MA
● Cherrystone Angel Group - Providence,
RI
● Clean Energy Venture Group - Boston,
MA
● CommonAngels - Lexington, MA
● eCoast Angels - Portsmouth, NH
● ECS Angels - Bar Harbor, ME
● Edible Ventures Group - Boston, MA
● Golden Seeds LLC - Boston, MA, New
York, NY and San Francisco, CA
● HubAngels - Cambridge, MA
● Landmark Angels - Greenwich, CT
● Launchpad Venture Group - Wellesley,
MA
● Maine Angels - Portland, ME
● Mass Medical Angels - Brookline, MA
● North Country Angels - Burlington, VT
● Ocean State Angels - Providence, RI
● Pipeline Angels - Boston, MA
● River Valley Investors - Springfield, MA
● SideCar Angels - Wellesley, MA
● TiE Angels - Boston - Boston, MA
● Topstone Angels - Darien, CT
● UMASS Lowell New Venture Fund -
Lowell, MA
● Walnut Venture Associates - Wellesley
Hills, MA
Some Angel Groups In NE

14. Alternate Sources
Crowd Funding
•Kickstarter, Indiego-go
•Usually associated with “product”
companies
•Can come with drawbacks
Accelerators
Many incubators across the country
• May focus on specific types eg.
LearnLaunch for EdTech
•Many different models
• Non-profit, equity stake, revenue, loan
•Can be very helpful but be wary of
being of the “accelerator circuit” too
long.
*Equity Crowdfunding (new as of May 2016)
Jumpstart Micro, WeFunder
Little information so far…

15. Conclusion
Educate yourself about all of your funding options:
• https://www.sbir.gov
- Example NSF: www.sbir.gov/agencies/national-science-foundation
- Next funding close date of Dec 6:
Advanced Manufacturing & Nanotechnology Biological Technologies, Chemical and
Environmental Technologies
• http://nvca.org
• http://www.angelcapitalassociation.org
• http://www.thecapitalnetwork.org
Non-dilutive funding is always great but not always the easiest to get
It’s all about the numbers for equity investors
Network, Network, Network
• http://www.greenhornconnect.com For startup events going on in MA