Boston New Technology - Founder Lessons - Feb 2019

Some founder lessons, execution and scaling tips for startups, and a 5-step “how-to” series of fundraising tactics

1. Boston New Technology:

Founder Lessons, Learned the Hard Way
DAVID CHANG
@CHANGDS

2. BACKGROUND

3. STARTUP EXPERIENCES

4. Direct Via Syndicate/Fund
ANGEL INVESTMENTS

5. How to Raise
a Round Pitch

Tips Execution &
Scaling Tips Founders

Tips

6. How to Raise
a Round Pitch

Tips Execution &
Scaling Tips Founders

Tips

7. IDEAS ALONE ARE WORTHLESS

8. DON’T GO SOLO

9. FIND THE RIGHT CO-FOUNDERS

10. WORK THE NETWORK

11. Feasible

12. Viable

13. Desirable

14. Feasible Viable Desirable

15. START OR JOIN A COMPANY

16. PEOPLE BONDS > COMPANY BOUNDARIES

17. Engineer
Product
Management
MarketingInvestor
Corporate
Development
Business
Development
EXPAND YOUR SKILLS

18. Function
Size
Location
Industry
WHAT ROLE FITS BEST?

19. How to Raise
a Round Pitch

Tips Execution &
Scaling Tips Founders

Tips

20. VALUE BUILDS IN STEPS
Team
Product Development
Market Demand
Product / Market Fit
Business Model
Execution
See www.techcrunch.com/2015/06/24/running-out-of-money-isnt-a-milestone

22. IN-MARKET EXPERIMENTS

23. 1.10
^ 12
=3.1
1.01
^ 365
=37.8

24. FOCUS PIVOT

26. ARE YOU ON THE RIGHT PATH?

27. CHOOSE WHEN & HOW TO EXIT

28. How to Raise
a Round Pitch

Tips Execution &
Scaling Tips Founders

Tips

29. 1:1 PITCH EXERCISE

30. SCENARIO 1: COFFEE SHOP
Instructions for Audience
You love everything the pitcher tells you.
You get so excited that you repeatedly
interrupt them, trying to finish their
sentences.

31. SCENARIO 2: GROCERY STORE
Instructions for Audience
You ripped your pants 5 minutes ago.
So you desperately want to leave and try
to end the conversation with the pitcher
ASAP.

33. KNOW YOUR AUDIENCE

34. ADJUST FOR STYLE

35. SHARE YOUR SUMMIT & BASECAMP

36. DON’T SHARE EVERYTHING AT ONCE
•1 Sentence
•1 Paragraph
•1 Page
•1 Light Deck
•1 Follow-up Deck

37. www.nextviewventures.com/blog/free-startup-pitch-decks-template

38. TYPICAL PARTS
Overview Problem Solution Market
Traction
Marketing
Strategy
Team
Competition Conclusion
Financial
Projections

(high level)
Money Being
Raised and

Use of Funds
Revenue Model
& Business
Model

39. www.bestpitchdecks.com

40. pexels.com

41. thenounproject.com

42. How to Raise
a Round Pitch

Tips Execution &
Scaling Tips Founders

Tips

43. WHAT OBSTACLES STAND IN YOUR
WAY?

44. BUSINESS TRAJECTORY
•Lifestyle or social good
•Linear growth or revenue fueled
•High growth, scalable venture

45. CAPITAL SOURCES
Source: Jean Hammond & MassChallenge
Size
Cost
Equipment Financing
Traditional VC
Micro VC
Angel Groups
AngelList
Angels
Corporate / Strategic
Venture
Customers
Jobs Bill Portal
Crowdfunding
Vendors
Founder
Friends & Family
Crowdfunding
Grants -Gov & Foundation
Venture Debt
Bank
Loans
Personal
Loans
Private Equity
Competitions
Accelerators &
Contests
Impact Angels & VCs

46. VENTURE CAPITAL STAGES
Growth Equity
Early Stage
Angel
Friends & Family

47. VENTURE CAPITAL DYNAMICS
Skewed return distribution
VCs must swing for the fences

48. RAISING A ROUND

49. HOW MUCH TO RAISE
•Basic financial model of
cost drivers and revenue
•Forecast monthly for 2
years
•Fundraise rule of thumb:
12-18 months’ cash

50. USE OF PROCEEDS
•Build out the product
•Grow the team
•Marketing
•Customer acquisition
•Working capital

51. MILESTONES
See www.techcrunch.com/2015/06/24/running-out-of-money-isnt-a-milestone
Team
Product Development
Market Demand
Product / Market Fit
Business Model
Execution

52. Prep Target Socialize Raise Close FUNDRAISING CAMPAIGN

53. BASIC PREP
✓Legal representation
✓Founders agreements
✓Financials and budget
✓Teaser (1 page)
✓Pitch deck (10 pages)

54. Stage Location
Industry
Vertical
Business
Model
Investment
Thesis
Social /
Trust Filter
TARGET CRITERIA

55. BUILD PIPELINE

56. SOCIALIZE
•Prioritize sequence
•Find strongest connections to 30+ targets
•Tactics: lead gen, cold calling, warm intros
•Network over 2-3 months

57. DON’T ASK FOR MONEY!“I’m not ready to raise”
“Who would be helpful?”
“Who else should I talk to?”

58. REFINE PITCH
•Incorporate feedback
•Double down on consistent themes
•Avoid whiplash changes

59. GO FOR THE ASK
•Approach your top candidates at the same time
•Run conversations in parallel
•Decide whether / when to tell investors about each
other

60. CREATE URGENCY
•Anchor investor acts as the first domino
•“Triggering events” to get a (or better) term sheet

61. STRUCTUREEquity Debt

62. STRUCTURE
•Preferences over common
•Board seat or 2
•Option pool
•Liquidation preference
•Control over sale, new options
•Debt that becomes preferred equity
when you raise it
•No valuation, but the “cap” is a
ceiling
•Interest accrues, rate <10%
•Conversion discountEquity
Preferred Stock Debt
Convertible Notes, SAFEs

63. CLOSING THE DEAL

64. Seed A B $15 $6 $1 $30 $12 $5
VALUATION & DILUTION
?
Dilution: what’s your end stake?Valuation ($M)
?

65. VALUATION & DILUTION 37%
See www.ownyourventure.com
Raise $1M on $5M pre 33%
Raise $1M on $3M pre 34%
Raise $1.5M on $5M pre
Dilution: what’s your end stake?Valuation ($M)
Seed A B $15 $6 $1 $30 $12 $5

66. FINAL DEAL POINTS
•Rolling close vs. set close
•Not done until money is in
the bank
Key terms
❑Board composition
❑Option pool
❑Voting rights
❑Founder vesting
❑Change of control
❑Redemption rights
❑Information rights
❑Anti-dilution

67. HOW LONG DOES IT TAKE?
•Longer than you expect
•3-6 months
•Speed limited by access to investors
•Your ability to find them
•Calendar availability (surprisingly hard)

68. FIND THE RIGHT INVESTORS

69. RESOURCES
•Legal
•Goodwin Procter www.foundersworkbench.com
•Foley & Lardner www.foley.com
•Pierce Atwood
•Techstars www.techstars.com/docs
•www.seriesseed.com
•General
•www.jddavids.com
•www.robkornblum.com
bit.ly/startresources

70. Boston New Technology:

Founder Lessons, Learned the Hard Way
DAVID CHANG
@CHANGDS