G98g Equity & Funding (13)

#1 (Minimum Victory Condition)

Set a Victory Condition to achieve before the Impact Deadline. The Impact Deadline is exactly three months after Graduation. Add the Impact Deadline to your Business Calendar. There is a Minimum Victory Condition that fast growing Graduating companies have historically achieved by the Impact Deadline. The Minimum Victory Condition has a Team, Product and Traction component. For the Team, the Minimum Victory Condition is that the Founders are all working exclusively on the business and have high profile people involved in the company. For Product, the Minimum Victory Condition is that there is a functional version of the solution that is engaging customers. For Traction, the Minimum Victory Condition is that the Product has demonstrable demand and actual usage from a representative set of customers. Spend some time to reflect upon your Victory Condition at the Impact Deadline, and write a couple of sentences that describe a measurable Victory Condition for each of Team, Product and Traction by three months after Graduation. Each Graduating company is eligible to apply for the Founder Lab fundraising acceleration program offered by the Founder Institute (http://FounderLab.com) at the Impact Deadline. (2 Hours)

#2 (Funding Strategy)

Consider a Funding Strategy to achieve the Minimum Victory Condition. As a startup, there are two high level funding Strategies: to Bootstrap or to Fundraise. With Bootstrapping, the startup leverages the savings of the Founder and revenues from customers to grow the business without professional investors. With Fundraising, the startup grows to hit a business milestone. Upon reaching this goal, the startup then raises money from professional investors to achieve the next business milestone. If a startup grows quickly, the company normally requires Fundraising to sustain the growth, regardless if they were previously Bootstrapping, and, once a company starts Fundraising, then the company no longer Bootstraps. At this phase, there are three Fundraising options available to startups: raising a Founding Round from people that you know as outlined in https://fi.co/guides/1281, entering a Seed Accelerator or raising money from Angel Investors. First, choose your Funding Strategy, whether to Bootstrap or to Fundraise, and write a couple of sentences about why this strategy makes the most sense for your business at this point in time. Next, rank order the following three options based on the needs of the business: raising a Founding Round, joining a Seed Accelerator and raising from Angel Investors. Write a couple of sentences on each one that outlines the benefits and disadvantages of each opportunity for your business, even if you are Bootstrapping. The rank ordered list is your Funding Alternatives, since, as a Founder, you must always have a list of viable options for the capital that you need to grow. (3 Hours)

#3 (Hiring Plan)

Update your Hiring Plan to meet the Minimum Victory Condition of the Team by the Impact Deadline. The caliber of your team is one of the most important facets of fundraising at this point in your company development. It is critical that you identify at least one very strong addition to the team. Write a couple of sentences that analyzes your successes with hiring to date. Write another couple of sentences that analyzes your struggles with hiring to date. Write one paragraph about your plan to recruit and onboard Team Members given your successes and failures, and make sure to target a strong team addition. Provide a bulleted list of the steps that you will take to achieve the Hiring Plan during each week over the next three months for a total of 16 weeks. Update your Business Calendar with milestones from this Plan. (2 Hours)

#4 (Sales Plan)

Update your Sales Plan to meet the Minimum Victory Condition of Traction by the Impact Deadline. Another important facet of fundraising is having customers using and paying for your solution. This demonstrates to investors that there is a real market need. Write a couple of sentences that analyze your successes with sales to date. Write another couple of sentences that analyze your struggles with sales to date. Write one paragraph with a plan to increase the top of your sales funnel each week with new sales targets and convert as many of these sales targets to paying customers through the Steps to Revenue. Provide a bulleted list of the steps that you will take to achieve the Sales Plan during each week over the next three months for a total of 16 weeks. Update your Business Calendar with milestones from this Plan. (2 Hours)

#5 (Product Plan)

Update your Product Plan to meet the Minimum Victory Condition of the Product by the Impact Deadline. Another important facet of fundraising is to have a strong solution or prototype of the solution. Using the lessons from your product development initiatives and speed of product development to date, update your Project Roadmap and Project Specification and include links to them. Write a few sentences about your desired state of the product after three months from now working at the same pace. Provide a bulleted list of product development Sprints that you plan to achieve to hit this desired state during each week over the next three months for a total of 16 weeks. Update your Business Calendar with milestones from this Plan. (2 Hours)

#6 (Use of Proceeds)

Examine the capital needs of the business. Extend your Financial Model to project revenues and expenses for a total of 24 months from now. Create a copy of the Financial Model and label it Use of Proceeds, which is the amount of money that you may need to raise from investors. In the Use of Proceeds spreadsheet, create a field that allows you to apply a multiplier to the total revenues and a multiplier to the total expenses. Over the next 18 months from now, multiply your revenues by 0.5 and your expenses by 2.0. The total negative balance in this period will be your Use of Proceeds. Write a couple of sentences about the major business milestone that you will achieve over the next 18 months, and then provide a dollar amount for the Use of Proceeds. Include the Use of Proceeds in your Investor Pitch Deck. (1 Hour)

#7 (Advisor Strategy)

Organize calls with your Advisors to review the Plans. Set up a 30 minute call with each of your Advisors and briefly review the Funding Strategy, Hiring Plan, Sales Plan, Product Plan and Use of Proceeds. Provide a bulleted list of feedback from each Advisor, and update each of the Plans with the feedback that you feel is valuable. At the end of the call, discuss a strategy to engage the Advisors with your various Plans over the next three months. Provide a bulleted list of the ways that each Advisor will help you with your various Plans. (2 Hours)

#8 (Graduation Plan)

Organize the various Plans into a short Graduation Plan. Take the Funding Strategy, Hiring Plan, Sales Plan, Product Plan, Use of Proceeds and the Advisor Strategy and combine them into a single abbreviated one page plan to share with your Working Group and your Local Leaders. Send your Graduation Plan to everyone in your Working Group and solicit feedback to improve. Provide a link to the final Graduation Plan. (2 Hours)

#9 (Capitalization Table)

Update and automate your Cap Table. Take the Cap Table that you previously produced based on the following template: https://fndri.com/2DY68Gv. Ensure that it includes everyone that you have granted equity, options or warrants to, including the Founder Institute and Advisors. Validate that you have properly signed agreements by all parties for every grant. Provide a link to the updated Cap Table. Review various online resources to manage your Cap Table online, such as eShares and CapTable.io. Implement your Cap Table into one of these online systems, and write the name of the system, and write a couple of sentences on how you plan to manage your Cap Table with the system going forward. (1 Hour)

#10 (Draft Investor Pitch Deck)

Refine your Investor Pitch Deck. Take your existing Investor Pitch Deck and refine it with all of your work to date, including details from your various Plans. Research at least two publicly available pitch decks from successful companies in a related space, and provide a link to each of these decks. Update your pitch deck with the best practices from the related company presentations. Ask at least one of your peers and at least one Mentor or Local Leader to listen to your presentation with the Investor Pitch Deck, which should take approximately 20 Minutes. Watch the body language of the participants and take detailed notes on their reactions and their feedback. Provide a bulleted list of the feedback with the name of the participant, and update your deck with the best insights, making it the Draft Investor Pitch Deck. Provide a link to the Draft Investor Pitch Deck and upload it to the Founder Institute site under ‘Account.’ (3 Hours)

#11 (Company Profile)

Create a company profile on the major startup and business platforms. Go to Linkedin, AngelList, F6S, Gust and Crunchbase, as well as any other platforms that are relevant in your local market, and create a profile for your business. Use the short and simple language that describes your business in your Founder Institute site profile. Reference or add Founder Institute as the accelerator associated with your company, and include at the end of your business description, “Launched at the Founder Institute.” Provide a bulleted list of the links to your profile on each of the major startup and business networks. (2 Hours)

#12 (Deal Room)

Create a Deal Room for future investors. Take all of the relevant documents for investors in your File System and place them into one folder with subfolders, named Deal Room. These files include the ‘Pitch Deck,’, ‘Company’ documents with legal, ‘Team’ bios, ‘Board Materials,’ ‘Financials,’ ‘Sales’ information, ‘Marketing’ materials and ‘Intellectual Property.’ If and when you decide to raise a professional financing round, you will need to have these documents in good order. Write a couple of sentences on how you plan to keep these files up-to-date over time. Share the Deal Room folder and provide a link. (1 Hour)

#13 (Target List)

Identify local Angel Investors and Seed Accelerators, ignoring Venture Capitalists and Seed Funds. Coordinate with your Working Group and other peers in the program to develop a shared spreadsheet among the entire program that will have two tabs: ‘Angels’ and ‘Accelerators.’ Use this template for the Target List to start (http://fndri.com/2sxQ9aY). The Target List should include at least 100 local angels, 25 regional and 50 global seed accelerators. Do not add Venture Capitalists or Seed Funds to your list. Most Graduates are not ready to raise capital until the Impact Deadline and until they meet the Minimum Victory Condition, so the Target List is for future use. Provide a link to the Target List, and write a couple of sentences on your contribution to the Target List. (4 Hours)

#14 (Event List)

Identify upcoming Pitch Events. Coordinate with your Working Group and other peers in the program to develop a shared spreadsheet among the entire program that has all of the major local events where you can pitch your company. Use this template for the Event List to start (http://fndri.com/2AAyTle). Look to add events where Angel Investors will be present that you identified for the Target List, and during the events, look to make connections with these Angel Investors for future use. Provide a bulleted list of at least three events where you will pitch your business before the Impact Deadline. Mark the event deadlines and dates on your Business Calendar with a 10 day reminder to complete the submission. (2 Hours)

#15 (Confirmation)

Confirm that you are ready to graduate. Complete any missing requirements for graduation. Write a couple of sentences confirming that you have met the requirements to be a Graduate of the Founder Institute. All Graduates must have completed all of the company-building work from the Curriculum, established a functioning Advisory Board, made notable progress on the solution, have started to put together a viable team and identified and preferably closed initial sales or revenue. NOTE: The status of your company will be reviewed by the Founder Institute headquarters before you are officially designated as a Graduate company. (1+ Hours)

#16 (Peer Support Group)

Develop a Working Group structure to support you after you graduate from the FI program. Being a Founder is lonely because there are a lot of issues that you cannot discuss with your employees, investors, friends or loved ones. During FI, your Working Group provided you with an audience to discuss these types of issues. Similarly, create a support group that you will virtually meet with monthly after graduation. This group may include FI graduates, mentors and other entrepreneurs you know. Develop a set of group rules, or just adopt the sample rules in this guide: https://fndri.com/2Qkcvc0. Write down your group member names, include a bullet point on what each member brings to the group, and share a link to your group rules. (2 Hours)

(Optional – Founding Round Close)

Close the Founding Round and receive the wired investment. Write the template for and send a short Closing Email to the interested individuals from your Target List that includes the investment agreement, the name of the Law Firm and instructions to sign and wire the investment. Include in the Closing Email the time for a Final Call, where you will speak with the interested individual to answer any final questions that they may have. During the Final Call, discuss the date when the interested individual will sign and wire the money for the investment, and set this time within the next few days. If the interested individual has any questions that you are unable to answer about the agreement or deal terms, offer to put them in touch with your Law Firm. Write the total amount of money that interested individuals have said that they would invest under the title, “Soft Circled.” Then, write the total amount of money that you have received signed agreements for under the title, “Hard Circled.” Write the amount of money that has been wired into your bank account under the title,”Closed.” Continue adding individuals to your target list until the Soft Circled amount is 200% greater than the Target Amount or until the amount Closed equals the Target Amount. Write a couple of sentences on what you have learned about the fundraising process and how you will improve yours in the future. (6 Hours)(Optional – Founder Lab) Apply for Founder Lab to expedite fundraising. If you are planning to raise money from Angel Investors, then ensure that you meet the Minimum Victory Condition by the Impact Deadline and apply to the Founder Lab program (http://www.FounderLab.com) on the Impact Deadline. The three month program will help you to secure commitments from Angel Investors by leveraging techniques used in the Founder Institute.(Optional) If you feel that a Local Leader or Mentor has provided you with valuable advice or support for your business, show them your gratitude by writing a recommendation for them on LinkedIn. For instructions on how to write a LinkedIn recommendation, go here: https://fndri.com/2DLx6PL. For more advice on how to write strong recommendations, go here: https://fndri.com/2P5AA1j.

Links

Reading

• 6 things to Pre-Empt 90% of Due Diligence
• A Beginner’s Dictionary of Venture CapitalHere’s a primer on the language of venture capital.
• How to Read a Convertible Debt Term Sheet — Hyde Park AngelsThe Ultimate Convertible Debt Term Sheet Glossary
• Fundraising Strategy GuideThis a guide designed to help Founders raise capital from early-stage investors, particularly angel investors by Adeo Ressi.
• Guide to Raising Money OnlineThis guide was created by FI Mentor Jason Friedman.
• Equity Fingerprint GuideEquity Fingerprint (English)
• Pitching to VCsDavid S. Rose’s rapid-fire TED U talk on pitching to a venture capitalist and the 10 things you need to know about yourself — and prove to a VC — before you fire up your slideshow.
• List of Funding Documents for StartupsThis is a free collection of essential sample legal forms for startup creation and funding, contributed by startup lawyers, venture capital firms, and accelerator programs.
• Seed Investing: Understanding the LandscapeA three part series dissecting different instruments for seed investment.
• Feld Thoughts BlogBrad Feld has been an early stage investor and entrepreneur since 1987. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of Techstars.
• Canaan Pitch Workbook 2013Dummies guide to pitching venture capitalists.
• Example Cap TableA simple cap table provided by Venture Hacks.
• Venture DealsThe best book to read to fully understand venture funding.
• How Startup Funding WorksInfographic.

Required

• Investor Tracker TemplateTrack investor leads with this excel template.

Resources

• FintaFinta is a secure online, cloud-based, operations center for your start-up. Founder Institute companies get a special friends & family discount to the platform.
• AngelListSee 1000s of startup jobs at the best startups. Get salary, equity and funding info upfront. Apply privately with one click. No recruiters, no spam. 4000+ startups hiring.
• CrunchBaseCrunchBase is the definitive database of the startup ecosystem and the world’s most comprehensive dataset of startup activity and it’s accessible to everyone.
• OnevestStartup investment opportunities on Onevest’s curated, personalized service, and free online investor community.
• The Holloway Guide to Equity Compensation — HollowayStock options, RSUs, job offers, and taxes—a detailed reference, including hundreds of resources, explained from the ground up and made to be improved over time.
• Y Combinator SAFE AgreementThe safe (simple agreement for future equity) is intended to replace convertible notes in most cases.
• Global Accelerator NetworkGlobal Accelerator Network – short-term, mentorship-based programs and guidelines.

Submitted

• STHLM MAY 30 – Bootstapping & Fundraising – Michael Lantz
• A Basic Overview Of The Cap Table For First Time FoundersSo you’ve just launched your startup and are preparing to take on investment. After running through the post-incorporation checklist, it’s…
• Capitalization Tables for Startup Founders — Part 1: Pre-Investment“Capitalization Tables for Startup Founders” is a three part series that will help new entrepreneurs better understand capitalization…
• cap table templateCap Table LIVE ON GOODS CAPITALIZATION Total Capital Invested by Founders to Date,$7,500 Common Shares,Ownership Share Price:,$1,(fully diluted) Founders: Gretchen Dahm,1,875,25.00% Maria Krach,1,875,25.00% Helen Nill,1,875,25.00% Laura Rao,1,875,25.00% Outside Investors Elevate Ventures,25,000…
• Startup Finance 101 – AlleyWatchRecently, we covered how to perform due diligence on startups. This is obviously helpful whenever you’re assessing a startup and whether or not it’s worth a closer look for a potential investment. So now, here you are, your friend wows you with his pitch. He has a rockstar team comprised of complementary talent. They have key advisors to add value, how they’re going to build their products, they legitimately know what their go-to market strategy is, who their audience is, and a concrete method on how they’re going to make money. As the entrepreneur, you are ecstatic and prideful of…
• Seed Investment Pitch Deck Templates
• Fundraising Table – FI TemplateFundraising Rounds Illustrative fundraising table Daniel Rothman reviewed during the session.
• Slides: Bootstapping & Fundraising – Andreas Gindin
• Slides: Bootstapping & Fundraising – Charlotta Holmquist
• The art of storytelling | Pixar in a Box | Partner content |Khan AcademyThis topic is an exploration of the storytelling process at Pixar.
• Hiscox InsuranceHiscox Small Business Insurance is America’s #1 online small business insurer. Our expertise comes from being in the insurance business for over 100 years. Get your business insurance quote online or call a licensed insurance agent.