Post on 31-May-2020
Finance / Funding Sprint 14.3.2019 & 21.3.2019
Tuomas Maisala / CEO & Founder at Maisala.net Oy
Start-up Funding in a Nutshellfor Aalto Venture Program
Tuomas Maisala
19 years as a start-up advisor
300+ start-ups
20M€+ funding raised as a consultant
10 direct investments
Crowdfunding experiments
Funding Sprint Mar 14th & 21st
• Today
• Startup Funding in Nutshell
• general principles
• discussion of case Sharetribe
• overview of different sources of funding
• Instructions for next session
• Next week
• Meeting with a suitable financier (simulated)
Basic law of finance
€
How much funding do you need?
€
t
Funding mix
Debt: e.g. bank loans = low risk capital
Grants (and soft loans) = “carrot”
Equity: e.g. investments = capital at risk
What is yourmost important
source of money?Always.
Discussion: Case SharetribeHow did they get funded?
Sharetribe
• Tekes/Business Finland: TULI, Tempo, …
• Investments: Reaktor Polte, Lifeline
• Crowdfunding: Invesdor
• Indirect support:
• Startup Chile
• StartupSauna
• EIT ICT Labs
Funding of Sharetribe
2010: TULI (idea exploration grant before incorporating)2012: 40k (Tekes Tempo, grant)2013: 60k private (Reaktor) + 60k public (Tekes grant)2014: 350k private (250k Lifeline, 100k Reaktor) +
350k public (Tekes R&D, loan)2015: 500k public (Tekes YIC phase 1, grant + R&D, loan)2016: 450k public (Tekes YIC phase 2, grant + R&D, loan)2018: 1.12M crowdfunding (Invesdor) +
930k public (Business Finland R&D, loan)
Total funding 3,86M: Grants 600k
Soft loans 1,73M
Equity 1,53M
Elements for the funding mix
Public
Finnvera
BusinessFinland, ELY
FinnishIndusty
Investment
Private:Professional
Nordea, OP,Danske etc.
Accelerators?Foundations?
Angels, VCs
Private:Crowd
Funduetc.
Mesenaatti.me
Invesdoretc.
4) Crowd
1) Debt
2) Grants
3) Equity
Predictable cashflow to pay back
Low risk or strong collaterals
1) Debt = business loans
-Operates like a commercial bank but is state-owned
-Loans for ”ready” new businesses, mainly SMEs
-Various loan products for all sizes of export business
Example: Finnvera can back up to 80 % of max. 100.000 EUR business loan from a private bank for a founder-owned SME
2) Grants and Soft Loans
Why?
Which activities can be supported by public funding?
Startup Grant: personal support
Carrot to take the leapSelf-employment
Innovations and R&DJob creation & exports
Some ”political” motivations
=+
Tempo
Business Finland Tempo
• Intended for innovative start-ups and SMEs aiming to enter quickly to international markets• Requirement: 30k€ as investment or retained profits
• Typically from proof-of-concept to MVP version• 4-5 months
• Must focus on market validation, customer exploration and first international activities
Other sources of grants
• ETE Center (ELY) (regional; not relevant in the Helsinki area)
• Salary support for employing unemployed persons (appr 30 %)
• Industry-specific sources : e.g. new UNTIL, Finnpartnership and Nopef
• Few foundations
• EU: rarely viable, maybe for few start-ups that fit and pass thetight criteria
nick@ on Flickr (CC BY 2.0) “Arm Wrestling”
3) Equity
FFF,Business Angels &Venture Capitalists
FFFThey like youThey want to support youThey want you good thingsThey trust you
Business Angels
They are investing
their own assets
Personal
interestsStartup Ltd
€
Startup Ltd Startup Ltd
€€ € €
Venture Capitalists
They are professional
asset managers
- 10x return
- Portfolio
- ROI Fund 1
(limited
partnership)
VC Firm Ltd
Investor N
Startup 2 Ltd Investor 2
Investor 1
€
Startup N Ltd
Startup 1 Ltd
€
board member
Some of the Finnish VCs
Pre-seed / 50k€+
Seed / 0,5M€+
Venture / 1M€+
Corporate VCs: maybe Reaktor Ventures, Fonecta, DNA, Fortum
Foreign VCs: active mainly on larger rounds
N.B. Funds come and go with their life cycle. Some of the VCs that are ”active in events” have no active funds to make any new investments.
Very rough scale of start-up valuation
Business idea 10k€
Business plan / prototype / demo 100k€
Pilot client(s) and proof-of-concept
Real product (price, materials, support etc) 1M€
Repeatable and scalable business model
Ability to execute in the growth-phase 10M€
Unique idea and IPR may increase valuation.
Skilled, credible team raises valuation much more!
Featured image source: http://www.nonprofitlawblog.com/assets/Crowdfunding.png
4) Crowdfunding
Crowdfunding for start-ups
Forms:
Perks:sell ”invaluables” like t-shirts
Pre-order: sell consumer products (to raisefunding for 1st batch)
Microloans (= debt):pooling of small private loans, often w/o collaterals
Equity investments:group of ”mini business angels”
Examples of web services:
Mesenaatti.me
Kickstarter & Indiegogo FundedByMe
Fundu, Yrityslainat, Invesdor
Invesdor, FundedByMe,
Privanet/Around and others
Finance sprint task / homework
1) Estimate rough amount of funding that you
will need to reach profitable growth
2) Sketch your funding plan = rough path of
funding you will raise for your new venture
3) Decide what funding you are raising:
• Business angels
• Bank
• Business Finland Tempo
• Finnvera loan/start guarantee
2019 2012 2021 2022
Business Finland R&D Project
(100ke, 70% loan)
Pro
du
ct
De
ve
lop
me
nt
Bu
sin
ess
De
ve
lop
me
nt
Business Finland R&D Project 2
(150ke, 50% loan)
ELY developmet grant /EU SME Instrument (50ke)
BF Tempo
(50ke, 75%)
Sample of a Visual Funding RoadmapO
pe
rati
ng
C
ap
ita
l
Pre-seed 1FFFs 30ke
Seed 1Angels 100ke
BF YIC
Program
Phase 1 (250ke)
Sales0ke 80ke 200ke 500ke
Seed 2Angels/seed-VC 200-500ke
Proto MVP + piloting Version 1 & sales Version 2 + international business
Bankloan
Traditional table with numbers
Company X 2019 2020 2021 2022
Sales 10.000 € 400.000 € 1.500.000 € 5.000.000 €
Costs 210.000 € 800.000 € 1.500.000 € 4.000.000 €
Profit/loss -200.000 € -400.000 € 0 € 1.000.000 €
Equity XXX.XXX XXX.XXX
Debt XXX.XXX
Grants XX.XXX
Reserves/cash
XX.XXX XX.XXX XX.XXX XX.XXX
Finance sprint task / homework
4) Sketch your funding proposal to selected
first financier and approach by email:
- DL Tue Mar 19. 23.59 to tuomas@maisala.net
- topic AVP: your case name
- state who are you approaching & amount of
funding e.g. 50ke and instrument you are
applying for Tempo/loan/equity investment
- include any materials you would like to share
like pitch deck or other background materials
5) Meeting on Mar 21st (simulated 20min)
- Tuomas Maisala & Teemu Polo
What do you need for fundraising?
Credible business opportunity
Some evidence / traction
Relevant team with fire in the eyes
Understanding the play from the other side (logic of the financier)
Creative Commons © https://openassembly.files.wordpress.com/2015/07/
www.maisala.net | tuomas@maisala.net
Phone/WhatsApp +358 44 766 7000Skype: tmaisala
How did you like the Nutshell?
See you on Mar 21st!
Tempo 75 % of
R&D costs
Pre-Seed Package 80k€
Tempo project costs are 66k€ Other 14k€
Founders or FFF
investment 30k€
Grant 50k€ Equity 16k€ + 14k€
R&D Soft Loan
70 % of R&D costs
Seed Package 400k€
R&D project costs are 300k€ Other 100k€
Syndicated
investment
Debt 200k€ Equity 100k€ + 100k€
R&D Soft Loan
50 % of R&D costs
Seed # 2 Package 600k€
R&D project costs are 400k€ Other 200k€
Syndicated
investment
Debt 200k€ Equity 200k€+100k€
Debt
100k€