TOFI Oct.20, 2015 Fundraising: Zifkin

The Road To Glory

How You Can Fuck

Everything Up

Should You Even Raise Capital?

QUESTION #1

Is Growth A Competitive Advantage?

Can You Only Achieve Growth With Funding?

Congratulations!

$2B0.5:1 1:1 1.5:1

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

2015 2016 2017 2018 2019

No.

No, they are not.

Strategic Plan

Talent Gap

Technology Gap

Customer Gap

Revenue Gap

Cash Situation

Equity Situation

Board Situation

Macro-Economic Situation

Micro-Economic Situation

Competitive Environment

Transience

Strategic Plan

Talent Gap

Technology Gap

Customer Gap

Revenue Gap

Cash Situation

Equity Situation

Board Situation

Macro-Economic Situation

Micro-Economic Situation

Competitive Environment

Transience

No Visibility.

No Control.

Constantly Moving.

Build a

Strong and

Healthy

Company

Angel Seed Series A Series B Series C IPO


You Are

Here


You Are

Here

Tech Companies Average More Than $80M of Funding Before Their

IPO


You Are

Here

“Trust me.

There is a

good chance

this thing will

work”

100% you

“Check it out.

It has

worked””

95% you

5% proof

“It looks like

this thing is

working”

70% you

30% proof

“Don’t

believe me,

see for

yourself”

15% you

85% proof

“ ”

5% you

95% proof

Power

Success

Pre-IPO: ~4% Pre-IPO: ~5%

Pre-IPO: ~3% Pre-IPO:

~24%


You Are

Here

$500K

$1.5M

$2M

25%

$2M

$6M

$8M

25%

$8M

$24M

$32M

25%

$40M

$160M

$200M

20%

$120M

$880M

$1B

12%

$300M

$1.7B

$2B

Raise

Pre

Post

Dilution


You Are

Here

37.5%

37.5%

25%

28.13%

28.13%

18.75%

25%

21.09%

21.09%

13.88%

18.75%

25%

16.87%

16.87%

11.10%

15%

20%

20%

14.85%

14.85%

9.7%

13.2%

17.6%

17.6%

12%

You

Co-Founder

Investor 1

Investor 2

Investor 3

Investor 4

Investor 5

Public

11.88%

11.88%

7.76%

10.56%

14.08%

14.08%

9.6%

20%

You

Co-Founder

Investor 1

Investor 2

Investor 3

Investor 4

Investor 5

$237M

$237M

$155M

$211M

$282M

$282M

$192M

11.88%

11.88%

7.76%

10.56%

14.08%

14.08%

9.6%

-

-

310x

105x

35x

7x

1.6x

GAMEPLAN

What Type of Money Should I Raise?

QUESTION #2

Debt

Equity

DebtDebt

+

Equity


You Are

Here

Convertible Debenture/SAFE Equity Equity

and/or

Debt

Who Should I Raise From?

QUESTION #3

Really Good People

Anyone else


You Are

Here

You

Awesome People

Seed Investors

Financial Institutions

Tier 1 VCs

Private Equity

Investment Banks

What Are They Looking For?

QUESTION #5

Inertia is the resistance of any physical object to

any change in its state of motion including

changes to its speed and direction or the state of

rest.

Inertia

[in-ur-shuh]

Team

RevenueTraction

How Do You Find Them?

QUESTION #6

DepositWithdrawal

What Is The Most Important Part of

Raising?

QUESTION #7

1. Terms

2. Amount Raised

3. Valuation

How Much Should I Raise/Value My Company?

QUESTION #8

The

Magic

Window

1/5 to 1/3

Step 1: Select a comfortable amount ($750,000)

Step 2: Select a floor amount ($500,000)

$500,000 @ 20% =$ 2,500,000 (pre)/$3,000,000 (post)

$750,000 @ $2,500,000 = $3,250,000 (post) or 23%

$1,200,000 @ $2,500,000 = $3,700,00 (post) or 32.5%

$1,200,000$500,000

1/5 to 1/3



$500,000 @ 20% =$ 1,500,000 (pre)/$2,000,000 (post)

$750,000 @ $1,500,000 = $2,250,000 (post) or 33%

$1,200,000$500,000

$750,000$500,000

1/5 to 1/3



$500,000 @ 20% =$ 7,500,000 (pre)/$8,000,000 (post)

Terms

ValuationAmount

Raised

Power

Success

Pro Tips

Raise only if you need it

Once you do, you have light

the fuse

Focus on the end goal and

reverse engineer the game

plan

Build for strength, not

acquisition

The goal is to maximize your

power while maximizing the

company’s success

Know what you are getting

into

Don’t chase cool

Bring on good people

and don’t take them for

granted

Ask other entrepreneurs

for help

Make sure you are

depositing to the karma

bank

It’s about terms, not

valuation

Build your magic window

Nobody knows the hell

they are doing, so do

what works for you

TOFI Oct.20, 2015 Fundraising: Zifkin

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