Getting Funding

Homework due for today

• Teams, work on your final deliverables!

Story

• How I came to found eRoom Technology

Funding Models

• Different Funding Models
  • Friends and Family
  • Consulting/Work on the side
  • Angels - Individuals or in groups (e.g. Walnut or Common Angels)
  • Venture Capital - Organized as funds - two sided (e.g. North Bridge or NEA)
  • Incubators/Seed funding companies (e.g. Y-Combinator or TechStars)
  • Crowdfunding
  • (Banks)
  • Reference: Different Kinds of Investors

Venture Capital

• What is the process
  • Rounds of investment
  • How valuation changes
  • Term sheets
  • Liquidation preferences will turn your hair grey.
  • Ideal First Round Funding Terms
• Sequence of events
  • Founders have an idea - investors have money
  • It’s a contract between founders and investors
  • Result is a new corporation owned partially by founder and partially by investors
  • Look at eRoom term sheet.
• Rounds of financing
  • What is a round
  • How does it end? Liquidity Event
  • Seed/Angel, A-Round, B-Round, … IPO or Acquisition* Let’s work an example on the whiteboard
• What you negotiate over
  • Valuation and Investment amount are the key parameters
  • How term sheets turn into “deals”
  • What’s a seed deal?
  • Should you or shouldn’t you?
  • What are VC firms really?
  • General and Limited Partners
  • Why do people love/hate vcs?