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presents
Back to Basics: Financial
Fundamentals For Startups
Get Funded: Financing your Startup
August 13, 2013
Smith Anderson
Silicon Valley Bank
(617) 796-6958
Smanderson@svb.com
Tw...
Chuck Goldman
Apperian
CEO and Co-Founder
cgoldman@apperian.com
Arye Barnehama
Melon
Co-Founder
arye@usemelon.com
Why We’re Here
Sources of Financing Overview
Crowdfunding: A Kickstarter case
study.
Equity: What you need to know.
Debt: ...
Financing partners take risk
Bootstrapping	
  
• Vendor	
  financing
	
  	
  Trade	
  credit
	
  	
  Stretching	
  payables
• Customer	
  financing
	
  	...
Bootstrapping	
  
• Amount	
  of	
  capital
	
  	
  RelaAvely	
  small	
  amounts
• Use	
  of	
  capital
	
  	
  Working	
...
Crowdfunding deep dive
Crowdfunding	
  Then..
Crowdfunding	
  Then..
• 1884	
  this	
  project	
  ran	
  out	
  of	
  
money.	
  
Crowdfunding	
  Then..
• 1884	
  this	
  project	
  ran	
  out	
  of	
  
money.	
  
• Joseph	
  Pulitzer	
  wrote	
  an	
 ...
Crowdfunding	
  Then..
• 1884	
  this	
  project	
  ran	
  out	
  of	
  
money.	
  
• Joseph	
  Pulitzer	
  wrote	
  an	
 ...
Crowdfunding	
  Then..
• 1884	
  this	
  project	
  ran	
  out	
  of	
  
money.	
  
• Joseph	
  Pulitzer	
  wrote	
  an	
 ...
Crowdfunding	
  Then..
• 1884	
  this	
  project	
  ran	
  out	
  of	
  
money.	
  
• Joseph	
  Pulitzer	
  wrote	
  an	
 ...
Crowdfunding	
  Then..
• 1884	
  this	
  project	
  ran	
  out	
  of	
  
money.	
  
• Joseph	
  Pulitzer	
  wrote	
  an	
 ...
Crowdfunding:	
  Today	
  and	
  Beyond
Product/Project
• Currently	
  thriving
– Pledgie	
  (2006)
– Sellaband	
  (2006)
...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
   Not	
  to	
  Kickstart?
• Kickstarter	
  	
  -­‐	
  La...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Crowdfunding:	
  A	
  Kickstarter	
  story	
  
To	
  Kickstart?	
  
• Demand/market	
  validaAon	
  
done	
  before	
  you...
Is	
  it	
  right	
  for	
  you?
Probably
• Hardware	
  with	
  a	
  specific	
  
cost	
  for	
  prototype.
• Consumer	
  f...
Angel Investors
Angels
• Class	
  of	
  capital
	
  	
  Equity	
  (ownership	
  in	
  company)
• Structure/organizaAon
	
  	
  High	
  net...
Angels
• Amount	
  of	
  capital
	
  	
  $100k	
  to	
  $2mm
• Use	
  of	
  capital
	
  	
  Growth	
  capital	
  (i.e.	
  ...
Angels
• Structure	
  of	
  investment
	
  	
  Purchase	
  of	
  common	
  or	
  preferred	
  stock
	
  	
  SomeAmes	
  co...
Venture Capital
Venture	
  Capital	
  
• Class	
  of	
  capital
	
  	
  Equity	
  (ownership	
  in	
  company)
• Structure/organizaAon
	
 ...
Venture	
  Capital
• Amount	
  of	
  capital
	
  	
  $1mm-­‐20mm	
  
	
  	
  Some	
  seed	
  acAvity	
  as	
  well
• Use	
...
Venture	
  Capital
• Structure	
  of	
  investment
	
  	
  Purchase	
  of	
  preferred	
  stock
	
  	
  SomeAmes	
  conver...
Debt
Debt
• Class	
  of	
  capital
	
  	
  Debt	
  (senior	
  debt	
  as	
  discussed	
  here)
• Structure/organizaAon
	
  	
  ...
Debt
• Amount	
  of	
  capital
	
  	
  $1mm-­‐100mm
• Use	
  of	
  capital
	
  	
  Working	
  capital
	
  	
  Growth	
  ca...
Debt
• Structure	
  of	
  investment
	
  	
  Senior	
  secured	
  credit
• Price	
  of	
  investment
	
  	
  Interest	
  a...
Case study
• The	
  early	
  days…
	
  -­‐Chuck	
  –	
  director	
  of	
  enterprise	
  at	
  Apple
	
  -­‐Launches	
  Apperian	
  in...
• The	
  early	
  days…
	
  -­‐Bootstrapping
	
  -­‐Self-­‐financing	
  (and	
  sacrifice)
	
  -­‐Vendor	
  relaAonships
	
 ...
• Six	
  months	
  later…
	
  -­‐The	
  dogs	
  are	
  eaAng	
  the	
  dog	
  food
	
  -­‐iPhone	
  is	
  exploding	
  in	...
• Six	
  months	
  later…
	
  -­‐$1mm	
  seed	
  round
	
  -­‐Common	
  Angels	
  &	
  Launch	
  Capital
	
  -­‐AddiAonal	...
• Q1-­‐10:	
  the	
  one	
  year	
  old	
  startup…
	
  -­‐Begin	
  developing	
  EASE	
  plaEorm
	
  -­‐Acquihire	
  a	
 ...
• Q1-­‐10:	
  the	
  one	
  year	
  old	
  startup…
	
  -­‐$500k	
  SVB	
  line	
  of	
  credit
	
  -­‐Leverage	
  A/R	
  ...
• Q1-­‐11:	
  the	
  two	
  year	
  old	
  startup…
	
  -­‐Enterprise	
  mobility	
  is	
  hot!
	
  -­‐BYOD,	
  iPad	
  in...
• Q1-­‐11:	
  the	
  two	
  year	
  old	
  startup…
	
  -­‐$9.5mm	
  series	
  A
	
  -­‐NorthBridge,	
  Bessemer,	
  Klein...
• The	
  past	
  two	
  years…
	
  -­‐ConAnued	
  market	
  expansion
	
  -­‐MDM,	
  MAM,	
  BYOD,	
  etc.
	
  -­‐Enterpri...
• The	
  past	
  two	
  years…
	
  -­‐$12.4mm	
  preempAve	
  series	
  B	
  in	
  Mar	
  ‘12
	
  -­‐$4.6mm	
  series	
  B...
Questions?
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• Q1-­‐11:  the  two  year Startup Roadkill??....these financing tools will help you avoid the 18 wheelers

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• Q1-­‐11:
 the
 two
 year
 old
 startup…

 -­‐$9.5mm
 series
 A

 -­‐NorthBridge,
 Bessemer,
 Kleiner
 Perkins

 -­‐1st
 enterprise
 investment
 from
 KP
 iFund

 -­‐Over
 2
 years
 of
 cash
 runway

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• Q1-­‐11:  the  two  year  old  startup…  -­‐$9.5mm  series  A  -­‐NorthBridge,  Bessemer,  Kleiner  Perkins  -­‐1st  enterprise  investment  from  KP  iFund  -­‐Over  2  years  of  cash  runway

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