Fund Raising 101 Incubation Programmes

Transcription

1 Fund Raising 101 Incubation Programmes Nov 2017

2 Agenda Fundraising Process Overview Business Model Financial Modeling and Analysis Management & Corporate Governance Investor Landscape 2

3 Fundraising Process Overview 4

4 Fundraising Process - Materials Teaser PowerPoint Presentation Business Plan 5

5 Fundraising Process - Preliminary Meet with VCs Provide materials in sequence depending on interest Teaser, PowerPoint, Business Plan Deeper discussions with interested parties Preliminary Due Diligence Term Sheet / MOU / LOI Major business terms, e.g. investment size, valuation, structure, rights, etc. 6

6 Fundraising Process - Negotiation Term sheet negotiations Official Due Diligence Business, Legal, Financial/Accounting, Tax Negotiate revised terms Negotiate/prepare transaction documents Closing 7

7 Business Model 8

8 9

9 1 - Customer Segments Describe who the company offers value to Target market 10

10 2 - Value Propositions Describe the Company s offer Product/ services 11

11 3 - Channels Describe how the company reaches its customers B2B, B2C, C2C 12

12 4 - Customer Relationships Describe the relationship the company builds Active user, conversion rate, retain customer 13

13 5 Revenue and Cost Describe how the Company makes money and the related costs 14

14 6 Key Resources Describe what capabilities are required Manpower, production 15

15 7 Key Activities Describe what activities are required Exhibition, direct sell 16

16 8 Key Partners The partners leveraging the business model Big names to support growth and assumptions 17

17 18

18 Financial Modeling and Analysis 19

19 Financial Statements Income Statement Balance Sheet Cashflow Statement 20

20 Example: Income Statement 000 USD Yr Ending Dec (Actual) Forecast Sales Revenue 1,000 2,300 7,000 29,800 Cost of Goods Sold 800 1,800 4,120 14,500 Gross Profit ,880 15,300 Gross Margin 20.0% 21.7% 41.1% 51.3% Marketing Expenses ,000 Admin Expenses R&D Expenses ,300 Net Profit ,830 11,440 Net Margin -15.0% 2.2% 26.1% 38.4% 21

21 Example: Balance Sheet As at Dec 31 ( 000 USD) 2013A 2014F 2015F 2016F ASSETS Current Assets Cash & Equivalents Accounts Receivable Inventory Total 701 1,360 1,774 1,491 Fixed Assets Intangible Assets Total Assets 826 1,506 1,934 1,672 LIABILITIES Current Liabilities Accounts Payable Short Term Debt Total , Long Term Debt Total Liabilities 599 1,269 1,409 1,222 SHAREHOLDERS EQUITY Common Stock Retained Earnings Total Shareholders Equity Total Liabilities and Equity 826 1,506 1,934 1,672 22

22 Example: Cash Flow Statement Year Ending Dec 31 (USD) 2013A 2014F 2015F 2016F Cash Flow from Operating Activities Net Income/(Loss) 78, , , ,000 Adjustment to reconcile Net Income Add Depreciation Expense 33,000 66,000 99, ,000 (Decrease)/Increase in Accounts Payable 3,753 6,793 10,663 10,000 (Decrease)/Increase in Other Current Liabilities (Increase)/Decrease in Accounts Receivable (5,175) (8,377) (16,001) (40,000) (Increase)/Decrease in Inventories (10,282) (19,540) (38,078) (92,000) (Increase)/Decrease in Other Current Assets (50,000) (50,000) (50,000) (50,000) Cash From Operating Activities 50, , , ,000 Cash Flow from Investing Activities Purchase of Fixed Assets (165,000) (330,000) (495,000) (700,000) Cash From Investing Activities (165,000) (330,000) (495,000) (700,000) Cash Flow from Financing Activities (Decrease) Increase in Long Term Debt ,000 (Decrease) Increase in Equity Investment 305, Cash From Financing Activities 305, ,000 Net Change in Cash 190,199 15,237 56,513 (12,000) Cash at Beginning of the Period 0 190, , ,436 Cash at End of the Period 190, , , ,436 23

23 Valuation Peer analysis Discount cashflow Net present value (NPV) Internal rate of return (IRR) 24

24 Projection Assumptions Sales growth Pricing Gross margin Net margin Burn rate CAPEX 25

25 Financial Analysis Profitability Solvency Liquidity Stability 26

26 Funding Requirement Round Size Use of Proceeds & Milestones/Roadmap Research & Development Mass Production Market Development Inventory Working Capital 27

27 Management and Corporate Governance 28

28 Management Team CEO CTO CFO 29

29 Corporate Governance Corporate structure Board of Directors Organizational hierarchy Monitoring and internal control 30

30 Other Important Info Market profile Company profile Competitor profile 31

31 Investor Landscape 32

32 Revenue The Financing Cycle FFF & Angels Venture Capital Private Equity Investment Banks Banks & PE Financing Different types of investors at different stages of development Source: 33

33 Angels vs Venture Capitalists Angel High net worth individuals with considerable business experience (e.g. retired entrepreneurs) Own wealth Open Timing Seed or Start-up stage of companies 3-8 year horizon Mainly invests locally Active/Hands on involvement post investment Make Money Mentorship Socialize Entrepreneurship VC Professional investors with finance, consulting or industry backgrounds 3 rd party money To be returned with gains in ~10 years Growth stage 3-5 horizon Mainly invests nationally and sometimes internationally Stategic/Board involvement post investment Career Make money Raise next fund Mainly Common Share Mainly Preferred Shares 34

34 General Investment Expectations Angel Investors Potential 20x return ~3 to 8 year Exit Horizon Venture Capital Potential 10x+ return, with 3x-5x minimum ~3-5 years Exit Horizon Pressure to show big returns relatively quickly in order to raise next fund 35

35 Investor Considerations - Return Return Exit Valuation Peer Analysis, Discounted Cash Flow Exit Timing Dilution/Additional Funding Rounds Pre-money and Post-money Valuation Exit Options 36

36 Investor Considerations - Risks Solution/Business Model IP/Uniqueness, Scalability Market Acceptance, Size, Entry Barrier, Competition Execution Risk Management, Complexity 37

37 Key Pitching Message Keep it Simple To the point Show potential 39

38 HKSTP Investment and Business Support Services 40

39 Services Business Consulting Business Collaboration Fund Raising Support 41

40 Investment Support Platform VC Matching - HKSTPC s VC Partnership Programme Angel Matching - Hong Kong Business Angel Network (HKBAN) 42

41 We are here to help! Incubation Programmes Leading Enterprises Acceleration Programme (LEAP) Angel Investment / VC Partnership Corporate Venture Fund (CVF) Global Acceleration Academy (GAA) Soft Landing Centre TechnoPreneur Partnership (TPP) 6 Universities + 19 Co-working space

42 Incubation Programmes Talent Premises Business Development Mentoring Investment Networking? Matching Consultancy

43 Stay Tuned. HKSTP Incubation Programme Admission team Tel: (852) / Website: Innovation For A Better World