Funding Your Venture

Frank MoyesLeeds School of Business

University of ColoradoBoulder, Colorado

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Goals for Tonight

Funding Financial Projections Cosmic Truths for Start-ups

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Types of FundingEquityDebtGrants

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Equity

Sell ownership in your companyAdvantage - permanent capitalLose control (dilution)Responsibilities to investor –

requires return

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Debt Loan for a set period & interest rate Source – banks, SBA, Guido No dilution Must pay back + interest Start-ups can’t get Vulnerable when things go south

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Grants Federal SBIR, CREDA Research – university

& corps. State, regional and

municipal development agencies

Foundations freemoney.com

No equity or debt Red tape and

strings Grant mentality

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Sources of Funding Friends & family Angels Venture capital Banks

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Friends & Family Get a good deal Maintain control Unsophisticated investors Different kind of obligation

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Angels Private investor early stage companies Value-added money - network, advice,

commitment Dilution No follow-on funds Over-control from angel

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Venture Capital Pool of capital invested in rapidly

growing companies Provide lots of money – multiple

rounds Greatest value-added money

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Disadvantages of Venture Capital

Want big opportunities > $100 million

Loss of equity, likely control Founder often “leaves”

Liquidity eventFund <0.5% of start-ups

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Best Source - Personal Resources Time to prove the concept, make mistakes Establishes value before go to investors Skin in the game – commitment Staying power Pressures on family

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Cosmic Truths for Start-Ups High Profit Margins Solve All

Problems Don’t Invest in Assets High Fixed Costs Are Bad Cash Is ?

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LIFEFrank Moyes

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What is Greatest Source of Cash?

Don’t’ Spend It

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