glosho'14: investment bootcamp - tom soto
TRANSCRIPT
Intro to Fundraising
Tom Soto
Managing Partner
TCW/Craton
A bit of TCW background
• Established in 1971 in Los Angeles, California
• $135.5 billion in assets under management
• Approximately 1,100 institutional and private clients
TCW/Craton is a private equity platform focused on growth investments in technology and/or technology-enabled service companies that promote sustainability and/or social responsibility
What we look for
• Team with experience and domain expertise
• Proven and visible track record
• Technology that solves a problem
• Environmental benefit and/or social impact
• Carbon reduction, resource conservation, social mobility
• Opportunities where we can add strategic value
• Regulatory expertise, capital strategies, business development
Trends impacting early stage investing
• The costs of starting a business have declined
• Startups have become commonplace
As a result, there are more startups and investment opportunities today than ever before.
• Competition is fierce, but rewards are greater
What are the implications?
• Startups are more capital efficient, requiring less investment
• Startups are further developed at an earlier stage with significant user growth, activity, retention and revenue
• Investment decisions based on results instead of perceived opportunity
• Startup founders now often have more leverage than investors
Early stage investments are increasing
Silicon Valley Financing Deal ShareBy Stage, 2009 – Q3 2013
Source: CB Insights
Small business is critical to economy
• SBA defines small business as an enterprise having fewer than 500 employees
• 28 million small businesses in the US
• Over 50% of the working population works in a small business
• Small businesses have generated over 65% of net new jobs since 1995
• Approximately 543,000 new business get started each month – but more employer shutdown than startup
Source: U.S. Small Business Administration
Some DOs and DON’Ts
• DOs:– Know your audience – no one is impressed by hoodies
– Keep presentations simple and concise – NO 40 page PowerPoint
– Send materials in advance to accelerate discussion
– Backup assertions with quantitative results – footnotes & appendices
– Demonstrate domain and market expertise
– Track and understand key metrics at granular level
• DON’Ts:– Cold call investors – network, conferences, social media
– Accept just anyone’s money – must have strategic value add
– Say and/or believe there is no competition – there is always competition
– Get hung up on valuation - big slice of small pie vs. small slice of big pie
– Be unrealistic with market expectations and international opportunity
Appendix: Investor deck outline
1. Concise overview
2. Problem / opportunity
3. Value proposition – competitive advantages
4. Product demonstration
5. Sales & marketing – go to market strategy
6. Competitive landscape
7. Business model
8. Financial forecast
9. Team – domain expertise
10. Status & milestones