Founder Institute

Boot Strapping and Fund Raising

Edgar C Harrell
Spring 2016

Overview
Conserve CASH
Set up a cash flow projection model and use it
Friends and Family and work and advice for equity in lieu
of cash have statements of understanding see
resources in FI study plan
Bootstrapping - pros and cons

Protect Your Early Investors

Avoid a Down Round
Be certain that early period financial projections are solid No
investor wants you to exhaust funds, leaving the company with no
place to go and not having met projected milestones in the offering
documents
Keep in touch with your early investors - many xxxx agreements
specify you must have xx% of ownership to access documents
that is nonsense

The First Round -Structure

Equity versus debt - pros and cons -equity, convertible debt
Equity plus warrants - example $25000 plus 1%/month warrants
SAFE versus convertible debt
KISS
Example:
Intag Systems - SAFE with valuation
cap, no interest and no discount

Sources of Financing
Friends, family, business and school colleagues
Angel Investors
Crowdfunding
Pre paid contracts
Other

The Walnut Adventures Case Study

Step into the role of the entrepreneur and negotiator over the term
sheet
Issues addressed:
valuation

types of securities
control rights of management versus investors
vesting of managerial stock

Reading List
SAFE https://www.ycombinator.com/documents/#safe
KISS http://500.co.kiss/
Walnut Venture Associates, HBS case A-D Nos 899-062,899063,899,064, 899-097 http://hbsp.harvard.edu
Saul Ewing. The Entrepreneurs Guide to Early Stage Financing,
2010 Eric G Orlinsky

Kaufman Foundation.http://entrepreneurship.org. resource

center, valuation, Luis Villalobos Startup Pre-Money Valuation..
www.pwcmoneyree.com