Open Source Startup

Unit 9: Pitching and Raising Capital

Key Takeaways

• Understand how venture capitalists value startup businesses
• Understand key dilemmas in managing relationships with equity stakeholders
• Understand the structure and contents of a term sheet
• Understand the “proper” way to raise capital
• Understand how to effectively negotiate with VCs

Readings

• High Growth Handbook
• Chapter 8: Financing and Valuation
• Founder’s Dilemmas
• Chapter 6: Reward Dilemmas: Equity Splits and Cash Compensation
• Chapter 9: Investor Dilemmas: Adding Value, Adding Risks
• Chapter 11: Wealth-versus-Control Dilemmas
• What Every Engineer Should Know About Starting a High-Tech Business Venture
• Chapter 9: Raising Money
• Chapter 10: Venture Capital
• Chapter 21: Issuing Securities
• Venture Deals
• Chapter 1: The Players
• Chapter 2: How to Raise Money
• Chapter 3: Overview of the Term Sheet
• Chapter 10: Negotiation Tactics
• Chapter 11: Raising Money the Right Way
• Appendix A: Sample Term Sheet

Deliverables

• Set out ideal terms, negotiable terms, and no-go terms for your startup
• Set out a cheat sheet of negotiation tactics for raising capital for your startup
• Set out a strategy for raising capital for your startup
• Prepare to issue securities