Financing Workshop for Entrepreneurs

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Financing Workshop for Entrepreneurs

• Presented to the Stanford GSB Entrepreneur Club

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Types of Financing

• Bootstrap
• Bridge Loan
• Angel Financing
• VC Financing
• Corporate Investor

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Bridge Financing

• Promissory Note
• Interest
• Conversion
• Term
• Warrants
• Defaults
• Handouts
• Form of Bridge Financing Term Sheet

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Angel Financing

• Usually less than 1 million
• Terms
• Number of investors
• Finding Angels

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VC Financing

• Usually 1 million
• Often more than one investor
• Terms

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Anatomy of a Term Sheet

• Valuation
• How to determine pre-money valuation and per
  share price
• Option pools
• Milestones
• Dividends
• Liquidation preferences
• Conversion
• Protective provisions
• Anti-dilution

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Anatomy of a Term Sheet (cont)

• Right to participate in future rounds
• Pay-to-play
• Redemption
• Drag along
• Registration rights
• Co-Sale agreement
• No shop
• Handouts
• Form of Term Sheet

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Board Members
Founder
Outside Director
CEO
Series B Director
Series A Director
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Sample Dilution
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Sample Dilution
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Sample Dilution
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Sample Dilution
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Sample Dilution
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Corporate Investor

• Higher Valuation
• Less day-to-day involvement
• Conflicts with customers
• Conflicts on exit

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Three Things to Remember

• Determine the type of financing that is right
  for your company
• Understand the terms of the financing
• Balance dilution with time to market

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Allison Leopold TilleyTel 650-233-4518Email
allison_at_pillsburywinthrop.com

• Allison Leopold Tilley focuses on the
  representation of technology companies in
  securities and venture capital transactions,
  including mergers and acquisitions, private
  placements, public offerings, venture funds and
  joint ventures. She has significant experience
  representing acquirers and target companies. Ms.
  Leopold Tilley is co-head of the Firms Corporate
  Securities and Technology Section and co-head of
  the Southeast Asia Specialty Team.
• Ms. Leopold Tilley has represented a wide variety
  of companies ranging from start-ups and emerging
  growth companies to Fortune 500 companies,
  private equity firms, venture capital firms and
  other clients.

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Office Locations
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• Doc 60392513v1