Fundraising Tips for Startups

Chloe Curtis (Fordham Law ‘19) and Daniel Salomon (Fordham Law ‘19) interview Gary R. Schall, Partner at WilmerHale, about fundraising tips for startup companies and specific tools for nailing a pitch to investors.

 

Episode Roadmap:

• [:30] Chloe Curtis and Daniel Salomon introduce themselves and Gary R. Schall, Partner at WilmerHale. They define equity financing and highlight characteristics investors are looking for when considering an investment.
• [3:13] ‘How does company type influence the ability to secure funding?’ and other questions startups need to answer before seeking funding.
• [7:40] Pros and cons of asking friends and family for initial funding.
• [12:03] The importance of obtaining legal advice to evaluate securities law issues, at the federal as well as state level.
• [13:29] An overview of angel investors — an ideal source of funding.
• [16:58] Understanding the value — beyond money — that sophisticated investors can bring to the board.
• [21:57] Equity crowdfunding as an option for raising capital, legal obligations, and funding limits that companies need to comply with when crowdfunding.
• [29:48] Tips for approaching traditional venture capital firms and the first message you need to convey to them.
• [34:33] Particular recommendations for female and minority entrepreneurs
• [36:17] Recommendations for nailing the perfect pitch starts with stating the problem your company will solve and why they should care about it.
• [42:51] How many investors should you plan on pitching to before securing any funding? And what is the ideal timeline for making a pitch?
• [46:45] How to negotiate the amount of equity provided to investors.
• [50:15] The essentials checklist for the perfect pitch, and Gary’s top tips for maximizing your time with the investor.
• [53:58] Advice for maintaining positive relationships with investors over time.

 

Tweetables:

• “There is a lot of homework you need to do before you even think about raising money.” — Gary R. Schall

 

• “For every security that gets issued in the United States, one of three things happens — it’s exempt under the securities laws, it’s registered with the SEC, or it’s illegal. We don’t like being in the last category; we typically like being in the first — it’s exempt.”  — Gary R. Schall
  
  
• “There’s an expression ‘smart money and dumb money’. Sophisticated investors are considered smart money because they bring more than just a check.” — Gary R. Schall
  
  
• “Being informed about what you’re getting into is very important with equity crowdfunding.” — Gary R. Schall

 

• “A good investor is going to test you….and you’d better know the answers. You’d better be prepared.”  — Gary R. Schall

 

Mentioned in This Episode:

• Startup LAWnchpad Season 1, Episode 12: Seed Financing
• Upfront Ventures
• X2 Ventures

 

Additional Resources:

• Fordham’s Entrepreneurial Law Clinic
• Follow us on Twitter @FordhamELC

 

Sponsors:

• Nasdaq Educational Founda