In this recorded presentation, Jason Kraus walks founders through the landscape of financing options for startups, outlining the pros, cons, and typical use‑cases for each source. He begins with traditional debt from banks and private lenders, emphasizing the need for collateral and revenue traction. He then details angel investors and angel groups, describing how to research portfolios, target industry‑relevant angels, and navigate group screening and due‑diligence processes. The talk moves on to venture capital, explaining the fund‑of‑funds structure, limited partners, typical check sizes, and stage focus. Family offices are presented as a hybrid of angel and VC models, with a strong emphasis on family‑specific interests and impact. Kraus contrasts donation/reward‑based crowdfunding (GoFundMe, Kickstarter) with equity crowdfunding platforms (WeFunder, SeedInvest), highlighting validation benefits and the importance of a pre‑existing audience. He briefly mentions alternative financing such as lines of credit and invoice financing. Throughout, he stresses the importance of matching the startup’s capital needs and growth timeline to the right investor type, preparing thorough fundraising materials, and leveraging introductions through portfolio companies or indirect contacts. The session ends with an invitation for questions and offers ongoing support for founders preparing their fundraising rounds.
Chapters
This conference will now be recorded. Hey, everyone. Thanks for, thanks for joining our 3rd week of the Prepare for VC presentations to the Found Something group. Today we're going to be talking about funding opportunities and different types of financing for your startup company. So the first option is traditional banks. This is great for more established companies or businesses that have some sort of collateral. So if you, you know, if your company owns any sort of real estate, any patents, products, you know, that you can use the inventory for financing. Then this is a great option. Most technology companies will have, or other healthcare companies have a difficulty with this path until they actually are up and producing revenue. Once you have revenue, you can sort of use this, the debt opportunities from banks or even private lenders, as additional growth capital. There are several lending sites and private lending groups that you can also use instead of banks if you're at an earlier stage and debt financing is an opportunity you're looking into for your company. One of the main ones, especially at an early stage, is angel investors. So these are individual investors that Typically, typically, you know, either grew their wealth through previous companies, through sometimes they're previous entrepreneurs themselves, or investors from the finance industry that now go in and decide to— basically, their goal is to invest in one or a group of startups For— in exchange for equity with the goal of an exit opportunity down the road. So with these investors, you know, there's a combination in here. Sometimes, sometimes they'll come from a particular background and be looking to invest in something, an area they can add added value expertise. or just something they really know about and want to get behind and see as a pain point they can get behind in the industry. So targeting those when you're reaching out to angel investors and targeting those that have a particular background in your industry is definitely a key value there. You can— Also, a lot of times they post their portfolios on sites like AngelList or GUSST or even Crunchbase. So if you can go to an investor, sort of see what basically what their portfolio looks like. Is it made up of only technology companies? Is it made up of finance, or is it made up of more early stage, later stage? Are the founders they're invested in only coming from the same college that the angel investor went in? And there's a lot of different makeups of angel investor portfolios, and basically being able to know who they are and why they're investing or what they're investing in can give you an added leg up when you're reaching out to them. So some of these do invest individually directly, like you reach out directly, they'll write a check for your company and in exchange for equity in the round. Other times they'll form— they'll be part of a larger group. So that's, you know, even in the Boston area, there's at least 10 angel groups or so, like Boston Harbor Angels, Walnut Ventures, a few others that— Launchpad Medical for medical devices. Basically, yeah, a few others that— there's a group of investors that come together. They're still writing their own checks, making their own investments, but— These groups are formed as a way to share deal flow, share due diligence and expertise when making these decisions. So like a typical group, for example, you know, might have a few people on a screening team that pick the companies that come to present to the group each month. So Say they're, you know, if the team picks 4, 8, depending on the group, whatever number they pick to present to the investment group, then at the larger investment meeting, each of the companies will go up, present, you know, present with a pitch deck, usually 10-minute presentation or so, followed by a Q&A from the investment group. And then each investor, depending on the structure of the group, most of them allow, you know, any number of investors from the group to decide that they want to go into the deal or that they're just interested in following up for due diligence and working together on the due diligence package. So if there's a group of 30 or 50 individual investors, And you, you know, 5 or 10 of them from the group want to go into it, that core would move forward with the company and work on finalizing the rounds, answering any due diligence questions that have come up, and yeah, moving toward an investment. Some are, again, some are more individual basis, some, you know, pool the investments into more of a fund structure as well. And there's venture capital. So the main difference here in terms of where the money comes from is that venture capital is— these firms are formed with limited partners. That invest— basically, they invest in a venture capital fund, and the fund is managing all the investments and making the investment decisions on behalf of the investors. So, and usually, usually venture capital groups will fund larger, larger amounts than angel investors just because, you know, because they're a pool of multiple either wealthy individuals or institutions. And generally, there are some micro VCs and smaller venture capital companies, but the majority are, you know, looking at more of a— or somewhat later stage than an angel round and putting more capital in. Basically, one of the main differences— so you can go through, basically get all these types of funding that I had mentioned so far, but there are some startups that, you know, do better with one type of an investment versus another. So if you're, if you're, um, basically if you're a type of company that throughout the life cycle of the startup you're gonna need, um, basically $1 million to $3 million, um, even a little more to, uh, to basically Take your company to profitability or an exit potential where another— you have enough users that another company will come in and acquire your company. You know, not highly capital intensive for the startup industry and quick to revenues, basically. You know, you can fund the majority of it through angels and angel groups. broken into a couple of rounds. If it's— there's some industries where basically you don't get much done, or there's no real success or milestone until you're at the— until you raise $5 million plus to really kick things off. And for those, Generally, you'd be looking to start with an early-stage venture capital firm and somebody that has the capacity to do a larger funding round down the road as well. Family office is another type of— basically, they're set up similar to a venture capital firm in terms of In terms of the structure, the structure, the types of investments, and the check sizes, main difference here is it's an investment company that's formed on behalf of either one or a group of high net worth families. So they are like an angel group. They're investing on behalf of, on behalf of one Like on behalf of themselves, either a family or a group of high net worth families. One other difference here is that a lot of family offices have sort of built their, their wealth in one industry or another. So having— if your company ties into into their main area of focus, or even, you know, impact opportunities that they fund. A lot of them have foundations as well that they funded for one cause or another. So if you can tie— Yeah, more of the investment focus is tied around particular interests. Versus a general investment thesis. And again, they are still looking for financial returns, the same type of investment opportunities as a VC firm or an angel investor. But yeah, it's just within that pool, more of a focus down into the beliefs of the family office and their background and added value as well. This is a crowdfunding page. Basically, the other side of this is crowdfunding. There's actually been a few different types of crowdfunding that have popped up over the last 10 to 15 years. So started with donation pages, sites like GoFundMe, Indiegogo, you know, brought on their Kickstarter, Kickstarters, which are great for similar sites like that, which are great for real product-based companies. Anything you can use to get a presale of your— either a presale of your product or just something even with Crowdfunding is great for impact opportunities as well, things people can get behind and would even sometimes they'll fund it in exchange for a t-shirt that shows their support of the particular company that's following a cause they believe in. Or other times they'll say, Yeah, this is great. I'll, instead of saying, you know, when you, a lot of times when you do a customer survey, customers will say, or potential customers will say, this is great, keep me on your subscriber list for when you launch the product and I'll buy it. This way they're actually investing through a Kickstarter campaign or something similar and You know, will automatically be purchasing the product once it launched. It's also great validation to take to investors and say, you know, with a limited amount of marketing and just a Kickstarter campaign to early users, you can show them how much traction you've gotten on future sales. Another development that's come about in the crowdfunding space is equity crowdfunding. So this launched in the middle of 2016 with sites like WeFunder, SeedInvest, NetCapital. Basically similar type of platform in that you're funding from the crowd and the general public. Basically non-accredited investor financing. Main difference here is it's the funding is in exchange for equity, debt, or other securities. So there are limits on the amount each investor can put in depending on their income, but generally this is— these are sites where you could have You could have people putting $100 into your campaign or more depending on your limits. And it's also great for consumer-facing, either consumer-facing technology products, just anything. It's good for restaurants and small businesses as well. Basically places where you can get your customers behind you as investors. If they're, you know, if they become a private shareholder in your company, more likely to buy your products, promote your products, be a power user in the future. Also, you know, there are more traditional, just smaller investors that want to use this want to use these platforms and look for the same financial incentives that angels, VCs, and family offices are looking for as well. And some of these platforms provide a great outlet for that capability. Best position to be in when you're doing a crowdfunding campaign is to have a large email list or following on social media of your own that you can sort of make a large initial push, get funding. And if you can show a lot of traction in the first 24 hours to 72 hours that you launch a campaign, then most of these sites will highlight you as one of the top funding opportunities of the week and really push that. that campaign even further from their own database of investors and subscribers. So there's a, you know, I've just touched on a few different opportunities here. There are, you know, there are some other alternative options like line of credit financing and Invoice financing, depending on your type of business. And, you know, and again, even within each of these categories, there's differentiations on what the investor groups are looking for. So, you know, happy to— this is something we really focus on at Prepare for VC is targeting the right type of investor. And finding the right investor for your group or your startup company. You know, a lot of times even the best introduction can be through connecting through a portfolio company, through an investor in the group that might not even be— might not be a decision maker, just has an inroad into the into the group itself. So we, we find these people that can connect you with the right, right investor and facilitate, facilitate introductions and make sure you're really prepared, prepared for the VC route with all of your funding materials put together. All of any questions that come up, you're prepared to answer. You have the slides. slides up and ready, and, you know, you're reaching out, and you can show you're reaching out to them because they're a good fit for your company as much as you're a good fit for their type of investment. So with that, if any— if anybody has any questions or comments, please submit them in the comments comment section below. And always happy to answer questions, always happy to learn about your new company and work with you on a— on your fundraising round. Thank you.
