Part 1: Financing Sources Panel
You have identified the product/service and the market. You have settled on a business model and have done your financial projections. How will you finance the plan?
This session will cover:
- Bootstrapping the early stages
- Funding from the 3 F’s—Friends, Family, and Fools
- Angels— who are they and what are they looking for?
- Private placements
- Customer financing
- Government grants (e.g., SBIRs)
- Consulting—getting someone else to pay for the development, provide a beta site, and endorse your idea.
- Venture capital
- Bank financing.
You will learn about the institutional constraints and needs of various funding sources. As a result you will be in a better position to determine if, when, and how to approach these sources for financing.
This part of the program will feature a panel of experts discussing different financing sources.
Readings
- Kauffman Foundation. “Kauffman Sketchbook. The ‘Money Game.’ Where Do Entrepreneurs Get Their Money?" YouTube. 2012.
- Hadzima, Joseph. “A Beginner’s Guide to Venture Capital” (PDF). 2007.
- “Venture Capital Deal Terms” (PDF). 2012. MIT Enterprise Forum presentation.
- 2023 Angel Funders Report, from the Angel Capital Association
Read articles below from Joe Hadzima from the Boston Business Journal’s “Starting Up” Column:
- “Thinking About Valuation” (PDF)
- “Dilution—A Primer on Stock Vocabulary” (PDF)
- “All Financing Sources Are Not Equal” (PDF)
- “What Are the Terms? - Part 1: A Preferred Return”
- “What Are the Terms?- Part 2: Investors Need Some Control After Their Checks Are Cashed”
- “What Are the Terms?- Part 3: Run Don’t Walk To The Exit” (PDF)
The panel for 2025 was:
- Nilanjana Bhowmik, founder and general partner, Converge
- Mary Tobin, principal, Liberty Mutual Strategic Ventures
- Drew Volpe, founder / managing partner, First Star Ventures
- Joshua Wachman, serial entrepreneur turned early-stage investor
Panel Moderator: John Harthorne
John is the Founder & Managing Director of Two Lanterns Venture Capital. Two Lanterns Venture Fund is a seed fund investing in software-only startups in the US and Israel.
Prior to Two Lanterns, John Harthorne was the Founder and CEO of MassChallenge, the world’s largest startup accelerator, where he oversaw the creation of 10 startup accelerators globally, of which graduated over 3,000 startups. These ventures have cumulatively generated billions of dollars of revenue and have created over 200,000 jobs. John earned his MBA at MIT, where he won the MIT $100K Business Plan Competition and the Patrick J. McGovern Award for entrepreneurship. He remains actively engaged at MIT and MassChallenge and advises numerous accelerators and venture funds, giving him ongoing access to very high-quality deal flow globally.
Video
Watch the video of the Financial Sources panel on the Nuts and Bolts website.
Part 2: Financial Projections
Armed with an understanding of the market for your product or service, how do you figure out what financial resources you will need to bring it to that market? This portion of the program will introduce some financial projection techniques based on actual business experience.
Readings
- Tiffany, Paul, Steven D. Peterson, and Colin Barrow. Chapter 10, “Figuring Out Financials,” and Chapter 11, “Forecasting and Budgeting.” In Business Plans for Dummies, IDG Books Worldwide. 1999.
- Download a copy of the Financial Template (.xls) shown in the lecture.
- Download a copy of the Equity Distribution and Dilution spreadsheet (.xls) shown in the lecture. (Courtesy of Charlie Tillett. Used with permission.
Speaker
Steve Derezinski, Entrepreneur, Senior Executive and Senior Advisor for technology-based ventures.
Steve has over 15 years of experience as an entrepreneur, Senior Executive and Senior Advisor for technology-based ventures. Most recently, Steve worked with Professors at Georgia Tech to create eight early-stage ventures from breakthrough research. These companies raised a total of $43M in series-A financing. Steve has been a senior executive in venture-backed software and semiconductor companies, working in strategic marketing roles to place breakthrough semiconductor, MEMS, nanotechnology, and software innovations into the right early market segments. Steve is also active in the entrepreneurial community, helping to found an MIT Enterprise Forum Chapter and mentoring student teams for business plan competitions. He is a past-President of the MIT Alumni Club of Atlanta and has served on MIT’s National Alumni Association Board of Directors. Steve continues to review grant proposals for the National Science Foundation and the University of Massachusetts. Steve holds a BS degree in Mechanical Engineering from MIT and an MBA from MIT Sloan School of Management, where his research focused on university-based startups.
Slides
Session 5, Part 2 Slides (PDF)
Video
This session will introduce financial projection techniques based on actual business experience.
