Financing your invention/concept

4 May 2008

This afternoon’s topic is funding… we’ve got Scott McFarland, recently CEO of Awarix which was sold to McKesson, talking first.  Some of his comments:

  • Tech Revenue Models impact to cash with highest impact listed first
    1. License revenue (primary fee)
    2. Professional services (i.e. installation/integration fees)
    3. Recurring or subscription revenue (i.e. maintenance fees)
    4. Transaction payment (i.e. hardware at cost plus)
  • Order of funding vehicles
    • Angel investments
    • Venture Capital
    • Debt
  • Things to consider…
    • Liquidation preference (1x, 2x…)
    • Board seats and observation rights
    • Full and partial ratchets
    • Dilution
  • Weighing the decision…
    • Slower growth
      • Preserve capital and equity
      • More predictable
    • Faster growth
      • Reduces competitive risk
      • Smaller piece of a bigger pie
      • Land grab / First to market

After Scott’s presentation, I will run through several slides in the following slide deck I created a year ago for a presentation at Jacksonville State University.  Don’t use the email at the end of the presentation b/c I’m not there anymore <smile>.  The punch line is in the section of the deck that starts with “my way” (#33-37) to financing the comany… (hint) it means passing on venture capital funding for as long as you can avoid it.

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