Kasey Grelle Sources of Funding November 11 2014

Kasey Grelle Sources of Funding November 11, 2014

Kasey Grelle, Cultivation Capital Principal • Principal, Cultivation Capital • MBA, BA Washington University in St. Louis • Venture Partner, Six. Thirty Financial Services Accelerator • Venture Partner, Prosper Women Entrepreneur Accelerator • Six Years Broadcast Journalism Experience – KSDK, St. Louis – KECI, Montana – ABC, Australia P. 2 | Cultivation Capital Confidential

Cultivation Capital Overview • Cultivation Capital managers two early stage ventures capital fund – Early Stage Software and Information Technology – Early Stage Healthcare and Life Sciences • Software and IT related companies seeking “pre-A” investment – Enterprise Software, Consumer Internet, Social Media, Financial Technology, Consumer Electronics • Health and Life Sciences related companies seeking “pre-A” investment – Six Focus Areas: Healthcare IT & Services, Drug Discovery & Development, Medical Devices, Diagnostics, Agriculture, Tools & Reagents P. 3 | Cultivation Capital Confidential

Agenda • Funding Opportunities in St. Louis • Funding Life Cycle in St. Louis • Intro to Angel Investors • Understanding Venture Capital • What’s it Like to Work With a VC? • What do Investors Want? • How to Nail Your Pitch • Avoiding Common Mistakes P. 4 | Cultivation Capital Confidential

Opportunity in St. Louis Startup Eco-System Seed Round Start-Up Pre-“A” Round $0 - $100, 000 $50, 000 - $250, 000 - $3. 0 Mil. > $3, 000 Friends, Family, credit cards, Angels 500 companies Friends, Family, Angels, Capital Innovators, Arch Grants 100 companies Angels, Arch Angels, Billiken Angels, Cultivation Capital 25 companies St. Louis is now doing $40 million needed a pretty good job in per year in pre-”A” this space funding P. 5 | Cultivation Capital Confidential VC Firms 3 -4 companies Needed this year

The Funding Lifecycle in St. Louis Friends and Family Angels and Grants • Credit Cards • Small Business lines of credit • Arch Angels • Billiken Angels • Arch Grants • High Net Worth Individuals Accelerators • Six. Thirty • Capital Innovators • Prosper • Yield Lab Early Stage VC Later Stage VCs • Cultivation Capital • Bio. Generator • MTC • Chicago, Nashville, Houston, San Francisco, New York P. 6 | Cultivation Capital Confidential IPO or Strategic Investor

Angel Investors • What is an Accredited Investor? – Any individual who, alone or along with their spouse, is worth $1 MM+ – An individual who makes $200 k+/year OR – An individual who makes $300 k+/year with spouse • In 2013, accredited angel investors put $24. 8 billion into nearly 71, 000 early-stage companies • Where do you find them? – Friends and Family – Individuals • Difficult– want to stay anonymous • Angel List – Networks • Angel groups: Billiken Angels, Arch Angels, Golden Seeds P. 7 | Cultivation Capital Confidential

Venture Capital • Growing source of funding: – So far in 2014, $33 billion + of venture capital funding has been invested, already exceeding the full-year 2013 total of $30 billion • Regional VCs – Cultivation Capital – Dundee Venture Capital, Omaha – Cincy. TECH, Ohio • Seed Stage VCs – 500 Startups – First Round Capital – Lerer Ventures • Industry Venture Funds – Google Ventures – Intel Capital P. 8 | Cultivation Capital Confidential

What’s it like to Work With a VC? Submission • 20 -30 deals/mont h • 2 -3 make it to next round; 2436/year Partner Interest • Light due diligenc e • 12/mont h; 1224/year Significant Interest • Intense due diligence • Present to investment committee • 2 -3/quarter Investmen t • 810/year • Board Seat • Active Investm ent P. 9 | Cultivation Capital Confidential Next Round(s) • Syndication Partners • Strategic Investors Exit

What Do Investors Want? • Traction – Revenue, momentum • Team – Expertise, drive, ability to listen • Market Size – Growing industries, big oceans– not just large waves • Follow-on Funding – Risk of follow-on funding P. 10 | Cultivation Capital Confidential

How to Nail Your Pitch • Know Your Audience – Customize your pitch, know potential synergies, adapt your pitch based upon your investor’s knowledge of your space and product • Prove You Know Your Stuff – Investors are looking for credibility, they want to know that you’re an expert in your field. However, don’t make the mistake of being too cocky– listen to feedback and graciously take constructive criticism (whether you actually implement the changes is up to you) • KPIs! – Investors want to know how you measure your success. Key Performance Indicators are the metrics by which they measure that success. Show investors that you know what makes your business tick by sharing the Key Performance indicators you’re tracking • Keep it interesting – Don’t get too bogged down with details. Keep the pace moving, and provide additional data if requested. • PRACTICE P. 11 | Cultivation Capital Confidential

Avoiding Common Mistakes • Taking too much money – Don’t get blinded by dollar signs. Don’t take too much money and dilute your own equity. Don’t take more than you need to reach the next milestones. At that point, you can raise a new round at a higher valuation • Setting your initial valuation too high – No one likes a down-round! Remember, you have to raise your next round of capital • Choosing the wrong investors – View this process as dating– remember you’re going to be in bed together for a very long time! • Not knowing the terms of your deal/taking the wrong terms • Not mapping out your funding needs and potential sources P. 12 | Cultivation Capital Confidential

Kasey Grelle kgrelle@cultivationcapital. com