בסד Privacy Restored.™ 1 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. RESEARCH CONSULTING Entrepreneurial Computer Science Yonah Alexandre Bronstein, PhD Session 10

בסד Privacy Restored.™ 2 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Session Outline 1.Administrative Stuff 2.Chapter 7: Art of Raising Capital – Part 2 3.Final Homework

בסד Privacy Restored.™ 3 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Admin: BP Sign-Up Attending? (Yes/No) Seat on Bus? (Yes/No)

בסד Privacy Restored.™ 4 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Admin: PSU Intro 1.ECS Class (Winter) Learn the principles, grow start-up seed 2.Project Start Up (Spring): Sign up for CS Project class (+ biz student ok) Official Supervisor: Prof. Shlomi Dolev Meet Sundays 12noon to 2pm, at 3.in Business! (Summer) Funded, or in Negev Incubator G_d willing: Afikim B’Negev! Interest? (Yes/Maybe/No)

בסד Privacy Restored.™ 5 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Clean Up Your Act Intellectual Property (Who really owns the idea? Previous employer? Founder? Patent infringement?) Capital Structure (Too much stock in founders unwilling to share? Control by inflexible investor? Over/Under-priced previous rounds?) Management Team (Related co-founders? Unqualified friends in CxO positions? Criminal convictions?) Stock Offerings (Stock grants vs. options? High valuation sales to relatives? Solicitation of “unqualified” investors?) Regulatory Compliance (Nonpayment of payroll taxes, Noncompliance with country rules?)

בסד Privacy Restored.™ 6 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Disclose What Cannot Be Cleaned Up Earlier rather later, will help credibility. “Mea culpa” rather than blaming others. Previous failures are nothing to be ashamed of. “Getting up and trying again” shows that you are an entrepreneur. (Frog in the glass of milk fable…)

בסד Privacy Restored.™ 7 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Competition Is Good! CompanyWe can do, they can’t We can’t do, they can X Y Z

בסד Privacy Restored.™ 8 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Convinces Investor That there is a market. You can realistically appraise competition. You can communicate knowledge clearly & succinctly. You are willing to present facts that don’t always make you look good…

בסד Privacy Restored.™ 9 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Top 10 Lies (to avoid!) 1.“Our projection is conservative.” 2.“Gartner says our market will be $50 Billion in 5 years.” 3.“Boeing is signing our contract next week.” 4.“Key employees will join us as soon as we get funded.” 5.“Several investors are already in due diligence.” 6.“IBM is too old, big, dumb, and slow to be a threat.” 7.“We have first-mover advantage.” … Bottom-line: tell the factual truth (present or past) & beware of future-oriented statements…

בסד Privacy Restored.™ 10 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Top 4 Trick Questions 1.“What makes you think you are qualified to run this organization?” (“Did OK so far, will step aside when necessary.”) 2.“Do you see yourself as the long-term CEO of the organization?” (“I’m focused on getting our stuff to market right now. Here are logical milestones at which a transition to another CEO could be made…”) 3.“Is ownership control of the organization a big issue to you?” (“No, it is not. To make this successful, we need great employees and investors who all need a significant stake. I’ll focus on making the pie bigger rather than keeping a big piece…”) 4.“What do you see as the liquidity path?” (“We know we have a lot of work in front of us before thinking of liquidity. An IPO would be a dream outcome, plus these 5 companies are possible acquirers…”)

בסד Privacy Restored.™ 11 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Understand What You’re Getting Into Different kinds of investors mean different business lives: Venture Capitalists (VCs) –Other People’s Money –Quarterly pressure / No room for personal feelings –2 Control buttons: fire CEO and/or VP of Sales Angel Investors (“White Knights”) –Different motivation (Pay back society? Get meaning to market) –Live vicariously –Spouse = investment committee (Make story comprehensible to spouse)

בסד Privacy Restored.™ 12 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Creating a Board Whether “Board of Advisors” or “Board of Directors”, you need to have: “The Customer” “The Realist” “Dad” (concensus builder) “The Truth Watcher” “Mr. or Mrs. Connections”

בסד Privacy Restored.™ 13 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Managing a Board Whether “Board of Advisors” or “Board of Directors”, you need to give them: Less paper rather than more Useful metrics A couple of days ahead of board meetings Only positive surprises (bad news should be shared in private ahead of time) And for your sake: ask feedback in advance of key decisions

בסד Privacy Restored.™ 14 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Frequently Asked Questions (FAQ) Longest in the book, with a wide variety of questions, yet only a few answers: “You’re thinking too much.” “Tell the humble truth.” “It depends.”

בסד Privacy Restored.™ 15 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Raising Anything Dear Guy Kawasaki, Following your 10 point format: 1. I am teaching a class on starting a start-up at Ben-Gurion University, Israel (details: 2. The textbook for the class is your book: "The Art of the Start" 3. To my surprise, most of the students can not afford to buy it 4. Turns out the local economics here are radically different from Stanford, where I went to school (yearly tuition around 2 K$, rather than around 20 K$) 5. Would Garage.com consider making a donation to the University Library of about 20 copies of your book? 6. You could consider it a Very Very early Seed investment in Israeli entrepreneurship 7. You could consider it a World Wide Kindness on this ThanksGiving day 8. The address to ship them to if you agree is: Frankel Admin, Bldg 37, Ben-Gurion University, Beer-Sheva, ISRAEL 9. My phone if you have any question is: (10 hours ahead of Pacific time) 10. It's all about Chapter 11 in your book :) Thank you very much for your consideration, Yonah Alexandre Bronstein, PhD

בסד Privacy Restored.™ 16 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Ch.7: Final Wisdom Arthur Rock (founder of Intel, backed Fairchild Semi, Teledyne, Apple): “If you want to get an investment, show that you will build a business.”  “Chicken & Egg” problem [bootstrap chapter] Hunt Green (VC): “Everything is always impossible before it works. That is what entrepreneurs are all about – doing what people have told them is impossible.”

בסד Privacy Restored.™ 17 ABUSE SUPPRESSION TECHNOLOGIES, ACTIVITIES, VISION. ©2008 ASTAV, inc. – Confidential & Proprietary – Contact for pricing. Q & A ? Infinite Loops are OK here… For Next Session? Take in feedback from midterm Sleep on it (pray if it seems too hard ) Act on it! (without waiting till end of semester…)