Discussion Topics

In running an angel network, consider using online events for the program. Here are some key tools for creating successful online events: A website. This keeps track of scheduled events with information about each one including the name of the event, description, who should attend, and associated documents. Event registration….

Warrants give the holder a number of shares to be exercised over a specified period to buy the company’s stock.  Warrants play a key part in venture debt. Companies offer warrants in exchange for a lower interest rate on the debt. Investors offering venture debt use warrants to gain access…

Litigation funding provides investments to businesses seeking to litigate a lawsuit.  Lawsuits come from businesses suing other businesses, tenants suing landlords, startups defending their intellectual property claims, and more. The one pressing the lawsuit needs funds to carry it through the courts.  Investors receive a return when the business wins…

Revenue-based funding makes a startup investment and pays back the investor at the rate of top-line revenue. This aligns the investor and founder to the same goal – to create a business and grow sales.  The higher the sales, the faster the payback to the investors and the higher the…

Salary-based funding makes a startup investment and pays back the investor at the rate of compensation the founders take. This aligns the investor and founder on the same goal, to create a business that can sustain itself and pay the team. The investors receive an agreed-upon percentage of any salary…

As your company grows and the equity becomes worth more, there comes a time to switch over to debt funding. There are several forms of debt to consider. Each one is used for a different application.  The primary options are as follows: 1. Traditional bank loan – requires a personal…

Growth startups can raise not only funding for equity but also funding for debt called venture debt. Venture debt doesn’t dilute the founders and provides capital to continue the growth. Here are some key terms and conditions to know when looking for venture debt: There are term loans and revolving…

Venture debt is not for every startup or for all fundraises. It is best used in conjunction with an equity raise. The equity funding provides ongoing working capital that doesn’t need to be paid back. It works well between equity raises from institutional investors. The business must be up and…

Venture debt can reduce dilution and give your startup more runway. Here are a few pointers to see if venture debt is a good fit for your fundraise: It’s often used with equity funding for purchasing equipment, making acquisitions, or making up for funding not acquired through the equity raise….

Venture debt is on the rise in the startup world as more startups find it a useful part of their fundraise strategy. It’s a form of debt financing for venture-backed companies that lack the assets for traditional debt funding.   Venture debt has been around for as long as venture capital…

There’s an old saying in the angel world: If you want money, ask for advice. If you want advice, ask for money. In raising funding, most founders spend their time selling the idea to the investor. An alternative approach is to collaborate with the investor. The selling approach uses the…

Founders need to bring startup mental models to bear on their business. Here’s a list of key mental models to know: 1. Least worst option — use this model when all options are not ideal. 2. Jobs to be done — use this model to discover how your product fits…

In pitching your business, investors will ask questions about metrics such as customer acquisition cost, lifetime value, and churn rates. The purpose of the question is to discover what systems you have built into the company and how robust they are. In the early stages of a startup, the CAC,…

In running a startup, time management is a key skill for the founder.  Here are some key steps in managing time: 1. Set up a schedule with standard meetings, routines, and to-dos that recur each week or month. 2. Schedule your day in advance so you’re ready to execute the…

In pitching your business, focus on the benefits your product or service provides rather than listing out the features. Features answer the question — what, or what is it? Benefits answer the question — why, or why do you want it? In pitching your business, go beyond the features of…

In pitching investors, there are many ways to blow the pitch. Here’s a list of common mistakes startups make: Losing your temper and letting emotions get the better of you. Investors want level-headed people they can work with. Building the company only for the exit.   There must be a “why”…

In running a business, it’s important to use written contracts. It’s easy to negotiate an agreement verbally, but this often leaves loose ends that become a problem later. A written contract makes clear the responsibilities and duties of both parties and what each owes the other. It’s often the case…

In raising funding, you must have a growth story. Investors want to know your business is in motion with momentum and traction. Investors look for activity in four areas: sales, team, product, and fundraise. These are the factors under the control of the startup.   Other factors such as competition, market…

There are basic principles around fundraising that apply in every situation. First, the most important step in fundraising is to build a relationship with the investor. The more you know the investor and the more they know you, the better the outcome. Second, demonstrate results in every contact. Never show…

Many entrepreneurs fail to build a financial forecast claiming they cannot predict the future. The purpose of the financial forecast is not for future predictions, but rather for communicating the business plan to the investors. From the forecast, the investor learns what growth rate the entrepreneur is considering. The forecast…

If you successfully raised your seed round you will find that Series A funding to be a new challenge.  Series A funding is different from seed funding in several ways. In seed funding, the entrepreneur must convince the investor that they can sell the product. In Series A funding, the…

So, who does the Venture Capitalist serve? The VC raises funds from the Limited Partner and invests in startups. In talking with entrepreneurs, they make clear the VC serves the Limited Partners first. Many founders talk about how helpful the VC is to their company and personal growth. Entrepreneurs are…

There are many metrics for determining how well your SaaS business is doing. Net dollar retention is a key metric that indicates the health of the business. To calculate it, take the revenue at the beginning of the month, plus upgrades, minus downgrades and churn. Divide this by the revenue…

Investors look for certain things in the pitch to decide whether or not to pursue. In pitching VCs, make sure you cover the following points: Say what your company does in 10 words or less. This provides context so the investor knows how to understand the rest of the pitch….

Pitching is an important skill in fundraising. Consider these key points in your next pitch: Tell a compelling story, not just any story. Use the pitch deck to communicate the “Why” behind your business. Time is short, so make sure you hit the key points of the business — team,…

The process of raising funding brings the startup founder several intangible benefits. Here is a short list: Fundraising forces you to think through your business strategy and articulate it clearly. Investors will challenge your strategy requiring the founder to defend it. The pitch elicits feedback from the investors which often…

In raising funding, the startup should be doing as much diligence on the investor as the investor is doing on the startup. Start by checking out the portfolio of the investor and making contact with CEOs who have been funded by the investor. Ask the CEO about their experience with…

In approaching venture capital, it’s important to know something about the VC’s sweet spot for funding. By reviewing the VC’s website, you can see their portfolio. By reviewing their portfolio companies, you can get a sense of the stage and sector of deals they invest in. The best way to…

Startup founders need time-management skills to run a business. Here’s a list of key skills successful founders have: 1. Can set up daily routines and repeat them consistently. 2. Can prioritize tasks doing the most important ones first. 3. Can delegate tasks to others when others are better suited for…

Startup founders need strategy skills to run a business. Here’s a list of key skills successful startup founders have: 1. Business model design – the founder can review a situation and develop a business model to create a profitable business. 2. Buy vs. build – the founder can decide between…

Startup founders need problem-solving skills to run a business. Here’s a list of key skills to develop: 1. Critical thinking – ability to analyze the key factors around a situation and find the real problem to be solved. 2. Decision-making – ability to choose the right solution and see it…

Startup founders need emotional intelligence skills to run a startup. Emotional intelligence helps the founder control emotions and empathize with others. Here are the key components for building those skills: Self-awareness – this is the ability to know yourself and recognize your strengths, weaknesses, and limitations. The more you know…

Startup founders need to be visionary to run a startup. Vision starts with seeing a business opportunity and applying a solution to solve it. The founder clarifies the vision and shapes it into a platform, product, or application. This informs the founder of all business decisions going forward. It starts…

Startup founders need general business skills to run a startup. Here’s a list of skills to bring to your startup: – Ability to make decisions in a timely manner. – Ability to take risks on new ideas, people, and strategies. – Ability to communicate in a clear and precise manner….

Startup founders need management skills to run a startup. Here are some key skills to have: – Ability to wear multiple hats at one time since there’s not enough revenue to fill every role. – Can hire and manage the team members.  – Ability to set strategy and direction for…

Startup founders need to develop leadership skills to run a startup. Here are some key skills to have: – Know your market and research the competition well. – Demonstrate confidence in difficult situations and be able to make decisions and see them through. – Ability to build a strong team…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Startup founders need conflict management skills to run a startup. Conflicts arise among the team members for the following reasons: They come from differing beliefs and viewpoints.   In the short…

Startup founders need human resource skills. Here’s a list of skills to bring to your startup: Can identify talent that matches the company’s strategy.   This includes defining the jobs with roles and responsibilities. Ability to find and recruit the right people for the position. This includes assessing the skills candidates…

Startup founders need some technical skills. Here’s a list of skills to bring to your startup: 1. Microsoft Excel or Google Sheets – you’ll use this for budgeting, forecasts, and numerous other applications. 2. Data analysis – you should be familiar with Google analytics and other basic analytic tools to…

Startup founders need some accounting skills. Here’s a list of skills to bring to your startup: Accounting vs. bookkeeping – bookkeeping is entering revenues and expenses into the proper accounts. Accounting is generating the income statements and balance sheets, along with filing tax returns. Accounting methods – know the difference…

Startup founders need some financial skills. Here’s a list of skills to bring to your startup: 1. For business modeling – ability to calculate the unit economics of your business model including cost of customer acquisition and lifetime value of customer. 2. For fundraising – ability to calculate pre and…

Startup founders need some legal skills. Here’s a list of skills to bring to your startup: 1. Legal Entity – ability to set up an LLC or C-Corp for your business with proper articles of incorporation. 2. Cap Table – ability to set up the cap table with initial ownership…

Startup founders need recruiting skills. Here’s a list of skills to bring to your startup: 1. Ability to define the jobs to be done with the requisite skills. 2. Ability to identify qualified candidates in the market that meet the requirements. 3. Can engage the candidates to discuss a position…

Startup founders need marketing skills. Here’s a list of skills to bring to your startup: – Ability to analyze and choose a market segment to pursue – Can create a story around your startup that sells – Can define a position in the market and communicate it – Ability to…

Startup founders need sales skills. Here’s a list of sales skills to bring to your startup: 1. Can craft a compelling story about the startup to sell to investors, prospective employees, partners, and others.  2. Knows the competition and the other choices the prospect has. 3. Knows the customer’s language,…

Writing is a key skill every entrepreneur should have. Email, social media, website copy, and more, all rely upon good communication. Here are some key points to remember: It’s not about you, it’s about your reader and what this will do for them. Write the way you talk in a…

In managing deal flow, the key to winning the best deals is responsiveness. Startups submitting their deal are looking everywhere for funding and you’re just one option among many. Here are some key points to consider: Automate the initial response to a deal submission with an email acknowledging the sender….

In running deal flow, here are some best practices to consider: Automate your deal flow process as much as possible by capturing consistent information into one application. Track deal flow sources and analyze on a regular basis.   This shows where the best deals are coming from and where to spend…

Deal flow is the lifeblood of the startup investor. It’s important to assess the deals in short order to prioritize follow-up. One way to help this process is to apply a rating to each deal. Here are some key factors and how to calculate them to use in your rating:…

Startup investing requires deal flow and the best deal flow comes from proprietary sources. Here are some key points to set up your own process: Contact your attorney and accountant as they are good sources of deal flow that aren’t known by everyone else. Launch a content marketing program. Your…