Discussion Topics

Start With Your Key Metric There are many metrics you can use to guide your startup. In the growth stage, start with your key metric that captures what drives growth. You can either focus on the total number of users or look at the total number of actions the user…

Unit Economics In the early days of a startup, the revenue is small. Instead of focusing on the absolute size of the revenue, focus on the unit economics of the business. Unit economics shows your business model on a per-unit basis. Measure the cost of acquiring each customer and the…

Pre-seed Metrics At the pre-seed stage, startups should focus their attention on engagement and referrals. Track how many visitors you can draw to your website. See how many of those visitors sign up for a trial.   The conversion rate is more important than the absolute number. See how many referrals…

Metrics by Stage of Startup Startups move through stages from pre-seed to seed to growth to scale. The metrics you apply should adjust to the stage of the company. Here’s a list of metrics by stage: Pre-seed – when you have an idea, use qualitative metrics and focus on basic…

Metrics by Stage of Life Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Startups go through three stages of life: product, growth, and operations. In the first stage, the startup focuses on the product. The objective is to…

Metrics by Startup Objective A startup’s objective changes as it moves from early to later stages. Here’s a list of metrics by stage objective: In the earliest stages of the startup, look for conversions.   Basic validation is important to prove the market wants the product. This exercise will teach you…

3X in 3 Terms I analyzed the results of several angel networks and found that 65% of the investments after three years were still in business but were no longer on the venture track.  In most cases, they were growing businesses but were not going to be bought out for…

Startup Success Rates The early-stage failure rate of startups is quite high. Out of 100 startups, only 40% go to the next level at Series A. Only 22% of startups reach Series B. Only 15% of startups reach Series C. Only 8% of startups reach Series D. As for the…

Payback Plans Not every funded startup continues on the venture path to a high payoff from the sale of the business.  For those startups, investors using an early-exit term sheet can find a path out of the deal. There are several options for the startup to pay back the investors….

Redemption Strategies In an early-exit term sheet, the investors have the right to redeem their stake in the company before an acquisition. There are several redemption exercise strategies. The first strategy is to recover the principal investment.   This makes the investor whole and now lets them play with “house money”….

Key to Facilitation Is Operational Involvement In managing an early-exit term sheet, it’s important to facilitate the ongoing information rights due to the investors. Most term sheets provide rights to the company’s financial statements, including the income statement and balance sheet as well as the cap table. This duty is…

Redemption Facilitation Process In an early-exit term sheet, it’s important to have a redemption facilitation process. This includes the steps for setting up the bank accounts, capturing the investor’s interest, providing payouts, and investor updates. The process also tracks escrow of repayment funds and later, revenue share payments to complete…

What Is a Cap Table? In raising funding, investors will ask for a cap table. Cap Table stands for Capitalization Table and is a document that tracks the capital structure of the company. In essence, it shows who owns how much of the company’s equity. So, a company that has…

Challenges in Building the Startup Community There are challenges in building a startup community. It doesn’t happen by accident and it takes a focused effort over a period of time. Here are some challenges to watch for and overcome: Choosing another community’s strategy instead of your own. It’s common for…

How to Launch a Startup Ecosystem For those who want to launch a startup ecosystem, follow these steps: – Start with a group interested in startups and meet regularly. – Encourage startups to share their projects and invite others to support through coaching and making introductions. – Set up a…

Signs of a Strong Tech Ecosystem In building out your startup ecosystem, look for these signs to know if you are on the right track: – Does the ecosystem have strong clusters of founders and developers that meet up regularly? – Does the local community foster the startup ecosystem? –…

Assessing Your Startup Ecosystem  In building your startup ecosystem, take time to assess its effectiveness. Here are some key points to look for: Do entrepreneurs connect and learn from each other? If not, set up events to increase the interactions and foster interactions. Do the entrepreneur groups share resources? If…

How to Get the Most From Your Startup Ecosystem  For those who want to engage with the startup ecosystem, here are some key points to consider: Know why you want to engage with the community and what you want to take away from your experience. The best way to meet…

Building Your Startup Ecosystem Resource List In building out your startup ecosystem, start by identifying the resources in your area. Search for the groups that foster and support startups. This includes the following: – Incubators and accelerators. – Coworking spaces catering to early-stage companies. – Local media organizations that feature…

Organizations of a Startup Ecosystem Take inventory of your startup ecosystem for what currently exists and what does not. Here’s a list of organizations to look for: – Universities that provide the founder talent. – Angel groups and other investor networks for funding the startups. – Venture capital funds providing…

How to Attract Startups to Your Startup Ecosystem  In building your startup ecosystem, recruit startups to move to your area. Here are some best practices to attract them: It takes technical and business talent to build and grow startups. Highlight the talent available in the area, both experienced and those…

Where to Focus Your Startup Ecosystem In building your startup ecosystem, focus on the strengths of the community. Interview the local economic development group to find out what startups already exist. Talk with investors to find out their interest in startups to fund. Review the local businesses in the community…

How to Build Out a Startup Ecosystem In building out your startup ecosystem, consider these points: Start with five successful serial entrepreneurs. Identify their sector and type of business. Interview them on how to multiply those businesses. Target their sector for growing new businesses. Figure out what additional resources are…

Steps to Building a Startup Ecosystem  In building the startup ecosystem, the entrepreneurs drive it. The role of the ecosystem builders is to create connections and networks. Here are some tools for building connections in your startup ecosystem: Robust set of meetings, happy hours and coffees, and activities that bring…

Components of a Startup Ecosystem A startup ecosystem is a network of startups, investors, and others who come together to foster startup formation and growth. It is fueled by talent, funding, and customers. In building your startup community, tap successful serial entrepreneurs to lead. Use their star power to capture…

What Is a Startup Ecosystem? A startup ecosystem is a network of startups, investors, and others who come together to foster startup formation and growth. The network fosters innovation through shared resources such as capital, talent, and mentorship. At the core of the network are startups led by founders who…

University Angel Network vs. Traditional Angel Network The university angel network has similarities and differences to a traditional angel network. They both consist of a group of investors interested in funding startups. They both want to make a return on their investment. They both want to socialize with others. They…

Finding the Champion In launching an angel network at a university, it takes a champion to see it to fruition. In addition to a business school sponsor and five check-writing angels, you’ll need someone who will be the champion for the group. The champion needs to be well connected with…

Retaining Members In running a university angel network, the attrition rate is often lower than for non-university angel networks. The university group has a great answer for “Why invest in startups?”. Many members join to support the university. The group’s primary purpose is to provide the student with an educational…

Offline vs. Online Meetings In running a university angel network, consider both offline and online meetings for the members.  Online meetings allow you to run education sessions, screening meetings, and pitch sessions along with diligence follow-up. Since the members need not travel to campus, these can be short half-hour calls…

Fund Documents In setting up a university angel network, you’ll need fund documents for the prospective members to review. You’ll need to establish a legal entity for the fund, typically an LLC. After that, you’ll need to write the company agreement documents.  This includes the formation of the fund, its…

Why Set Up a Fund? Consider setting up a fund early on for your university angel group. For every one alumni who joins the angel group, there will be three who will join the fund.  Angel investing takes time and many will not be able to participate in pitch meetings…

Student Participation Is Important Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In setting up a university angel group, the student experience is the primary objective. To ensure the success of the group, set up a program for…

Where Does Making a Return Fit In? Many angel investors want to support their university group, local entrepreneur ecosystem, and more. The primary goal is building up their local community or network. In addition to supporting the community, the investor needs to make a return on the investment.  Investors will…

What Is the Mission of the Group? In starting an angel group at a university, the key mission of the group is not to make money. Supporting the university by providing students with a quality academic experience and job placement is the primary goal. Alumni who join the angel group…

Providing Mentorship to Startups Angel groups are often asked to provide mentorship to startups. Here are some best practices for engaging your angel investors into mentorships with startups: Start by matching the investor with the startup based on the business model, sector, and stage of business. Identify a specific challenge…

Who Else Should You Involve? In launching a university angel network there are legal considerations specific to the university to keep in mind.  A university is a non-profit and therefore cannot participate in startup investing. The first step in launching a group is to contact the university legal counsel about…

The Two Keys to Success A university angel network is a group of investors formed around the affinity to a university. The primary goal of it is to provide student experience and job placement. Making money from the investments is secondary. There are two keys to successfully launching an angel…

Why Start a University Angel Network? A university angel network is a group of investors formed around the affinity to a university. It typically consists of alumni and supporters of the university. So why start an angel network at a university? It’s a great way for alumni to connect back…

Why You Should Move Your Angel Group Online As the world moves online, so you should move your angel network online as well. This includes your screening process, presentation meetings, diligence process, and education sessions.  The screening process can be made more efficient by capturing 1-3 minute pitch videos from…

Meeting Considerations In setting up your angel network you’ll need to set up the meetings. Here are some key points to consider: 1. How many deal flow cycles are you planning? 2. Are you online, in person, or both and at the same time? 3. How will you set up…

Working With Other Angel Groups In setting up an angel network, it’s important to build relationships with other angel groups. Here are some key points to consider: 1. Other angel groups can provide additional deal flow to your group. 2. They can provide follow-on investment for your funded deals. 3….

Sponsorship Issues Sponsors bring needed financial support to the angel network. Here are some key points for managing sponsors: 1. Keep the number of sponsors low so it’s easier to manage. 2. Allow a limited number of sponsor representatives to join the meetings so they don’t overwhelm the members. 3….

Consider Service Providers In setting up an angel network, it’s important to have support from services providers such as lawyers, accountants, and financial advisors. Startups will need legal, accounting, and financial support. Review your community for current service providers who are already helping the startups. Assess the skills of the…

Educating the Members In running an angel group, it’s important to educate the new members on how to invest in startups. Most new members will not have experience with startup funding. It’s important to set up an education program for the members. The members will receive education through the process…

Communicating With Members In running an angel group, it’s important to communicate your membership criteria and organizational structure to prospective members. The website and associated documents should make clear not only the membership criteria, but also the process to become a member, and how the group is structured. It also…

Setting Membership Criteria In setting up an angel network, you need to determine the membership criteria. Here are some points to consider:  The Securities and Exchange Commission or SEC sets the investor criteria to allow for investments into startups. Members must meet the SEC criteria for accredited investors. Make clear…

Funding the Angel Network Program In setting up an angel network, you need to fund the program.  Here are some funding sources to consider:  Most angel networks charge a membership fee to cover the expenses for running the program.  For those groups using the fund structure, a management fee or…

Choosing the Investment Structure In setting up an angel network, you need to choose an investment structure. Here are some structures to consider:  Individual investments — the members can each decide if they want to invest and how much to invest in each deal. This allows for maximum flexibility for…

Choosing the Regulatory Environment As angel networks expand across the globe, those groups outside the U.S. should also consider their local regulatory environment before launching an angel network. Here are some points to consider: 1. Is there a legal environment that allows for investment structures for venture funding? 2. Are…