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Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In launching your startup you must have a legal entity to raise funding. Start with an LLC or Limited Liability Company. This can be filed with your Secretary of State…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. All startups need to have a legal entity. Before you launch your fundraise make sure you have a legal entity filed as you’ll need it for accepting investment funds.  Start…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. If you want to raise venture capital funding, then check these points to see if you are venture fundable: Do you have the following: – Recurring revenue – Do you…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Raising funding requires document and business preparation as well as pitching and extensive followup. Throughout the process there’s one thing you need to do before you can raise the funding. …

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In fundraising, milestones are specific goals you have accomplished. In crafting your fundraise story, focus on key milestones both those you just hit and those you are striving for. This…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as anchor clients. Anchor clients are those who prepay for a custom version of…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as consultation funding. Consultation funding is using consultation work to pay the bills and…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others. In general, equity funding is for launching and growing a business and is the most…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as grants. Grants are typically provided by government organizations to spur research and make…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as crowdfunding. There are several forms of crowdfunding such as crowdfunding with prepayment, crowdfunding…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Many startups use equity to fund their business.  Equity is an ownership stake in a company.  Equity aligns everyone’s interest in the startup. It preserves cash since it’s only paid…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Another source of funding is supplier funding. Supplier funding comes from those who provide services to your company such as contract manufacturing, software development, legal, accounting services, and more. Suppliers…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as a line of credit. A line of credit is a short-term loan from…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as bootstrapping and barter. Bootstrapping is using your own funds and that of initial…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In today’s startup world it seems everyone is a startup investor in some form or fashion. Startup investors call me to discuss deal structures, valuations, or serial entrepreneurs. I can…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as equipment leasing. Equipment leasing is used to reduce cash requirements for a startup…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equipment leasing lets you borrow funds to obtain assets such as computers, machinery, and other items you may need to build your product and run your business.  Instead of raising…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as licensing. You may be able to reduce the amount of funding needed to…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as factoring. Factoring is selling your accounts receivables to a finance company at a…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. When you sell a physical product and invoice the customer, it can take 30, 45, 60 days or more before they pay.   Factoring provides funding by reducing your accounts receivable…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as loans. Loans are debt instruments that must be repaid. Startups can find it…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Equity funding is just one source of funding for your startup. There are many others such as accelerators and incubators. Accelerators and incubators provide startups with workspace, mentorship, pitch practice,…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Many startups use loans to fund their business. If you are taking a loan from family and friends, here are some points to consider: The first step is to determine…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Many startups raise funding from family and friends on their first round to get the startup going. Before launching, make sure you do the following:  Co-founders should agree on the…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Many startups use profit sharing to fund their business.  It is important that everyone involved has a very clear understanding of how “profit” is calculated. There are three locations in…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. I’m often asked if you should you take money from family and friends to fund your startup. Outside investors will look at family-and-friends funding as a sign of support for…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Many startups use loans to fund their business. Here are a few ways to set up a payment structure and schedule. For payment structure you can use: Interest-only payments —…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Many startups raise funding from family and friends on their first round to get the startup going. For those considering family-and-friends funding, think about the profile of the type of…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. So how do Venture Capitalists make money? VCs charge the limited partners a management fee on the funds raised. This is traditionally 2% which is paid out every year for…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. The fund manager provides a quarterly report to the Limited Partners.  The reports typically contain the following sections: 1) Fund Manager Commentary — the fund manager provides an overview of…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Investors in the startup space have a certain expectation for returns.  Startups raising funding should keep in mind these expectations and only approach them if they have a deal that…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. When a Venture Capitalist makes an investment, they place a portion of their allocated investment upfront in the first round and save the rest for a follow-on round. Most VCs…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Both angels and venture capitalists often invest in syndicates.   In a syndicate, one of the investors leads the round and the other investors follow.  Sometimes the syndicate is a formal…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. A venture fund brings a fiduciary responsibility to those raising the funds from limited partners.  A fiduciary means the VC must act in the best interest of the investors. VCs…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing So how do Venture Capitalists raise funding? VCs raise funding from limited partners which include family offices, high-net-worth individuals, foundations, pension funds, and other sources. Institutional investors such as pension…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Targeting investors for your fund and getting buy-in is a key step in raising a fund.  Potential investors include family offices, high-net-worth individuals (HNI), and angel investors.  Larger institutional investors…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. So what is growth equity? Growth equity refers to investing in a company at later rounds such as Series C or D. These companies typically have $3-5M of revenue and…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. The Returns on a Fund are based on the power law which means that the Pareto Principle applies: The bulk of returns come from just a few of the companies….

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In running a fund it’s important to analyze market segments. First, evaluate the leading companies in the market. Are there any leaders that stand out, or are all the companies…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Fund managers must present their investment ideas to the other general partners.  Here’s how to analyze a potential company for investment: 1) Identify a recent event for the target company,…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. There are 3 key legal documents for your fund. They are: 1) Subscription Agreement — describes how the limited partners purchase interest in a fund, or rather, subscribe to it….

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. There are three key metrics for tracking the performance of a Fund. The first is Net Internal Rate of Return (called Net IRR) — this measures the performance of fund…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. For those raising a fund, you must develop an investment thesis for your fund or investing strategy. An investment thesis is a hypothesis that describes how a particular market is…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In raising a fund you’ll need an executive summary which should include the following: Fund Objectives, (Legal) Structure, Fund Specifics, Investment Strategy, Investment Criteria, Investment Process Overview, Management Team and…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. One of the key selling points for a startup is their potential market size. There are several ways to find it for your startup. You could buy a market research…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. You can now start your own VC fund. Venture capital, angel investing, crowdfunding, and most forms of startup funding are best done through a fund model for when deal flow…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. As a startup, it’s helpful to understand the VC investor you are talking to and how they make money. In venture capital, there’s two ways to make money. First, VCs…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In calculating returns the timing of the return is a key factor. There are two metrics for measuring return. ROI is return on investment without respect to time, and IRR…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In angel investing the two basic approaches are generalist and specialist.  The generalist funds across all sectors but with certain criteria focused on growth rates, team composition, or monetization models…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. You’ll need to gather your basic company documents for investors to review. In preparing a due diligence box also called a dataroom, there are basic documents to include: Income Statement…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Many people want to work for a VC, especially those straight out of college. Most are not aware of the challenging dynamics that come with the VC life.  Here are…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. I once read a sixty-five page business plan that talked about the startup’s services and the benefits that came from it. After reading it, I met with the CEO and…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In diligencing a startup, the team is the most critical factor in the process.  Since the startup has only a nascent product and perhaps some intellectual property, the team is…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In due diligence you may encounter red flags indicating something is wrong. Here are some that I’ve found: The founders are not investing any of their own money into the…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In due diligence, what isn’t being said or shared is as important as what is. When a startup pitches their idea, you should be skeptical of founders that don’t mention…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. So many entrepreneurs think the most important moment in the investor engagement is the pitch.   In fact, the pitch is the second most important.  The most important moment is the…

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. In raising funding you will hear “no” from investors a lot.   When I say a lot, I mean it’s more than most entrepreneurs think. I know one entrepreneur who made…