Startup founders must build a company from scratch. After fundraising, team building is one of the biggest challenges. The founder must be able to recruit qualified people to the team. Startup failure most often comes down to hiring the wrong people for the job. A founder must have charisma and…

There are several key legal documents every startup will use. Here’s a list of those documents: Business Entity filing — this establishes the legal entity of the business, such as a Delaware C Corp, an LLC, or other. Non-compete documents — employees sign these to prevent competition with the company….

Investors look for protection against the competition. The stronger the moat around the business, the more compelling the offering. Here are some key steps to build a moat into your startup: Develop a unique brand that stands out. This prevents others from copying the business model and diverting revenue away…

Founders face a daunting challenge in launching a startup. There are many things the first-time founder doesn’t know. Accelerators bring many benefits to the startup founder. Here is a list: Accelerators bring education to the founder to fill in their knowledge gaps. This is often around sales, marketing, and finance….

Investors screening deals look for momentum and traction before investing. They also look for the team and its capabilities. An often overlooked factor is the team’s genuine interest in the field. Passion for solving a particular problem can be a strong factor in startup success. The founder who wants to…

In the startup space, one is always learning. There’s a new technology, a new business model, a new market, or other to grasp. It’s important that those in the startup space can make mistakes and learn from them. The faster one can learn, the better. The startup often has two…

Some founders find fundraising to be frustrating.   The founder expects more to happen than is realistic. Progress is slow, and the results are not coming in as expected. In most cases, the expectations for the fundraising results are not aligned with the current market conditions. Most deals are done several…

The best asset in raising funding is growing traction with customers. Knowing how to sell into the enterprise is a key skill that founders should have. Here are the steps for selling into the enterprise: Find a champion for your product within the target company. This is typically the person…

Closing an investor for funding is a critical skill founders need to have. Here are some key steps in closing an investor: Investors look for startups that show evidence of success. They avoid startups with red flags and problems. To close, you must show key elements of success already in…

The pivot brings additional opportunities to the startup. Consider using a pivot to add additional revenue streams and touch points to your business. Here are some examples: Consider monetizing the data flowing through your business by capturing and reselling it. Partner companies are ideal customers for this type of data….

Success in most endeavors comes down to having the right skills and the right connections. Your network determines your focus. In startup fundraising, you’ll need skills such as how to pitch, how to grow a business, and more. You’ll also need a network of investors to tap for funding and…

Investors want to see momentum and traction before funding a startup. It’s important to have a growing revenue stream to gain investor interest. Here are some key ways to grow your revenue. Look for disruptions in the market and take advantage of those opportunities. This could be external factors, such…

Pivots are part of the startup journey. Most startups pivot at some point along the way. Here are some reasons to pivot your startup. The revenue traction is simply not coming up. Consider a pivot to a more profitable business model, such as SaaS. This can generate a great deal…

While a fund of funds investment approach may have benefits, there are disadvantages. Here is a list: The returns on a fund of funds range widely. It’s rare that a fund of funds makes more than 25% IRR. It’s just difficult to do with the funds spread across so many…

Investors looking to fund startup investments often receive unsolicited calls from founders. In most cases, the founder is not yet fundable but is making a go of it. To find quality investments, investors need to be proactive in their outreach to founders. Here are some key steps in approaching a…

Biotech startups bring a unique set of value propositions and exit opportunities to the startup investor. Here’s what investors look for in a biotech startup: Investors look first and foremost for a novel target to pursue. These receive outsized funding rounds at the early stage. Investors look for platform-based approaches…

In engaging investors, startup founders should master the self-introduction. It’s important to make a good first impression. While some introductions come from others, most often the founder will be introducing themselves. Here are some key points in introducing yourself to an investor: Begin with gratitude for their time. Avoid the…

The power law drives the startup investment return. Only a small number of startups are going to have an outsized return. The power law also applies to startup pitching. The best pitch in a group wins the lion’s share of the funding. While investors may view each startup differently, the…

Investors see many pitches from a wide range of founders. To stand out, the founder should show credibility to the investor. Those with exits should put that first in the pitch. This shows you know how to reach a successful exit for your investors. Those who were part of companies…

Investors say no to most of the deals they see. Founders should take ‘no’ in stride and do the following: Review the deal for the risks the investors see. Some investors worry about risks that don’t exist, as they are not familiar enough with the company or the market. Founders…

Fundraising is a time-consuming challenge for founders. Some consider outsourcing the fundraising process to brokers who will take a success fee for what they raise. This works well in later-stage funding but is not a fit for startup fundraising. Portions of the fundraising process can be outsourced, such as the…

Running a startup brings many challenges. Here’s a list of key challenges to overcome: The startup is a rollercoaster ride from the highs to the lows. Be prepared to have your emotions go through turmoil. The founder must move everything. There’s no corporate flywheel behind you. There’s no brand that…

Investors reviewing a startup for a potential investment know there are many risks to consider. Here’s a list of key risks to look for in a startup: Team risk. Does the startup have the right team with the right skills, and can they work together? Market risk. Will the market…

In raising funding, investors look to see where the startup is in finding product/market fit. Here are some key tests to check how close your startup is to product-market fit: Demand outstrips supply. The startup finds itself constantly adding more server space for customers. The startup finds itself hiring more…

In raising funding, the founder should avoid out-of-market valuations. There may be investors who become so excited about the deal that they offer a valuation that is above the current market. While this may appear to be a great opportunity to get a better price, the founder should avoid it. …

In raising funding, a founder starts with their own network. When that runs out, he looks for additional sources. There are many investor lists available through online resources. Here’s how to use an investor list in a fundraise. Check your connections to the investor through your network, including social media….

In raising funding, the bar goes up with each round. The revenue must be higher, and milestones must be achieved. In raising funding, consider how to build a steady growth rate into the business. Look to avoid those businesses that have strong seasons and cycles throughout the year. Rework the…

Investors see a tremendous amount of dealflow. For some, it can become wearisome to see the same mistakes repeated. It’s important for the investor to keep a good relationship with the founder. This means avoiding arrogant or condescending feedback to the startup. It also includes treating the startup founder with…

In raising funding, the founder sets a target.  Oftentimes, the target is a rather large number. It’s best to break the larger raise into smaller rounds. This lets you run a series of smaller campaigns inside the larger fundraise. One of the benefits of breaking the raise into smaller rounds…

Startup investors should act as role models for startup founders. Startup founders are often new to the startup world and so look to others with experience for how best to play the game. Avoid these sins as a startup investor. Not being genuine. Investors want startups to tell it straight,…

Bringing on a cofounder has many advantages. There are also disadvantages. Here’s a list of challenges with partnerships: Decision making. Partners bring the challenge of making decisions. It’s best to decide who has the final say in all decisions to avoid a stalemate. Liability. Both partners are liable for the…

Launching a startup is a challenging endeavor. Having a co-founder can bring many benefits as follows: Share the responsibility of launching and running the business. One can hire administrative people and outsource functions, but there needs to be management over each of those areas. Bring more skills to the business. …

In raising funding, the startup founder’s job is to motivate the investor to engage in the deal. Investors are often motivated by what they see other investors do. This is called the herd effect. This is when people copy what others are doing. Here are some key tips on how…

In the early stages of a company, fundraisers should focus on the minimum amount, not the maximum. The valuation is low, and so the founders encounter greater dilution. The majority of the fundraise should be done later when the valuation has increased. Each round will cost the founder 25% of…

In fundraising, there are many scenarios and strategies a founder can use. Here are several factors that impact which strategy to use: The current market for funding. In up markets, one can raise more funding and at a faster pace. The strength of the startup. Startups with traction and a…

Founders seeking funding will hear yes from an investor. Many founders consider the funding to be done.  Founders should move to close the funding and not rest until the funds have been transferred. Many funding commitments never materialize. Issues come up in diligence. The investor has cash flow issues or…

In fundraising, the founder encounters a variety of investors. Some are concerned about the return, some about the traction, and others about the valuation. For those focused on valuation, here are some key steps to consider: First, check their knowledge of current market valuations. Ask what valuations they’ve seen on…

Most startup founders calculate how much funding they need to accomplish the goal. This is a good initial step in the fundraising process. The mistake is then asking for that amount of money in one go. It’s important to break the raise down into steps and stages. The first round…

In raising funding, some founders focus solely on finding their lead investor. In most cases, it’s better to find investors to join the round even if they are not leading. By using convertible notes and SAFE notes, investors can join the raise. Start with investors who are most likely to…

In raising a round of funding, most founders focus on the invested funds so far. When asked about the progress, the founder quotes the invested amount and the amount left in the raise. This undersells the traction the founder has. In addition to the invested, also track the interest and…

Startup founders raising funding will encounter a range of investors with varying levels of interest. Founders should prioritize their follow-up and focus on the investors with the greatest likelihood of making an investment with the least amount of work.  A lead investor can be quite helpful but will require substantial…

Investors follow many startups before investing. They stall in making an investment to be certain it’s a good one. They look for additional information about the startup, its product, and market before making a final decision. Investors want optionality. They want to have as many options available as possible. This…

In raising funding, the founder will need to follow up with the investor to close. After the pitch, some founders send one email to follow up. The one-and-done approach to follow up will not work. It takes multiple follow-ups and outreach to close an investor. The investor is searching for…

Fundraising is a full-time job. It takes time and focus to do it properly. For some founders, it’s a job within a job. In running a fundraise campaign, the founder should consider it their full-time job. Their startup duties should be handled by someone else for the time it takes…

Special Purpose Vehicles or SPVs are the use of a legal entity to gather investors into a startup investment, which takes one place on the cap table. This works well when there are many investors with small-dollar investments. SPVs bring many advantages to the founder, the VC fund, and the…

There are several models for running a VC fund. The venture studio model is one of them. It brings additional support to the startup. The venture studio creates a set of startups in a sector with various skills and capabilities. As the startups progress, some raise funding while others do…

Startup investing is one of the most difficult asset classes to pursue. Information about the potential of the startup is often scarce and always opaque. Some information is available, but the early signs provide only scant information. Investors are torn between the fear of missing out on a good deal…

In pitching investors, the founder will hear ‘no’ many times. Without understanding why, the fundraising process can turn into a slog. By understanding why the investor said ‘no’, the founder can turn it into an educational experience. Here are some common reasons why investors say ‘no’. There’s no momentum or…

In raising a VC fund, there are key factors that will lead to a successful outcome. Here’s a list of key success factors: Providing value add to the relationship. For example, make introductions between two Limited Partners who may benefit from knowing each other. Educate the LPs so they understand…

In raising a VC fund, it’s important to create momentum in the fundraise. This helps carry the campaign through the ups and downs that come with fundraising. Here are a  few steps to create momentum: Before launching the fundraise, obtain commitments from one or two Limited Partners. LPs with a…

In raising funds, the VC fund manager needs the ability to close Limited Partners. Here are some closing techniques to consider: FOMO The Fear of Missing Out is one of the most often used techniques for closing. To use this, the fund manager must demonstrate how other investors are coming…

In raising funds from Limited Partners, make sure to prepare the following marketing materials: Website. The website should reflect the values of the general partners and details about the fund. This is the first place investors go to learn more. Pitchdeck. Just as startups use a pitchdeck to communicate their…

To find the ideal investors for your VC fund, consider the following: Value proposition What is the value proposition of the fund? Answering this question will narrow the field of investors dramatically. What is the solution your fund offers? This could be funding women-led businesses, startups using the latest technology…

Limited partners considering an investment in a VC fund should check the references. Here’s a list of references to consider: Other funds the VC has worked with before. This could be in the form of a syndicate for funding startups. Entrepreneur network. This is the list of startup founders the…

Limited Partners in VC funds look at the team’s track record and also that of previous funds. Here’s a list of key metrics to disclose about your track record: Total Value to Paid in (TVPI)  Compares the value of realized gains and the estimated value of remaining assets to the…

Limited Partners test VC funds before investing. Here’s a list of the criteria LPs use to test the fund: Does the fund have a track record that is compelling? Does the fund fit an open slot in the LPs asset allocation? Does the fund manager have access to deals the…

In raising a VC fund, there are several types of limited partners. Here’s a list to consider: High networth individual This is a person who has a net worth of over a million dollars available for investment. They often participate as an active investor. Ultra high net worth individual. This…

Not all startups succeed. For those that don’t, there may come a time to shut it down. Here are some key points to consider in shutting down a startup: Before announcing the shutdown, collect all accounts receivable. Sell any inventory left on hand. Notify investors first so they are aware….

Many founders have unrealistic expectations and misguided notions about how startups work. Here’s a list of best practices to consider for launching a startup: Don’t bank on the idea alone. Startups need more than a great idea; they need execution. Launch as soon as you can. Delaying the launch means…

The Lifetime Value to Cost of Customer Acquisition ratio is called LTV:CAC and is a useful ratio in determining the health of a startup. To calculate the Lifetime value, take the monthly revenue and divide by the churn rate.  To calculate the Cost of Customer Acquisition, take the number of…

Startup founders receive buyout offers throughout the life of the business. Even in the early days of the startup, they have the opportunity to sell the company. At each round of funding, the founder has the choice to raise more funding or sell it. Here’s a list of reasons to…

Regulation by the government of an industry is meant to protect customers and provide a level playing field for the companies. The downside to regulation is that it inhibits innovation. It often favors the incumbents in an industry and makes it difficult for startups to succeed. It makes market entry…

Forecasting revenue is an important skill because investors want visibility into it. To forecast better, use the Trailing Four Months model. In this model, calculate the growth rate by taking the average of the growth rate over the last four months. Use this growth rate to forecast the remainder of…

The seed stage grows the business from 0 to $1M. The growth stage grows from $1M to $10M. The scaling stage grows from $10M to $100M. Here are the most common mistakes founders make at the scaling stage: They stop working on sales to focus on other areas of the…

Startup founders often believe their idea will carry the day with the investor. They propose their idea to spark interest. While that may be a good way to get attention, it will certainly not maintain it for long. Investors look for execution, not ideas. In raising funding, investors look for…

Napoleon never ran a startup, but his life provides many lessons for the startup founder. Here are some lessons to take away from his life: Underestimating risk — Napoleon underestimated the harshness of the Russian winter and suffered great losses. The startup should consider carefully the market to pursue before…

Artificial intelligence is a disruptive technology that promises tremendous benefits to the tech industry. Current products will be upgraded to use AI. New products will be introduced using AI from the get-go. Here’s a list of product strategies for AI: AI-based applications that use large language models called LLMs. This…

A CEO once said, I don’t mind people making mistakes. I mind people not learning from them. It’s important to learn from mistakes. There are several ways to do this. Learn from your own mistakes. Writing down the mistakes and what you learned helps reinforce your knowledge. Learn from the…