Before you launch your fundraise, you’ll need to build some basic documents for pitching the investor and following up their due diligence. Start with a basic pitch deck, ten to 12 slides, that includes a non-confidential introductory version of your deal. For first presentations to an investor, keep it simple and focused on the core. […]

I’m often asked where startups should look for funding. There are many sources. First, start with your family and friends, as they already know you and believe in you. Second, expand the circle to include current and previous coworkers. If accelerators are appropriate for your deal, then consider those not only in your geographical area […]

For early stage funding there are several types of investors. Angel, VC, Family office, or customer funding. So which type is right for your deal? This depends on your type of business, the return and timeframe for that return. VCs want standard business models in high growth sectors with a 10X return in seven years. […]

There are two primary deal structures for your startup fundraise. There’s the convertible note which is a debt instrument that converts to equity later. However, if you want to use a straight debt instrument you should use a promissory note. Then there’s equity. It gives ownership rights in the company. The ownership is set by […]

Every day I ask entrepreneurs how much they are raising. Most begin with the big number–the full and complete raise they anticipate to run. This ranges usually between $1m and $10M. It’s good to have the big picture in mind. Some actually consider raising it all at once because “they want to get the fundraising […]

Competitive advantages increase revenue by 30% over the competition or decrease cost by 30%. Virality is a key competitive advantage in which users invite other users to join your platform. Virality reduces your cost of customer acquisition. It’s is different from Network Effects. Network Effects shows the platform increasing in value based on more users […]

A competitive advantage increases revenue by 30% over the competition or decreases cost by 30%. Most businesses increase in value as the customer base grows and validates the product/service. Users encourage others to join the platform. This is called Network Effects. As the number of users grow, so the value of the platform grows as […]

Competitive advantages increase revenue by 30% over the competition or decrease cost by 30%. A platform-based solution is a competitive advantage over a single-product company, as a platform brings an inherent cost advantage. Platforms reuse the research, design, architecture, and product packaging. Customer support is also reused. Consider adopting a platform-based approach to your business. […]

Competitive advantages increase revenue by 30% over the competition or decrease cost by 30%. Recurring revenue is a key competitive advantage. In today’s world you would think every business has recurring revenue. Yet, I find most businesses who are raising funding did not structure their business for recurring revenue. Recurring revenue helps your business in […]

A competitive advantage increases revenue by 30% over the competition or decreases cost by 30%. Channel access is a key competitive advantage. Channel access lets you connect to a set of customers that others cannot. Perhaps your previous job gave you contacts throughout the industry that you can now leverage for your startup. Perhaps you […]

In raising funding you need to find investors. So how do you get in front of them? First, identify the right type of investor and build up your network in that area.  Know your sector, stage, and revenue category and look for those who invest in it. If your target investor funds  biotech then you […]

Entrepreneurs are often enchanted with the idea behind their business that they think investors will write them a check based on the idea alone. Many have great ideas but I always say no matter how great your idea is standard startup metrics apply. New technologies can capture the imagination such as blockchain in 2017 that […]

When I ask an entrepreneur what their competitive advantage is, most point to their product and say it’s better. Of course, they spend ten minutes citing anecdotal stories to “prove” it. My definition of a competitive advantage is that it increases revenue by 30% over the competition or is a decrease in cost by 30%. […]

When I started angel investing over twenty years ago, there were angels, venture capital funds, and accelerators. That was about it. Today there are many more investor types in the early stage funding arena. Here’s my experience with the investor types including how much they invest and what they expect as a return in general: Crowdfunders […]

How Investors can find an exit in a Startup Investment. One of the challenges for investors funding startups is finding the exit.   Startups typically exit through an IPO or an acquisition by a larger company. As a startup  investor you have little to no control over the exit and can end up in a deal […]

I meet a great number of entrepreneurs and have seen numerous approaches to raising funding. Some approach it as an opportunity to meet new people and explore another part of the entrepreneur ecosystem. Others see it as a chore that distracts from the real business such as product development, closing sales, creating the next unicorn (take your […]

There are some statements I’ve never heard a startup Investor ever say. Here are some of them: No startup investor ever said: -I hear way too often from that startup that I invested in. -There are so many good deals to invest in- where do I start? -The payback on that startup investment came fast. […]

There are some statements I’ve never heard a startup CEO say. Here are some of them: -Fundraising just flew by. I didn’t have a chance to really enjoy it. -Sales is the easiest part of the business. -All my customers are happy and no one is complaining. -There are so many good people to choose […]

The startup world is open to anybody and it seems like everybody comes through it at some time or another. I receive calls daily from entrepreneurs who are seeking to start a business, raise funding, or hire a team member. I can always tell who is the serious entrepreneur and who is the pretend-preneur- someone […]

In the past venture capitalists stood in the shadows of their successful portfolio companies hinting about their contribution using veiled wording in Twitter posts. Today we see VCs stepping up to take more credit for their contribution. There are numerous examples of VCs using successful exits as validation for their investment thesis. With the explosion […]

I love startup stories. In the startup world everyone has a grand idea and big plans to make it happen.  It’s the venture world so you better have an idea that can be big. The talk around the idea is large and full of hyperbole. The future is going to be so bright that you […]

When I look through my LinkedIn network these days it appears every fifth contact is a venture capitalist of one kind or another. When I started in the early stage funding world 20 years ago, the VC was a rare breed who had access to venture funding. Most of them were in a handful of tech […]

Here are some pointers for startups raising funding Launching a startup and growing a business is hard.  It’s supposed to be hard.  You need a complete team to start a business – someone building it and someone selling it.  No fair, everyone on the team is building it and no one is selling it. Being […]

Here are three key pointers for investors who are funding startups. The team is the most important part of a startup. Diligence should focus first on the team, not the product, space, or anything else. Monitor the startup for three months before investing to gauge momentum and traction.  You need to peel back enough layers […]

Design for virality not revenue I heard a startup CEO once comment, ‘I wish I had designed for virality and not revenue.’ Virality is a key competitive advantage. The more your users share your information with others the more traffic and sales opportunities you will receive. Most companies set up their product and website for […]

10X rule your Startup Today, we’ll talk about the 10X rule for Startups. For startups to displace an incumbent, the offer needs to be 10X better than the current alternatives. So often, startups go to market promising their customer an ROI of 10, 20, or 30% better. Unfortunately, that’s not enough to win over customers […]

If they don’t define the exit, then you define the exit. Today, we’ll talk about how to achieve an exit in a startup investment. It’s easy to get into a startup investment, but difficult to get out- especially with a positive return. Most startup exits come when they sell the business to another company or […]

Should You Invest in a Startup Fund Choose broad or narrow investing to meet your goals Today, we’ll talk about investing in a fund and choosing between a narrow or broad investment thesis. When does a fund make more sense than direct investments? A fund works best when you are not familiar with a sector […]

Figure out what you want to invest in then look for resources to help Today, we’ll talk about investing in startups Should you invest in startups? Startups are very risky and it’s a lot harder than it looks.  If you have already invested in mutual funds, index funds, stocks, bonds, real estate etc. then you […]

Use Metrics to show your progress Today, we’ll talk about knowing your metrics Investors look for the metrics in your business so it’s important to know them. There are three levels of metrics you can use: Activity metrics show the basic activity of the business Unit economic metrics show the unit economic model including cost […]

Six months to build it and six months to sell it. Today, we’ll talk about what to build first in your startup. Some startups suffer from what I call the “Vision Problem”. They have a vision in their mind about what the product/service should look like AND they have to have it on the first […]

Show the system behind your goals Today, we’ll talk about establishing a growth story for your startup Investors fund deals based on the team, the market, or the technology.  While these are popular investment thesis, the investment decision often comes down to what I call “the Growth Story”.   This is your operational revenue model showing […]

Validation — the Product Works and People will Pay for It Today, we’ll talk about demonstrating product and market validation In talking with startup investors the first two questions that come up are Product validation and Market Validation. The product works and someone will buy it. Investors look for evidence of this before moving into […]

For family and friends funding — no one is getting paid back. Today, we’ll talk about raising funding from family and friends. Many startups launch their business with family and friends funding. Some entrepreneurs are often reluctant to take money from their family because — well Thanksgiving turkey tastes different if things don’t work out. […]

Find customers to pay for the product before you build it Today, we’ll talk about product development for startups. In growing your business you must prioritize what products you develop. In developing a new product it’s helpful to ask ‘who is going to pay for it’ before you spend money on it. The goal is […]

Look for the right investor to lead your deal, not just the first investor Today, we’ll talk about finding a lead investor for your deal. I’m often approached by a startup who has several investors interested in their deal but no one wants to lead it. This is not surprising given how much work goes […]

Today, we’ll talk about how to value your startup. Since startups don’t have significant revenue then how do you value your startup when fundraising? Traditional tools such as discounted cash flow, book value, and other standard accounting techniques don’t work for early stage companies. For startup valuations we use the rule of 4. For each […]

Today, we’ll talk about the documents you need for your fundraise. The pitch deck, the terms sheet, and the projections The first document is the pitch deck.This is usually ten to fifteen slides introducing your deal to the prospective investor. It should cover the basics of the business including the problem you are solving, the […]

Today, we’ll talk about the different type of investors you will find in the startup world. There are four type of investors for your startup — Venture Capital, Angel Investors, Family Offices and High Networth Individuals. There are lenders who provide debt financing but that’s a topic for another day. Venture Capitalists are professionals with […]

Today, we’ll talk about the deal structure you should use for your fundraise. There’s equity, and then there are convertible notes and SAFE notes. If you want a straight loan, then you should use a promissory note. Equity agreements set the valuation for the company and various terms of governance, preferences, voting rights and more. […]

Today, we’ll talk about should you raise funding and if so, how much should you seek. – Funding accelerates what you already have going in your business today. You should have a core process for acquiring customers and providing a service. If you don’t have it then funding at this stage will only hurt your […]