The Venture Studio model is a form of venture capitalism that brings numerous startups together and fosters their growth through shared resources and learning. Not all startups make it. The Venture Studio model takes the best of each failed startup and finds a place within a successful startup in the…

In raising funding, it’s best to have a network of accredited investors to pursue. For those who do not, one can start building that network. Figure out where the angel investors in your area hang out. Find out what they read, listen to, and talk about. Based on this information,…

Raising investment from family and friends is often a key step in a startup’s fundraise. In the early days, there’s no team, product, or customer traction. The founder has only an idea but lots of enthusiasm. It’s a sign of validation that a founder’s family and friends will invest money….

The Go-to-Market slide is important for seed-stage companies pitching for funding. It shows how the startup will enter the market.  Consider setting up an initial target market. List the top twenty customers who will buy your product and gather them into a group called the beachhead market. This shows a…

Building a full-blown product is unwise at the early stage, as the startup will inevitably build the wrong thing. It’s best to test the market first.  Minimum viable products or MVPs are a better solution than a product, as it’s cheaper and easier to do. The goal of the MVP…

Customer intimacy is a strategy in which one builds a relationship with the customer about their care abouts and expectations. The more one knows about the customer, the better one is able to support and meet their needs. In fundraising, customer intimacy can be a compelling value proposition for the…

Some founders get lucky and achieve a successful exit of their business. They were in the right place at the right time with the right solution. Investors should be wary of founders who got lucky. Their luck may have come early in the life of the startup. It’s often the…

In raising funding, the first round is always the hardest. Here’s why it’s so difficult: There’s often no product or revenue to prove traction. The team, in most cases, is unproven. The market is not yet well defined. The ideal target customer has not yet been identified. How the business…

In a pitch, founders focus on the opportunity while the investors focus on the risk. Founders who raise funding have successfully shown how they mitigate those risks. Here are some key risks to mitigate: Team risks — show how the team works well together. Cite a substantial project the team…

Raising pre-seed funding is one of the bigger challenges in startup fundraising. This round comes at the idea stage, so there are no metrics around traction or product-market fit. Here are the keys to a successful pre-seed round. The current team must have strong experience in the domain and a…

Vertical SaaS is a known business model that narrows the focus to a single application. This reduces the cost of capital to raise and gives the startup the opportunity to go deep on an application. Here’s how to choose a vertical SaaS niche. Look for industry segments that are highly…

How Not To Follow Up With an Investor Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Founders raising funding should consider their approach to following up with an investor. Here’s a list of ways not to do it:…

Founders pitching investors can learn a great deal about an investor by the questions they ask. Investors apply the founders’ pitch to their investment thesis. They work through the pitch to see how it does or does not fit. For example, questions focused on the financials show the investor makes…

Both angels and venture capitalists invest in early-stage companies. Here are the key differences between the two: Angels invest their own money while VCs invest other people’s money. This makes the angel investor more risk-averse, while the VC often takes bigger risks. Most angels hold down a day job while…

In raising funding, revenue traction is a key driver in attracting investors. Here are some key steps to gain sales traction for your fundraise. Early-stage companies don’t have a large number of users, as that will take time. Instead, start with a small but dedicated set of users. Engagement with…

In raising funding, it takes several touches to close an investor. It’s best to create additional interactions with the investor beyond asking, ‘are you ready to invest yet?’ Here are some key steps to maintain presence with a prospective investor: Offer to provide a special discount on your product or…

In raising funding, the founder hears the response ‘no’ many times. Here’s what to do when the investor says ‘no’. Show gratitude. Thank them for their time and attention. Ask for feedback. Find out more about what they like about your deal and what they don’t. Connect on social media….

Fundraising is project management. In launching a fundraise, treat it like a series of projects. Here are the key steps: Start with investor documentation and build out the materials needed. Build a list of potential investors. Gain introductions to those investors. Set up meetings with each one. Follow up on…

In raising funding from an early-stage investor, the founder must build a relationship with that investor. Here are some key steps to starting a relationship with an investor. Learn their background and experiences from online sources. It’s important to know their education and work experience.  Research the investor by talking…

Startups raising funding need to show a growth story. Investors look for traction and momentum in businesses to fund. The ability to sell the product is a key skill for early-stage founders. Some founders are not good at selling and have sales call anxiety. Here are some key steps to…

Startups in the early days have little to protect the business beyond intellectual property. As the company grows, the startup can build a stronger moat. Here are some key steps for building a moat into a startup: Network effects — grow the network within your customer base to strengthen the…

Investors look for capital-efficient businesses to invest in. Founders looking to raise funding should first consider building a capital-efficient startup. Here are some key steps to building a startup that is capital-efficient: Look for a business opportunity that generates good revenue from the customer. The customer will pay a high…

In reviewing startups, here are the key metrics investors should look for: Annual contract value — the value the customer spends on the product in one year. This needs to be a meaningful amount of money in order to grow a startup. Customer lifetime value — the total amount of…

For those setting up a pitch session, here are the key steps so the presenter and investor get the most out of it. Decide the goal of the pitch session. This could be providing practice for the presenter, or giving feedback on the pitch, or making an investment decision. Determine…

Fundraising Is a Sales Process Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. Fundraising is a sales process. Consider these steps in setting up your fundraiser: First, build the investor documents, including pitch deck, terms sheet, and data…

Founders often mistake their pitch deck for their product launch strategy. But the two serve different goals. The pitch is meant to raise capital — the launch is meant to earn trust. A strong product launch strategy doesn’t just announce features. It builds a narrative: who it’s for, what it…

Founders looking for investors face the same challenge as those looking for a date. Just as in the dating world, both the investor and the startup exaggerate their strengths. Some don’t know exactly what they want from the other. Just as there are marriage contracts, the startup world has term…

Founders raising funding should consider what investors want to know about their startup. Here are some key points to make before the meeting: Show how your startup fits the investment thesis of the investor. This should include how it fits with the sector, stage, and trajectory of the startup. Investors…

Founders raising funding need introductions to investors. Here are some common mistakes introducers make with investor introductions. Lack of information Most founders ask for an introduction but fail to provide enough information for the introducer to make a meaningful introduction. It’s best to include some context in the request. Lack…

After fundraising comes building the team. The core team may already be in place, but growth will demand new hires. Here are some key points in hiring the team for your startup: Have your high-performing team members interview new candidates. The high performers tend to hold others to their standard….

Venture capital is a job that many aspire to hold. It’s challenging, but it provides great experiences. For those who want to become a venture capitalist, there are several paths. Start by working in a startup in a sales role. Some of the most effective VCs are those who have…

Investors look for large target markets that are growing well. Founders looking to launch a startup often look for huge problems to solve. Since startups are limited in their resources, they must find a way to solve a large problem with few people and products. One solution to this problem…

Investors looking for startup investments need to screen deals efficiently. Here’s a set of criteria to apply to startups before pursuing diligence. Check the team. Do they know what they are doing? Do they have the skills to achieve the goal? Do they have passion and grit? Check the business….

In the early days of a startup, the founder seeks to build and sell a product. In the later days, the founder seeks to scale the business. Here are several ways to scale a startup: Raise funding to fuel the scaling strategy. This could be a substantial amount of funding…

Press releases can help the startup gain exposure in the marketplace. This helps recruit employees, find customers, and attract investors. Founders can do this upon closing a round of funding. Here are the steps to write a press release for your startup: Start with a compelling headline that motivates the…

Building an MVP is a part of almost every founder’s work. Here are the key steps to build an MVP. Most founders build an MVP and then talk to users. Instead, talk to users first and then build the MVP. Take into account the users’ feedback. Release the initial MVP…

The startup life brings many challenges. It’s not for the faint of heart. It will demand the best of you and will test you often. Here are some key challenges in the startup life: Most founders have co-founders to deal with. Maintaining the relationship is tantamount to having a marriage….

When finding new startup ideas, start with your own interests in mind. Look for solutions to problems or challenges you face. Here are the steps to finding new startup ideas from your own experiences: Choose a problem that is a major pain point. Skip the casual problems that generate solutions…

In raising funding, the founder will find that investors vary in their approach to the startup’s fundraise. Some will want a valuation set while others just want to be in the deal. Some will invest because of the team, others because of the product or sector. Founders should customize the…

Investors funding startups look for founders who have the right characteristics for success. Here’s a list of key characteristics of fundable founders: Grit is top of the list. Launching and running a startup is hard work and takes years to see an exit. Founders with grit who can last through…

Founders who take on funding start the process of transferring control of the company to the investors. As the funding moves from Seed to Series A, the investors increase their control. Most seed-stage companies have no board of directors. Instead, they often have a board of advisors who can provide…

There are several reasons international companies expand into the US market. The US market is the largest market in the world and provides the most opportunities to the company to sell its products. Funding in the US is more available than in most other countries. Startups moving to the US…

Investors should foster the local startup community. The more vibrant the community, the better the deal flow. Here are some key ways investors can foster it: Provide events and activities that connect and network startup founders with co-founders. It takes a complete team to make a startup successful, so it’s…

In startup investing, look for startups that solve real-world problems. Focus on the ones that provide a solution tantamount to a painkiller. The customer has a problem that causes them enough pain that they’ll pay for a solution to get rid of it. There tend to be fewer painkiller solutions…

Invest in the Capable Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing. The team is often the key indicator of a successful startup. In startup investing, look for competency and experience in the team. Competency and experience can…

Startups raising funding should have a grand vision. That vision must inspire investors to join the cause. It takes years for the vision to come to full fruition. To take on a large problem, consider the following: Start small.   In the early days, the startup will be small and sometimes…

Startup investing requires several skills, including business model analysis, domain knowledge, and team evaluations. The early days of the startup provide only a glimpse into what that startup will be in the future. Startups often look unable to achieve greatness in the early days, as the team is not built…

Startups are different from small businesses in that they are based on the growth paradigm. Small businesses such as restaurants and retail are good businesses, but they are not startups. A startup seeks high growth throughout its life. Startups build their businesses to foster growth. Through the products and services…

There are many entity types used in forming businesses. Here are the key ones to consider for your startup: LLC — Limited Liability Company Startups use this structure to protect themselves from liability. It’s issued by the state, which can vary the rules across the country. It doesn’t allow for…

Founders looking for their next startup seek ideas for launching a business. Some look at what other founders are doing and then copy the idea. It’s best to start with a customer problem that has not been solved. Once you have a startup idea, test it with the following: Are…

In acquiring a company, there are indicators pointing to success. Here are the key elements leading to a successful acquisition: Outgoing CEOs Acquirers with outgoing CEOs often lead to successful outcomes. They have the ability to project their vision onto others. Their personality can sway the negotiations to a successful…

There are more venture capital funds in the market today than ever before. It’s never been easier to launch a VC fund. Here are some key steps to consider before launching one. Do you have a track record in startup investing? Limited Partners in the fund will want to know…

In raising funding, it’s important to create a herd effect. A herd effect is building a larger group of investors that gives your fundraiser credibility. Here are some key steps to create a herd effect with investors.  First, show how other investors have either invested or are following your deal….

Startups appear to be straightforward to launch and run. But there are many aspects of running a startup that are not obvious. Here are some key points to consider before launching a startup: The key to success is not just to know how to run a business. It’s about knowing…

In building a startup, the founder should consider monetizing the data. Data can provide an additional range of moats for the business. Here is a list of data moats that are ineffective: Openly available and easily accessible data sets General analytics on the data Dashboards and reporting tools. Here’s a…

Founders raising funding are often under the gun with a dwindling cash account. Some founders mistakenly use this as part of their pitch. They emphasize the need the founder has rather than the return the investor will receive if they fund the startup. Investors look for fundable companies. Those in…

Startup investing returns vary greatly from one investor to the next. Here’s a list of key drivers that provide startup investors with a return. High-quality dealflow. Many startups seek to raise funding, but only the top 15 to 20% will provide a good return. Rigorous due diligence. It’s easy to…

The startup world is constantly changing. It brings new technologies, applications, and business models. The startup investor must keep up with the ever-changing startup world. Here are some key tips on how to stay up: Realize that one’s beliefs about how the world works will at some point become obsolete….

Founders pitching investors almost always use a pitch deck. It’s a convenient way to organize the story. Graphics, charts, and glyphs help tell the story in a short, concise fashion. In some cases, the pitch deck is not available for the pitch. For example, the founder receives an impromptu introduction…

The investor holds sway over the startup founder since they hold the decision of who to fund. Some investors take advantage of this and treat founders poorly just because they can. It’s better to be the nice guy investor. Here’s why: The nice guy investor builds relationships rather than burns…

Startups carry with them a glimpse of their potential future. Most companies look small and insignificant in their early days. The challenge for the investor is to see their future and know how to help them achieve their potential. Successful startups have a vision of the future and work to…

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…