Having a little historical perspective might help to understand the market.
When we first launched Springboard in 2000, entrepreneurs were raising unbelievable amounts of money from angels, and Series A first-round institutional funding was averaging $8 million to $15 million. Those were the heady days of Internet 1.0, and venture capitalists were pouring money over the transom. You had to drink from a fire hose to take in the cash that VCs were throwing around.
But times have changed. Technology has made it cheaper, faster and easier to launch a business today. In recent years, Software as a Service (SAAS) such as SalesForce.com; cloud computing, offered by big platforms such as Amazon; mobility in the form of iPads and tablets; and 3-D printing in manufacturing and social media have made it easier to start a business, at often one-tenth the cost of what it was a decade ago. Beginning in 2013, it became possible to raise funds from accredited investors via crowdfunding, adding a whole new route to capital to the entrepreneurs' choices.
So entering a business is easier, which in turn creates more competition. Marketing becomes more ubiquitous, yet more competitive. Establishing a brand is more challenging.
What to do?
Find clear advice in Carol Politi's article, "Are You Ready to Raise Money? How to Tell." In it, she offers specific guidelines to help you with that decision. "Six Steps to a Perfect Pitch," by Renee Lorton, will help you understand the value of telling a good story.
There is a great deal to learn about the process of raising capital. One important step is identifying potential investors. You need to know as much about them as possible before meeting with them. Ellie Cachette offers some very good advice in her article "Finding the Right Investor."
Entrepreneurs can learn a great deal from industry experts, from the investor comments during pitches and even from tracking competitors. Often, company target markets or revenue models need to make a significant correction. This is called a pivot, and you can learn more about knowing when to pivot from Leslie Bane in her article, "Is It Time to Pivot? How to Tell."
Of course, there are many other decisions one has to make about raising capital, among them understanding the terms of the capital one is taking on, whether it is debt or equity, the terms sought by the lender or investor, and whether this is good for you. There are many online sources for these documents, including the Springboard website (sb.co) and the Angel Capital Association (aca.org).
Be sure to check out local sources, too, as capital could come from a variety of sources. You can find out about local angel investing groups on the Angel Capital Association site. There are a plethora of online lending and investing platforms, connecting companies to sources of capital.
Sometimes, raising capital is not the right decision for your company. Today, many corporations have their own strategic investing units and these, too, scour the landscape for early-and late-stage companies to buy. Sharon Kan explains her decision to sell as an early-stage company in her article, "When It Makes Sense to Sell Your Company Early."
Raising capital in the public market through crowdfunding became a reality on September 23, 2013, when the Securities and Exchange Commission issued rules for soliciting accredited investors in public under Title II of the JOBS Act. This new access to capital is one way entrepreneurs are raising funds, and you can find out more about the types of crowdfunding available in Luan Cox's article, "Crowdfunding (and Crowdfinance) 101." You can also learn the best practices for crowdfunding from Chance Barnett in his article, "Seven Crowdfunding Tips Proven to Raise Funding."
Knowing where to source capital is very important, and especially true for women founders. Joshua Henderson makes the process of finding good sources easier in his article, "The Ultimate Guide to Finding Women Investors."
First, you really need to know if you are ready to raise outside capital. The experiences of those who have done so in this chapter will give you insight for this decision.
Are You Ready to Raise Money? How to Tell
Carol Politi
Getting outside money will dramatically change the way you run your company. Are you ready for that?
Many entrepreneurs view raising outside angel or venture investment as a baseline requirement for starting their business-before they even write a line of code or bring a customer on board. An idea, a big scalable market target, a set of PowerPoint slides and you are ready to go.
This has predictable consequences: You get told that the company isn't ready or that the market is too difficult. If you can make a great pitch, you may end up making a ninety-degree turn or going after an adjacent market rather than executing the business plan you had in mind.
The alternative: Run as lean as you can and raise as little money as possible while you work to prove that your business model and product work. Doing the basic work of testing and tweaking your business model becomes a whole lot more difficult when you are sitting on funds that are supposed to be used to make that same business model come to life.
Here are a few questions to ask yourself to determine whether you should try to raise money:
1. Do you have customers, and do they like your product?
Have your target customers tried your product, and how much do they like it? Will they (or customers like them) buy more? If not, can you get to the point where you do have paying, satisfied customers without going to experienced angel or venture investors? Most investors do not want to invest in science experiments. They want to see some kind of evidence that you've got a real business in the making.
2. Are you ready to execute, or are you still learning?
Most investors will be focused on measuring how well you execute on your business plan. They aren't particularly impressed by watching you innovate and brainstorm your way toward a business plan. Once you take money, you will need to execute, execute, execute. In the early stage of a company, this can limit much-needed experimentation.
3. Are you ready to raise more capital in one to two years?
Your early investors are probably not funding you to profitability. They are funding you to reach specific milestones, and after you reach them, you'll need to go out and raise more money. So what are your milestones? Are they well-defined? Can you meet them comfortably?
4. Can you take advantage of investor involvement on your board?
Investors will contribute to your business plan and help drive corporate strategy-from their vantage point as investors. They will naturally endorse execution and sales-oriented plans in order to drive a better return on their investment.
If you say no to the majority of these questions, you're not ready to raise money. Avoid that distraction, and keep your head down until you've made more progress. Certainly, you'll want to get feedback from friendly advisors, but don't expect to raise start-up capital from experienced investors until you have sorted out your value proposition, tested and validated it with customers, and are ready to define and meet established business-plan goals.
Remember, there are other choices. Bootstrapping is increasingly preferred for many early-stage companies. "Lean" start-up approaches are popular for a reason. Just as agile software development is driving more effective development, agile business processes allow you to efficiently hone your business plan. Test and iterate until you get it right, while spending as little as you can.
Most bootstrapped investors are also going to end up tapping some amount of personal savings or friends and family investment. Putting your own money-and that of your friends or family-to work is a focusing event in itself.
KAY'S TAKEAWAYS:
Taking on investor funds changes your business. Before taking in investors, wisely consider whether or not your business is ready for it.
Ask yourself if your business has met customer and sales milestones, is progressing at a rate that will require cash again within a year, and if you are ready to execute your business plan.
If your assessment indicates you are not at the point of taking in investor money, focus on testing and validating your model while spending as little as you can.
Six Steps to a Perfect Pitch
Renee Lorton
You'd be surprised at the difference a perfect pitch can make. But first you have to get there.
No matter how obvious it may seem that you have a winning idea, the ultimate success of your company is entirely dependent on how well you can personally drum up interest, excitement and investment.
Which means you need to pitch. A lot.
Ironically, the ultimate goal in developing your pitch is to make it seem as if you are not pitching at all. Your audience should feel as if they are taking part in a very interesting conversation, and should be left wanting more.
With more than twenty years' experience creating and delivering hundreds, if not thousands, of pitches for customers, analysts and investors, I've developed a step-by-step methodology to getting your pitch nailed.
The six steps:
1. Take inventory and take heart.
You likely have a great foundation for your pitch in materials you have already created. Pull together every presentation, product description, scribble, customer praise (or lashing) that you've ever seen. Dedicate one to two days with your team to sort through, filter and organize it. Be prepared to investigate the gaps you'll uncover and take a new look at the competition. It's best to do this off-site with a barrel of junk food and have some fun with it.
2. Take your position.
Before you construct a pitch, it's critical that you apply both creative thinking and discipline around your positioning and messaging. If you don't have a knack for marketing, this is a great time to invest in a pro who can facilitate this process. You will need to decide on an overall message and, at most, two to three supporting points. Your positioning and messaging is just as fundamental to your ultimate success as any "secret sauce" or competitive advantage. A compelling, sticky message is make-or-break for any venture.
3. Choose amongst your children.
Once you've decided on your key message and positioning, do the math and put your deck together. Count on one or two minutes per slide, and ruthlessly limit the number of slides.
You will probably need to develop a number of versions of your pitch, depending on how much time you have. For a one-hour customer or investor presentation, a good guideline is to kick off with a fifteen-to twenty-minute pitch (that means ten to fifteen slides, max), plus a two-to five-minute demo (live, video or slide). Leave at least a third of the meeting for introductions, follow-up and next steps. The only excuse for running out of time is because you had great audience questions, not because you couldn't edit yourself.
4. Get your razzle-dazzle on.
Script every word and time your delivery. And I mean every word. Be sure you are doing the talking and not hoping the slide will do it for you. It's death to your presentation to have your audience reading lengthy slides while you're talking. Bullet points should be five words or less. No more than five bullet points per page.
Once you have timed your script to one to two minutes per slide, you should reduce the script to the bare minimum. What you want is a CliffsNotes version of your presentation-enough to prompt you, but not enough to tempt you to read your notes, word for word, if the jitters hit. Practice out loud, on video, in the mirror, with your team-no fewer than ten times. You should be able to deliver the pitch without having to look at the slides.
As you practice, you'll gain confidence with your message. Think of your practice sessions as stage rehearsals at a theater production. Just like stage actors, you will need to bring the identical enthusiasm, emotion, emphasis and storytelling every day, and sometimes ten times in a day. So pull out those tap shoes and top hat and get in character. This is your big show!
5. Gather your friendlies and give it a go.
You need at least three practice sessions, and you need solid feedback at each.
"Friendlies" are not the same as cheerleaders. Friendlies need to be ruthless, and you must encourage them to not hold back. Over time, you'll learn that the worst outcome from an investor or customer pitch is silence and a polite, "Thank you, and best of luck." Listen to your critics and buy them lunch for beating you up.
6. Stick a fork in it.
At some point you need to declare it done and go for it. Creating your pitch, and getting it ready for prime time, is probably going to take you three to ten weeks. You don't do this in a day. Once you begin delivering your pitch, it will evolve as you learn the positives and failing points and make tweaks and adjustments.
Once you have your pitch nailed, you will be amazed at how foundational it is to your venture. Pitching your venture should feel as natural as breathing. With the right pitch, whether you are in a conference hall with a thousand people or having a glass of wine at a networking event, whether it is a structured presentation or an elevator pitch, your messages, supporting points and, most important, your enthusiasm, will all weave together naturally to prompt excitement and action from your audience.
KAY'S TAKEAWAYS:
Engage in the act of storytelling.
Write out your entire pitch, then reduce it to simplest form for different lengths: two-, five-and ten-minute scenarios.
Practice before your friends. Ask for honest and direct feedback.
Finding the Right Investor
Ellie Cachette
Before writing a check, an investor is going to know every last thing about you. Here's how to return the favor.
Once you've got investors invested in your company, your first reaction may be to break out the champagne. But be careful. Just as investors do due diligence on you and your company, you should be doing due diligence on them. Here's how:
Instinct and chemistry
Do you like the investor? Can you communicate well virtually? While there is a lot of emphasis on face-to-face relationships, the truth is that once your start-up takes off, the odds of you and your investor ever being in the same city at the same time are very slim. If communicating via email is tricky in the early days, watch out. It's only likely to get more difficult over time.
Crunchbase
Go to crunchbase.com and make it your friend. Crunchbase lets you find out all sorts of details about your potential investor and the investor's fund. AngelList is fine, but to me, Crunchbase is more relevant. It's more sterile, less social, just the facts. Here's what you're looking for:
An investor's personal investments
Current or previous funds
Investments made within a current or previous fund. What types of company does this person invest in, and at which stage?
Founders that have accepted money from this investor. Get in contact with them. Grill them.
Between Crunchbase and your own network, see if you can find an entrepreneur that turned down an investment from your potential financier, or one that had a round fall through. Often you learn more about investors from the deals they don't do than the ones that they fund.
Many investors have spent years or even entire careers working behind the scenes, so Googling them may be less fruitful than you'd expect. Still, keep an eye out for:
Old blog posts or rants about other investors or entrepreneurs
Hobbies and personal interests
Previous employers or funds that you may not be aware of
Before an investor writes a check, they will want to know every single detail about you and your life. Do your best to return the favor. See if they will be your Facebook friend or if they have a semi-open profile on Facebook. Transparency is always a good sign. If your potential investor is really loved, they may have reached the maximum number of Facebook friends (five thousand) and may be unable to add you to the list. This is always a good sign and probably someone you want to become close with, whether or not they invest.
Competing term sheets
A competing term sheet or letter of intent will help you get an idea of how good a deal your investor is offering. Of course, it isn't always possible to get a competing term sheet, but you might be able to get a friend or founder of a similar-sized company to share a term sheet with you. Make it clear that you don't mind if they scrub out names or confidential info.
It's important is to share investment documents with other founders. Some investors might pass on your company because they don't think they can get a good deal, or because they only invest with certain terms. It'll be a huge help to know what terms other companies are getting. Also bear in mind that "standard" terms can vary hugely by region-this is one time there is almost no such thing as too much research!
KAY'S TAKEAWAYS:
Before you accept that check from your potential investor, do your due diligence on them and their company. Check the successes or failures of their previous investments.
Follow your instincts and observe if their responsiveness and communication style suits you.
Don't negotiate terms in a bubble. Share investment documents with other founders and get a competitive term sheet.
Is It Time to Pivot? How to Tell
Leslie Bane
"Pivots" come in all shapes, sizes and varieties. How to see a course correction coming.
In the early days, an entrepreneur's success at raising money and recruiting strategic advisors depends mostly on a grand vision and a business plan that shows how everyone can make a lot of money. But what if that plan isn't working out as you hoped? What if you see a new opportunity that looks better? How can you tell if you should stay the course or abandon it?
To decide, you've first got to overcome two styles of working that can make it hard for you to do a good job of evaluating your own business and sizing up other options:
Head down. It's easy to be so focused on getting to the next milestone that you fail to notice what the market or your competition is doing. This can mean that outside factors force you to make a change. Far better to identify the need for change upfront.
Idea love. You are so in love with your idea that you try to do too much, too soon. You ignore the advice of people telling you not to bite off more than you can chew, probably because you don't fully appreciate how much you can accomplish with a specific amount of money within a specific amount of time. In this case, you may need to change course because you run out of money.
How can entrepreneurs avoid these mistakes?
Make change a part of your company culture. At first, I found it very difficult to accept and communicate change. I worried that those around me would lose confidence in my ability as a founder, leader and visionary. It took some time to realize that entrepreneurs are forced to make fundamental decisions relating to their product, solution, business model and pricing structure all the time. It's best for all involved if everyone gets used to this, fast.
Don't go it alone. The beauty of running your own business is that you really do get to call the shots. Day-to-day, no one's telling you what to do. The flip side of this is that you need to lean on those around you for guidance, perspective and, yes, coaching. Just because you're the founder or CEO doesn't mean you can't or shouldn't take advice from a wide range of people-in fact, the opposite is true.
Leverage and listen. Leverage your network, advisory board members and thought leaders in the space to help you challenge your assumptions on a regular basis. You can do this around the water cooler (if you have one) or you can conduct a more structured strengths, weaknesses, opportunities and threats analysis.
Course corrections happen all the time. The savvy investor understands that business plans change, business models need to be adjusted, and that knowing when to zig or zag is one of the hallmarks of a great entrepreneur.
KAY'S TAKEAWAYS:
In order to assess whether it is time to pivot your business model or not, you need to look outside your company at market forces and competitors.
Change is a constant for entrepreneurs. Institute a culture of constant change and pivots will naturally flow from insights gained.
Investors understand that business models evolve. Engage them in decisions to change course before approvals are required.
Nope, Your Investors Can't Help
Susan Askew
With a boom in VC, it's tempting to start fund-raising. But can money really fix what ails your company?
Thanks to a thaw-some would say bubble-in venture capital investing, raising money no longer seems like such a crazy idea. The latest tech IPOs, with the Facebook offering still to come, have raised hopes for more successful exits. [Editor's note: Facebook's IPO came a month after this blog was posted.]
I've raised outside money for two businesses, once in the height of the Internet boom and once again after the bust. Before you get caught up in the idea of outside investment, take a step back and understand what that money-and the investors who come along with it-can and can't do for you.
What investment capital can do is fairly obvious. It can:
Jump-start expansion. All of a sudden, you're no longer scraping by. Instead, there's now money for spending on lots of things: increased production capacity, opening new facilities nationally or internationally, making hires, etc.
Build your brand through expenditures on advertising, social networking and publicity.
Expand your network of contacts, increasing your visibility with potential partners, board members, advisors and others who can give you a boost.
Provide mentoring and executive development (with the right investors).
Less well understood is what investment capital can't do for a business. A misunderstanding here can mean the difference between success and failure. So, consider for a moment that outside money can't:
Fix flaws in your business model. If the market is saturated, the barriers to entry low, or the target audience too small, throwing money at the business won't change anything. Ask yourself, is it really the lack of money that is holding us back, or is there a weakness in the model that needs to be addressed?
Buy customers and revenue. While capital can buy brand visibility, it cannot buy customers. You have to have a product/service that people are willing to pay for. You can give away the razors, but you have to sell the blades or the shaving gel… or something.
Create a path to profitability. If your costs are greater than your revenue, you can't keep raising money to fill the gap. Remember the joke from the dot-com days? We're losing money but we're going to make it up in volume? (Think Pets.com.) Eventually, you need to be profitable.
Guarantee success, or even that the business will be around in a couple of years. You have to continue to innovate, provide a good product or have high switching costs. Otherwise customers will leave you for a competitor.
The bottom line is that fundamentals matter. Investors know that success depends on a solid plan, a lucrative target market, a good team, a product that solves a problem or fills a pressing need, competitive advantage and a path to profitability. Without the fundamentals, you cannot succeed. No amount of money will make these things magically appear, even if an investor is willing to invest in their absence.
With the fundamentals in place, the next consideration is scalability. Many successful businesses work because they are local. Scaling is either prohibitively expensive, or the trust of the community is so critical to the success of the business that the business just can't live outside the community. Money can't change that. That said, there are many businesses that can leverage economies of scale to create national or international businesses. Know which category you fit in.
Investment capital can benefit your business in many positive ways, but it is not a panacea. Understand what your business really needs-is it money or is it better fundamentals? The money follows the fundamentals, not the other way around.
KAY'S TAKEAWAYS:
Before you look for an investor, understand what that money will and will not be able to do for your business.
Investor money can help grow your business and contacts rapidly, and help you build your brand as well as provide mentoring.
Investor money cannot buy customers or fix a flawed business plan that lacks solid fundamentals.
When It Makes Sense to Sell Your Company Early
Sharon Kan
We idolize entrepreneurs, like Mark Zuckerberg, who hung on when everyone urged them to sell. But sometimes selling early makes a lot of sense.
In 2007, I started a company called Tikatok.com, an online self-publishing platform for children. Just twenty-two months later, I had the opportunity to sell my company to Barnes & Noble, and was suddenly faced with a big decision. Do we remain a start-up and keep building the business on our own, or do we become part of a larger, established company right away?
I wasn't planning to sell my company this early. The opportunity just presented itself and after much thought, I decided to take it.
Why did I say yes? I was well aware that a big part of entrepreneurship is indeed the exit. You either sell the company after years and years of building it, or try for an IPO. But after thinking about the Barnes & Noble possibility, I realized there is a third option: Build your company under the aegis of a large parent company that has resources you couldn't acquire on your own.
So when is this a good deal? Make sure your potential buyer has:
1. An already-established significant customer base that could potentially buy your product
Barnes & Noble has over seven hundred stores and reaches seventy million customers. As part of Barnes & Noble, we get exposure to all those customers. And they're the same types of parenting customers we were already targeting.
2. A marketing machine and platform that you wouldn't be able to afford
Let's face the reality. Big companies have big marketing budgets, and small companies have small marketing budgets. If you play it smart, you can integrate your product as part of the overall marketing campaigns of the parent company. For example, over the summer, Barnes & Noble had a large NOOK color reader tablet campaign, and we participated in the campaign too. We developed a Tikatok app for the NOOK platform, and ran a contest on our website that we promoted in all Barnes & Noble stores.
3. Your buyer will push you to think BIG!
As a start-up, sometimes all we wanted to do is finish out the month successfully. We just didn't have the bandwidth to focus on the big picture every day. Like other entrepreneurs, we got caught up in issues like, "Can I pay salaries by the end of the month? Should I release this product now or wait until we add more features?" Guess what-big companies don't think like that. Their big question is "Can you create a multibillion-dollar business?"
A big company can challenge you to think in the same way. Are you building a product that will make an impact on millions of people? Small products marketed to small volumes are just not interesting to big companies.
The challenge to think big has really helped us. Barnes & Noble challenges us every day to take our vision and our ideas and make them bigger than big.
While many entrepreneurs resist the idea of selling their firm too quickly, there's something to be said for the bandwidth, budget, brand recognition and manpower that a larger business can provide. And if you pick the right partner, you'll still be able to think creatively, innovate and develop your own ideas.
KAY'S TAKEAWAYS:
Exiting is an important aspect of entrepreneurship. Sometimes exiting early makes sense.
Selling to the right parent company can give you access to resources and infrastructure like customers and marketing that would take years to develop on your own.
Working within the right parent company, you can still be able to innovate and be creative and you will be challenged to Think Big and have the resources to execute your big ideas.
What to Do When Your VCs Just Don't Get It
Ellie Cachette
Being a trailblazer sounds glamorous, but if you're too far ahead, your investors may not be able to keep up with you.
Raising money for your idea or start-up is tough enough. As capital becomes scarce and barriers to entry become lower, venture capitalists are raising their expectations for start-ups. Here are five tips for raising money when venture investors just don't seem to get it.
1. Talk to experts.
Venture capitalists say they love disruptive ideas, but if your idea is really new, or if your industry is changing really quickly, venture capitalists might not have had time to do their homework and get caught up with you. On the other hand, industry experts will know the little wrinkles of what's going on and will be able to understand why you're different. Find these people-and the investors they work with-and show them what you're up to.
When the time comes, one start-up veteran recommends you ask these experts if they will serve as references when VCs are trying to validate or deny your company's potential. Be prepared to give your references talking points, such as details on your market and how your company fits into it.
2. Talk to other VCs or find competitors.
Another tactic is to grow a thick skin and move on. There is a common saying among entrepreneurs that it's easier to find a new investor than to change one's mind. Many start-ups raise seed and Series A rounds simply by going through the interview process. Investors are often looking for companies that match a pattern with metrics they are comfortable with. Don't waste time and energy on investors who are looking to match patterns you'll never fit.
3. Talk up numbers and educate on your space.
Sometimes it can be as simple as education-your space may have its own quirks or trends that investors don't know about. Talk up those points and break down the information into relevant points that are easy to follow. Rebecca Woodcock, cofounder of Cakehealth, was one of the first to come up with an online system to help consumers manage their health care bills. She notes, "I always have a handful of industry reports ready to send to investors to help them understand the specific trends I'm watching. For each report it's important to call out bullet points."
4. Publish a white paper or an expert publication.
If there isn't enough information out there on your niche or space, then publish it yourself. Whether it's something odd about your space, an area you plan to disrupt, or just simple statistics, you can make a SlideShare, write a white paper or collaborate with other experts in your field to cross-publish something. Show that you can be a leader in your area of expertise.
5. Find your "Esther."
Listening to early criticism of your pitch can also be huge help, and if there's something you hear a few times, you need to find a way to address it. In my case, I was frequently asked if Esther Dyson, an investor known for having an interest in health apps and software, was involved in my start-up. After being asked this a dozen times, I finally got a meeting with her and convinced her to join in. While it took some time, for me, this was a crucial step to overcoming funding hurdles. Other companies might need to convince a critical advisor or client.
Not all VCs are created equal. Many investors are excited to invest in new spaces. Break down the important information in a way that makes it easily accessible, and show that you can be a leader, even in the great unknown.
KAY'S TAKEAWAYS:
If your idea is innovative and ahead of its time, you may have additional hurdles to overcome with VCs; recruiting industry experts that VCs are already working with can help validate your company's potential.
Educate VCs on trends they may not know about and use the industry experts to back you up. Publish expert data if it doesn't exist and establish yourself as a leader.
Listen to the questions or criticisms that continue to come up during your investor presentations and address them powerfully.
Crowdfunding (and Crowdfinance) 101
Luan Cox
Here are four things you need to know before you ask for other people's money.
Crowdfunding has paved a new avenue for entrepreneurs to raise capital for their growing businesses and has generated billions of dollars for start-ups. Some do it well (think innovators such as "Generation Why Not: 35 Under 35"). Others, like New York City Opera, struggled with executing a winning campaign. New York City Opera used crowdfunding site Kickstarter to try to raise $1 million the opera needed to stay open through September 2013. It got $301,019 from the twenty-two-day campaign-not even close to its target-and filed for bankruptcy soon thereafter. Although this was not the sole reason the NYCO shut its doors (it needed to raise another $6 million from private investors but only got $2 million), entrepreneurs can learn valuable lessons from the failures of their online campaigns.
First, the NYCO did not clearly define what it was producing with the funds. Kickstarter's guidelines state that the site is not to be used for direct charity or cause funding, therefore a project from a nonprofit organization must have a clear end and focus on what is being created. Second, the campaign began a mere nine days before the 2013-14 season that it was supposed to be funding. Some thought this gave off a sense of desperation and looked like poor planning on the part of the NYCO. Both of these illustrate how lack of understanding and preparation can produce poor results in an online crowdfunding campaign.
How can you do it right? Do you even want to? Before jumping into a crowdfunding campaign, here are four things you need to know.
1. Crowdfunding is not one size fits all-you have four options.
Donation-based crowdfunding. People contribute to a cause or campaign that they believe in with no expectation of returns. This is ideal for philanthropists or those wanting to support their community. Sometimes referred to as civic crowdfunding, this type of crowdfunding works best for charitable causes, community projects and other socially conscious campaigns.
Rewards-based crowdfunding. A reward is given that usually corresponds with the amount contributed. Though rewards-based crowdfunding is not a new concept, it has been thrust into popularity by sites such as Kickstarter and Indiegogo. Popular with musicians, artists, movie producers and start-ups producing consumer goods, contributors are often rewarded with a prototype or some other tangible reward.
Debt-based crowdfunding. This involves the person or entity essentially getting a loan from contributors and paying them back with interest. These types of loans are growing in popularity, particularly with businesses looking to expand but not give up equity in their company.
Equity-based crowdfunding. This is associated with the passage of Obama's 2012 JOBS Act, which eased federal regulations regarding fund-raising and gave individuals the opportunity to become investors in private companies. With the implementation of Title II on September 23, 2013, private companies can publicly solicit funds from accredited investors. This usually happens online through a portal such as AngelList, EquityNet or EarlyShares. When Title III is implemented, unaccredited investors will be able to invest in these private companies as well. This type of campaign entails the most legal and regulatory complexity, as it involves the sales of securities. Many project that soon this sort of fund-raising will be a vital tool for small businesses and start-ups to raise capital.
2. Crowdfunding has its own rules and regulations that you must follow.
Listing your company on a crowdfunding site may seem simple, but much regulatory compliance is required for each type of crowdfunding campaign, and a lot of legwork is involved in having a successful raise. The work on your crowdfunding campaign actually begins far before you even list your raise on a website. Social media has become a powerful (and free) marketing tool for building momentum and encouraging engagement. Take the time to develop your network; it is a personal investment in what you are trying to achieve.
However, even before you begin building the hype, you need to research the hundreds of portals out there to decide what type of campaign and site are right for you. Take your time, and make sure that you understand the regulatory compliance required for your campaign. Talk to a lawyer if you have questions, especially if you choose to go with an equity crowdfunding campaign, as consulting with a lawyer beforehand will be much less costly than paying one after something has gone awry. There are plenty of tools and resources out there to help you, such as books, blogs and videos, so take advantage of them.
3. You should not crowdfund without a business plan.
Having a proper business plan is important, especially in an equity crowdfunding raise. You want investors to know that you are serious. They want to know your priorities, and that you not only have a great idea or product, but that you have put in the time to figure out how to make it profitable. Having a good business plan can inspire the investor with confidence, trust and belief. The respective intermediary you choose may not have the most stringent requirements for posting a listing, but the more information you provide to potential investors, the better. These investors are savvy, and there are a lot of companies seeking capital; you need to stand out. Clearly explain your business goals and how you plan to achieve them.
4. You need to keep crowdfunding even after you have raised all your funds.
If your campaign is over and you were successful, don't forget that the work is not finished. Do not stop your communications afterward. Keep updating your social media with your progress, and don't lose momentum. Stay focused, and make sure that you keep your investors informed. You will not be able to prepare for everything, but the more roadblocks you are equipped for, the better you can manage any unforeseen bumps.
Following these guidelines will help you avoid many common crowdfunding pitfalls that new businesses face when using this type of fund-raising. Choosing the right crowdfunding strategy for your business will enable you to define your capital-raising needs and the level of involvement that you would like contributors to have. Doing your regulatory homework will prepare you for the road ahead; you will not be surprised by any fees or compliances required of you. Finally, having a clear and succinct business plan will not only provide you with the framework that you need to build your business, but it will also enable you to establish your brand through social media in a genuine and professional manner.
KAY'S TAKEAWAYS:
Decide if you want a charity, reward, equity or debt crowdfunding campaign.
Prepare your social media marketing campaign and launch in advance.
If you choose an equity campaign, have your business plan and documents reviewed by legal advisors and be ready to go the day you launch.
Seven Crowdfunding Tips Proven to Raise Funding
Chance Barnett
Crowdfunding is hands down the most interesting and most effective new way to find backing. Here's how to do it.
This post on crowdfunding success tips answers the following questions for people or businesses thinking about using crowdfunding to raise funding:
"What are the common elements behind wildly successful crowdfunding campaigns?"
"Which platform is the best fit for my business or project?"
"What should I offer funders or investors?"
I cover these questions and more in the following seven critical crowdfunding success tips below.
If you'd prefer video-based crowdfunding tips on equity crowdfunding, see the recent interview between Kay Koplovitz, the founder of USA Network and Springboard Enterprises, and me (youtube.com/watch?v=22DkpQc4o5s).
Crowdfunding Tip 1: Pick your platform
As you're getting started with your fund-raising and crowdfunding goals, the first place to start is to pick the platform you'll raise funding on.
To help you is a list on Forbes of The Top Ten Crowdfunding Sites for Fund-Raising (forbes.com/sites/chancebarnett/2013/05/08/top-10-crowdfunding-sites-for-fundraising).
First, decide if you're doing a rewards-based crowdfunding campaign, or equity crowdfunding (where people become actual shareholders in your company).
Rewards crowdfunding: If you're raising rewards-based funding (not investment), Kickstarter and Indiegogo should be on your list, but you should also be aware that there are specialty platforms and communities as well that focus more exclusively on things like music, health care or nonprofits.
It's best to pick among these rewards crowdfunding platforms based on the project types they focus on and the existing community of members already on the platform, as well as the way the platform structures their fund-raising product.
What many people aren't aware of, or are confused by, are the differing fund-raising products and how they're structured. In short, Kickstarter has a strong track record of success for creative projects, and their fund-raising product has been an "all-or-none" fund-raising product to date. This means that if you don't raise 100 percent of your initial funding goal, you don't keep what backers have pledged.
Indiegogo has a different product in that regardless of whether you meet your funding goal, if you choose to pay more (up to 9 percent of funds raised), they will let you keep any of the funds pledged to your campaign. But this has its drawbacks as well, as often times projects need some minimum funding to work, and sometimes the required goal is a good incentive that motivates both crowdfunding campaign owners and those funding the campaign.
Equity Crowdfunding: If you're raising investment for your start-up or business via what is called equity crowdfunding (where people actually can become shareholders for a potential future return), then check out Crowdfunder or Circle Up.
Circle Up takes a percentage of your funds raised, which according to their site is similar to how investment bankers work. Investment bankers take fees as high as 7 to 10 percent of the money you raise. On the other hand, Crowdfunder.com has a simple flat monthly fee of just a few hundred dollars.
Crowdfunding Tip 2: Pitch and story
It's important to remember the context of crowdfunding and fund-raising online. You're vying for a person's attention while they're online, and they have tons of other distractions and things pulling their attention away from you.
It's for this reason that your initial pitch and messaging absolutely must grab your funder or investor's attention right away and pull them in.
Once you have their attention, the way to keep their attention and truly engage them is to engage "the two brains," as I call it. This means engaging both the Rational Brain (the "what" of what you're doing) and the Emotional Brain (the "why" of what you're doing).
The most effective way to do this is via telling a great story-either about yourself, the story of your project or company, or the story of your customer or who your project truly has an impact on.
If you're crowdfunding a business and raising investment, there's a good resource on forbes.com on how to pitch your start-up and tell a great story and package it all in a succinct pitch deck (forbes.com/sites/chancebarnett/2014/05/09/investor-pitch-deck-to-raise-money-for-startups).
If you're creating a rewards crowdfunding pitch, you should know that videos often double success rates for rewards campaigns. You should also be sure to have a clear and compelling "ask" of your funders that relates to your larger story and project.
Crowdfunding Tip 3: Focus on what's in it for them
It may sound counterintuitive, but while your goal in crowdfunding is to raise funding for yourself, the more you can focus on what is in it for your backers or investors, the more likely you are to create a set of rewards or terms that helps you raise the dollars you're looking for.
In rewards crowdfunding, make sure you develop truly compelling rewards for your backers that tie in to your story and aren't just swag. As a rule of thumb, simply ask yourself, would I go through the trouble to buy this reward myself? Also think about what is truly and unique and compelling you could offer.
One of the best ways to come up with great rewards is to look at some of the big successful multi-hundred-thousand or multimillion-dollar campaigns. Each platform leaves the campaigns up online and you can browse through all their rewards.
In equity crowdfunding, you need to focus on what terms you're going to offer your investors. While there is not a "one size fits all" rule in raising investment, there are some guidelines to follow.
A free term sheet resource on Forbes is a great place to learn what your options are and what might work best for your type of business (forbes.com/sites/chancebarnett/2014/05/30/the-entrepreneurs-guide-to-term-sheets-and-equity-crowdfunding).
Crowdfunding Tip 4: Supporter engagement
The most common mistake that first-time crowdfunding campaign owners make (in both rewards or equity crowdfunding) is to not adequately engage their first-level network of friends, family and supporters.
For rewards crowdfunding, this means having people set and ready to start funding the launch of the campaign on Day 1. This is important because campaigns that accelerate more rapidly early on and attain a significant percentage of their funding goal in a short span of time often attract more attention as a whole over the life of the campaign.
For equity crowdfunding, supporter engagement more often means having important and notable stakeholders around the company online around the campaign and represented. This includes the entire team, advisors, board members, partners and existing investors. Sites like Crowdfunder.com make this easy by displaying this important "social proof" of your existing investors and team right alongside your investment offering online.
Crowdfunding Tip 5: The power of notable investors
You might believe that what you're doing is the coolest thing since sliced bread, but regardless of how great it is, there is one sure way to get other people's attention who have never heard of you or your cool gadget or project before-and that is to get people or organizations involved with your project or business who people already know and have positive associations with.
If you're involved in a rewards crowdfunding campaign, ask yourself, who can you involve in your rewards in some creative and meaningful way so that people will get excited by and respond to the opportunity to get the reward?
If you're raising equity crowdfunding, what existing advisors or investors, or even partner organizations will bring credibility and trust to you and your business?
At Crowdfunder.com, the data shows that equity crowdfunding campaigns that have notable businesspeople as investors or advisors already engaged and listed get up to six times the engagement on their fund-raising efforts as those who don't.
One of the most powerful steps a company can make is to find a first or lead investor to invest before they launch their fund-raising efforts online. This has the benefits of both avoiding the optics of $0 invested, as well as often helping to arrive at what are sometimes more "market" terms of what terms an investor would actually invest at.
The first and/or lead investor is a critical part to kicking off a successful equity crowdfunding marketing plan.
Crowdfunding Tip 6: Planned marketing and outreach
Crowdfunding platforms are not listing services. Period.
Regardless of the platform, the results you get from the platform are proportional to the effort and attention you put into the platform and tying this into your own fund-raising efforts both on-and offline.
In rewards crowdfunding, successful campaign owners put in tens to hundreds of hours on the creative and marketing planning side of their campaign before launching. They then also have a plan for several "pushes" in their marketing to launch, fund and push to close funding at or above their goal.
In equity crowdfunding, a lot of the work goes into structuring the actual investment offering by first figuring out the terms and completing all the legal agreements first. While larger investors (investment amounts at $10,000 to $200,000 per investment) aren't often effectively reached through broad marketing and PR across the web, as happens in rewards crowdfunding (donation amounts average closer to $25), storytelling and engagement are still important for both crowdfunding types.
Crowdfunding Tip 7: The data perspective
The overall crowdfunding industry is growing exponentially. In 2011, the total crowdfunding market was $1.2 billion. In 2014, crowdfunding is expected to finish off the year nearing $10 billion in funding online.
Obviously, this means that there are lots of opportunities for those seeking funding and for those who are donating, pre-purchasing or investing dollars.
But what does the data say for you as someone looking to run a crowdfunding campaign?
In rewards crowdfunding, let's say you're looking to raise $50,000. A leader in the space, Kickstarter, shared data that the most common contribution amount is $25. Knowing this, you can do some simple math to better understand what success entails.
Here's an example of what that looks like:
If all of your funding came at the average of $25 per, and you assumed a conversion rate of 3 percent of visitors who actually fund your campaign, you'd have to reach over sixty-six thousand qualified people on the web and get them to view your campaign. At the 3 percent conversion rate, you'd be converting two thousand people to fund your campaign.
For most people, that's a lot of traffic in forty-five days, and a lot of backers. Do you have the kind of existing network, reach, press contacts and marketing plan to really meet these goals?
Adding in additional higher dollar amount rewards can help. Most campaigns thus also include several higher-priced rewards from $100 up to a few thousand dollars. The point is, it is critical to "run the numbers" up front for your campaign by considering the rewards you provide and how many backers you will need to get at each reward level to make your overall goal.
Equity crowdfunding data
In equity crowdfunding, as a leader in the space, Crowdfunder.com has an average investment from accredited investors on the platform of roughly $25,000, though funding commitments from single investors and funds have been as large as $500,000.
Equity crowdfunding can provide a powerful way to raise your funding by enabling you to take fewer dollars from more investors. Let's say you're raising $500,000. At an average investment of $10,000, you'd need up to fifty investors, though most companies also get commitments in their round sized at $50,000 or $100,000, or more.
In some ways, it can be easier to find many investors at $10,000 than it is to find one or two investors at $200,000 to $500,000. The risk is just that much greater when considering investing that much money.
What entrepreneurs are finding in equity crowdfunding is that there is a new way of fund-raising now available where you can spend less time trying to convince one or two single investors over three to six months to invest. Instead, by lowering the minimum investment amount into your funding round down to as little as, say, $1,000, you lower the risk exposure for any single investor, and entrepreneurs often find it much easier to get the investment and support of many investors online at these amounts.
There's no doubt that crowdfunding is changing the rules of the game for fund-raising, and investing. Don't expect the growth or innovation to slow down anytime soon.
KAY'S TAKEAWAY:
I only have one takeaway for this article: Read and follow this seven-step template. You'll be happy you did.
The Ultimate Guide to Finding Women Investors
Joshua Henderson
Five insights, nine VC funds, seven platforms and lists, ten angel groups, ten accelerators, twenty articles and five tips
Earlier this year, a Springboard entrepreneur came to us to say she was closing out her seed round and wanted to make room for a woman investor. Her cap table was about to be filled with male investors.
This wasn't the first time we've been approached at this point in the fund-raising game, and we have never encouraged our companies to find a woman investor just to check off a box.
Diversifying boards with women leaders has proven to help companies be more successful. Women see problems (and solutions) differently than men, and mixed-gender groups help create diversity of thought.
There's a strong business argument for entrepreneurs to diversify their cap table, not just their board and not just their management team.
Great in theory, but in practice so few people think proactively about instilling diversity at every level of their company. I want that to change.
Women investors are a small minority. I want that to change, too.
In the meantime, it will take time and it will take effort to find the right female investor who will be your partner and advocate. I wrote this guide to help make your search easier, regardless of your gender.
Five Women Investors on Finding Women Investors
1. Kay Koplovitz, Springboard Enterprises (sb.co) and Boldcap Ventures (boldcap.com)
Diversity on the cap table is ideal, as it widens the pool of human capital available to the entrepreneur. I learned with our first fund, Boldcap Ventures, launched in 2001 comprising forty-four women investors, that our value to entrepreneurs was our pool of resources that were different than those brought by coinvesting funds, which were almost entirely men. They sought us out because they began to realize that we had a network of people and resources they didn't tap into, and we sought them out for their expanded networks and ability to place follow on capital. I like to promote women as investors in companies needing growth capital, and also for broadening the pool of value-added investors on the cap table. Entrepreneurs and investors work best in combined efforts, men and women alike, and there is plenty of evidence in the market to support that position.
2. Lauren Flanagan, BELLE Capital USA (bellevc.com)
Recruiting top female investors, board members and senior management is smart business. Women account for 85 percent of consumer decisions and the majority of enterprise purchases. Women are starting the majority of new businesses and control 51 percent of the wealth in the U.S. Women-led companies are 15 percent more likely to be profitable and 30 percent more capital efficient. In the "new girl network," diversity is a given, and success pattern recognition favors female, serial entrepreneurs with the complete package: maturity, domain expertise, prior success and a deep understanding of customer, partner and collaborative team dynamics.
3. Joanne Wilson, Gotham Gal Ventures (gothamgal.com)
It is always a good idea to have both women and men on a board, as investors and in a company. Women and men look at things differently, they analyze things differently, they get involved differently, they share information differently and more than likely they bring a different network of people to the table. Having that diversity in any situation creates a balanced environment and in many ways better checks and balances. Studies have shown that having that diversity at any level in the company provides a higher chance of success.
There are not enough women investors and certainly it would be great to see more, but they are out there. There is always a balance for an entrepreneur behind passive investors and involved investors and that is diversity too. At every stage of growth, starting with funding, there are always challenges, but if you can find diversity from the get-go, meaning both men and women from investors to board members to employees, it is a very positive move in the right direction.
4. Angela Lee, 37 Angels (37angels.com)
I don't actually think that companies should try to have more women on their cap table for the sake of having more women. What I do think they should optimize for is 1) diversity of background so they're getting a mix of perspectives, and 2) investors that add value and mesh well with their working style. Having more women is one way to add diversity, but so is getting a mix of industry background, personality type and roles.
5. Stephanie Newby, Golden Seeds (goldenseeds.com)
Women make excellent early-stage investors. They are not risk averse-they want to be risk aware. Women want to understand before they write a check. For this reason, we created a series of investor training programs at Golden Seeds. Once committed, they become sought-after investors in early-stage companies, as they are typically very willing to offer their skills, expertise and connections to companies in their portfolio. They are extremely conscientious and are excellent advocates for their companies… 80 percent of the Golden Seeds investors are women. We love our male investors too. We truly believe in the power of diversity, so have welcomed men in our group since Day 1.
Nine VC Funds
Either with women partners or a track record of investing in women:
1. Women's Venture Capital Fund: Small fund focused on West Coast digital media and sustainability companies led by women. (womensvcfund.com)
2. Illuminate Ventures: Founded by Springboard alumna Cindy Padnos. (illuminate.com)
3. Aspect Ventures: Founded by Theresia Gouw and Jennifer Fonstad. (aspectventures.com)
4. Cowboy Ventures: Founded by Aileen Lee. (cowboy.vc)
5. Forerunner Ventures: Founded by Kristen Green. (forerunnerventures.com)
6. Starvest Partners: Founded by Jeanne Sullivan and Deborah Farrington. (starvestpartners.com)
7. Canaan Partners: Recognized by Bloomberg BusinessWeek for investing in women. (canaan.com)
8. Scale Ventures: Recognized by Dan Primack for the number of women partners. (scalevp.com)
9. Springboard Fund: Founded by Kay Koplovitz, Whitney Johnson and Amy Wildstein to invest in women-led high-growth businesses, starting with Springboard alumnae. (springboardfund.co)
Seven Platforms, databases and lists of women investors
1. AngelList: While AngelList is the de facto platform for angel investors, there is a dearth of women angels on the platform. There isn't a tag indicating gender, but there is a "women investors" market that lists many. (angel.co/women-focused/investors)
2. Portfolia: Platform of consumer-focused investors to fund women-led consumer companies, founded by Springboard and Kauffman Fellows founder Trish Costello. (portfolia.com)
3. List of Female Investors on Quora: (quora.com/Women-in-Investing/Who-are-some-notable-female-investors)
4. List of Female Angel Investors on Quora: (quora.com/Women-in-Investing/Who-are-some-of-the-best-female-angel-investors)
5. PlumAlley's Digital Database of Female Investors: Assembled by angel investor and entrepreneur Deborah Jackson. (femaleinvestors.plumalley.co)
6. TechCocktail's Femanomics List: (tech.co/femanomics-105-women-in-venture-capital-and-angel-investment-2012-05)
7. Women 2.0 list of VCs who blog: (forbes.com/sites/women2/2013/04/16/women-vcs-blogs)
Ten Angel Groups and Funds
Either all women investors or investing in women-led companies
1. BELLE Capital USA: Early-stage angel fund founded by Businessweek top-25 angel Lauren Flanagan to create an evergreen ecosystem of women investors investing in women-led companies. (bellevc.com)
2. Golden Seeds: Largest angel network investing exclusively in women-led companies. (goldenseeds.com)
3. 37 Angels: A community of women investors committed to funding early-stage start-ups led by men or women. (37angels.com)
4. Astia Angels: A global network of female and male angel investors that invests in women-led, high-growth ventures. (astia.org/content/view/337/795)
5. Women's Capital Connection: A regional angel fund investing in women-led companies surrounding Kansas City. (womenscapitalconnection.com)
6. Pipeline Fellowship: An angel-investing boot camp for women with a growing alumnae network of female angel investors. (pipelinefellowship.com/program-overview/alumnae)
7. Broadway Angels: An angel investment group made up of world-class investors and business executives who all happen to be women, investing in both male-and female-led teams. (broadway-angels.com)
8. X Squared Angels: Group of angels in Ohio investing in companies with women in senior leadership. (techcolumbus.org/technology-startup-investments/x-squared-angels)
9. Scale Investors: Australia-wide angel group and angel-training company focused on women-led businesses. (scaleinvestors.com.au)
10. Launch Angels: Early-stage firm investing in companies sourced through equity crowdfunding sites, with plans to create a fund to invest in women-led companies. (launch-angels.com)
Ten Accelerators and Coworking Spaces
Either focused on women-led companies or with a high percentage of companies with diverse teams.
1. Springboard Enterprises: Global accelerators for technology and life sciences companies led by women. (sb.co)
2. Astia: Community of experts supporting women-led start-ups. (astia.org)
3. Women Innovate Mobile: Focused on women-led mobile companies. (Each of the founders has continued to other ventures.) (wim.co)
4. 500 Women: 500 Start-ups' AngelList syndicate investing in women founders. (angel.co/500-women)
5. AVINDE: Texas-based training program for women entrepreneurs. (avinde.org)
6. Women's Startup Lab: Bay-area based accelerator and community. (womenstartuplab.com)
7. NewMe Accelerator: Virtual accelerator for diverse teams. (newmeaccelerator.com)
8. RockHealth: Health care IT accelerator with high percentage of diverse teams with a sister nonprofit, XX in Health. (rockhealth.com)
9. Upstart Accelerator: Accelerator for female founders and part of Global Accelerator Network. (upstartaccelerator.com)
10. Hera Hub: Coworking space for female entrepreneurs in San Diego. (herahub.com)
Favorite Blog Posts on Raising Capital
1. Mark Suster's six-step relationship guide to VCs. (bothsidesofthetable.com/2009/08/08/wtf-is-traction-a-6-step-relationship-guide-to-vc)
2. Paul Graham's primer on how to raise capital. (paulgraham.com/fr.html)
3. Inc.'s primer on how to raise capital. (inc.com/guides/2010/09/how-to-raise-venture-capital.html)
4. The difference between a VC and an angel pitch deck. (quora.com/Whats-the-difference-between-a-VC-pitch-deck-and-an-angel-pitch-deck)
5. Why it is critical to reference-check potential investors. (bothsidesofthetable.com/2010/12/14/why-its-critical-that-you-reference-check-your-vc)
6. NAV Fund's tips for a good first pitch. (navfund.com/blog/tips-for-a-good-first-pitch)
7. Mashable's tips for presenting to the full partnership. (mashable.com/2011/06/28/vc-partnership-pitch-tips)
8. Remember that it's not about what you say but how you make them feel. (blog.clarity.fm/pitching-hack-its-not-what-you-said-its-how-you-made-them-feel)
9. Have a lean strategy for raising capital. (venturebeat.com/2014/01/08/why-is-your-fundraising-process-waterfall-when-your-startup-is-lean)
10. Round up investors using one of these three fund-raising approaches. (medium.com/@twang/horses-rabbits-and-poker-b00d1bd56210)
11. Don't get discouraged by the reality of first-time funding. (giffconstable.com/2010/05/the-cold-reality-of-first-time-funding)
12. Learn how Alexa von Tobel got funding. (businessinsider.com/learnvest-founder-heres-how-you-get-4-million-in-funding-in-4-weeks-2010-9)
13. Read how Penny Herscher raised capital. (pennyherscher.blogspot.it/2010/09/video-interview-on-raising-venture.html)
14. Lessons from Paul Stamatiou. (paulstamatiou.com/startup-fundraising-time-sink)
15. Rand Fishkin's story of the $18 million raised for SEOmoz.com. (moz.com/blog/mozs-18-million-venture-financing-our-story-metrics-and-future)
16. Angela Haines's insights on how VCs have a different way of thinking about your business than you do. (huffingtonpost.com/angela-haines/why-pitching-investors-so_b_892333.html)
17. Chris Dixon says sell a story, not numbers. (businessinsider.com/chris-dixon-sell-vcs-on-a-stroy-not-numbers-2010-04)
18. Inc.'s take on the inside of a VC's mind. (inc.com/articles/2010/09/inside-the-mind-of-a-venture-capitalist.html)
19. The Wall Street Journal on the perspective VCs bring to the table. (blogs.wsj.com/venturecapital/2010/08/27/what-is-that-vc-really-thinking-during-your-pitch)
20. In the end, remember to be yourself: All the advice in the world can only take you so far. (nea.com/blog/recurring-patterns-be-yourself-everyone-else-is-taken)
Five Recommendations for Using These Resources
1. Do your homework.
Look at the fund's recent investments to get a sense of the regions, sectors and stages they focus on in order to better assess whether you are a fit.
2. Always go through a connection.
Find mutual connections to one of the general partners on LinkedIn and ask them for an intro. Give your connection a forwardable email under five sentences with a Dropbox link to your executive summary or pitch deck. Show you've done your homework.
3. Be politely persistent.
Investors are busy and spend a lot of time filtering potential investment opportunities. If they don't respond to your intro, don't spam them until they do. Don't give up until you get a definitive "No," but try another mutual connection, network to someone they trust and track them on social media so your follow-up pings are timely and personal.
4. Remember you need a champion.
The investor courtship occurs in stages, from first contact, to a call or meeting, to the partnership meeting, to due diligence. If you want any real shot of getting investment, you need to find your champion within the fund or angel group who will stake their reputation on you and advocate for you within the group. Make it easy for your champion to market you.
5. Don't give up.
It's going to take longer than you think, especially for first-time entrepreneurs. Recruit a "personal advisory board" to support you through the process with encouragement, connections and a dose of reality when you need it. It can be done.
KAY'S TAKEAWAYS:
Seek funding from like-minded investors.
Determine whether the amount of capital you are raising coincides with the target range of the investor.
Use community connections to get the right introductions to capital sources.
聚合中文网 阅读好时光 www.juhezwn.com
小提示:漏章、缺章、错字过多试试导航栏右上角的源