Getting Investment
From Angels
John Schmitt5/18/[email protected]
Searching for Funds: So Sexy!
Finding a Mate Finding an InvestorLead Generation: Networking
NetworkingLead Qualification: First Date First PitchSales Process:
2nd-3rd dates 2nd-3rd round pitchReference Checks: Meet the family
Due DiligenceClosing: 95% of leads fail 95% of leads fail
Existential Genes propagate Business survives Importance: or not
or not
>1? Usually just 1 >1 encouraged
Searching for Funds
As founders, this is often the hardest thing you'll do.
Lack of experience raising funds
Tons of time spread over months
You don't see results until the end
You get rejected 95% of the time...Even when you win
Start Early
Start before you need $6-9 months before
It takes timeTo find leads (fishing)
To work on your pitch (bait)
To reel them in (convert)
For them to decide
Your small startup team is likely FASTMoves at the speed of
skype
Don't expect investors to move nearly as fastMoves at the speed
of banks
Often, investors have incentives to (slightly) delay
You get leads Your network
Angel.co
the eHarmony for startups
You do first rounds
You get to 2nd/3rd rounds
You get $
In each step, your goal:
is to get to the next step
Don't over-reach
The funnel
# of potential investors
Also, throughout the process, you look for more leads!
Nutrition:Value proposition to customers
Market size
Competitive landscape
Marketing / customer-acquisition plans
Exit strategies (esp. relevant to investors)
Human capital (staff, advisors)
Cap table
Progress to date, with metricsTaste:How did you change the life
of a customer?
Pitch Elements
Don't wait till your pitch is perfect.It never will be
Get it in front of people soon & oftenTo get feedback
To spread the word
Feedback on your pitch doesn't just help your pitch.It helps
your business!
Hey, what's the competitive landscape like & how do you
differ? What's your customer acquisition/marketing plan?
Even once near perfect, you'll still always update it: To
customize it to each audience
To add fresh metrics / progress
Build a Great Pitch (iteratively)
Everyone on your team is pitching/helping
Everyone on your team is stressed
Even with a great business & great pitch:
Talk to ~100+ people
Get 2nd rounds with ~20 people
Get 3rd rounds with ~10 people
Get investment from 2-5 people
That's successAnd that involved hearing sorry, but no from ~100
people.
Emotionally prepare for rejection.
Only take $ from family/friends who can afford to lose
everything they invest.... unless you are willing to lose them Take
only gambling money
You can only take $ from accredited
investorshttp://en.wikipedia.org/wiki/Accredited_investor ~$1M
assets (other than house) or >$200k/year incomeYou can NOT make
public offers to sell private equityNo broadcasting it on
Facebook/LinkedIn
Networking & SEC rules
About how many people know you?
What % do you really like?
It's not just your friends who will help.
Often, an opportunity is found through acquaintances, even
people you don't actually like.
This is where the shallow/wide social graph helps best.
Networking: How big is your network?
YouLike
People who know you
Good Networking is 1:1's NOT talking to the cloud
You don't communicate well
on Facebook/twitter/Linkedin.
Everyone shouting to a cloud
Few listen
You communicate (/network) best
through a series of 1:1's.
I'm talking to YOU.
Attention, listening, change.
Borrowed from:
http://headrush.typepad.com/creating_passionate_users/2007/03/sxsw_interactiv.html
Facebook wall postsTwitter
So?
Yes, it's very difficult & long
Go for it anyway!We need the $ to grow the biz
The $ comes along with engaged investors who offer advice &
help.
It's great practice.
Entrepreneurs love challenges
[email protected], 5/19/11
Getting Investment from Angels 5/18/11 [email protected]
