Loading...
Answers
MenuI have recently created a profile in AngelList https://angel.co/datacusp ? I have few questions relating to this from experts.
Answers
This is a very complex question.
I have personally gone through funding, I've used angellist and other platforms for this purpose. The reason for needing funds is not a concern for you at this time. Your concern is approach. Focus on that.
Check out my blog
Http://Unthinkeverything.blogspot.com
I have some books listed there that I recommend, I particularly did benefit a lot from the Presentations one that is there on the right in my blog.
Your goal is to craft an image that engages with a certain type of Persona, similar to what you should do when crafting a marketing strategy to sell your product. Then make that pitch, angel profile, landing page, pitch deck... All speak to that persona only. All you have to do is convince one person, but if you trysts focus on pleasing everyone you'll end up with nobody. That's often true because investors go for the people running the business not the MVP or idea alone. Even a great idea if not presented correctly will lose opportunity.
To give you more detailed insight and guidance give me a call. This is not easy but it is a lot of fun!
Hey buddy more than happy to help. I work as director of the brokerage for Angel Investment Network i've raised money personally for over 125 start-ups. We spend our whole life pitching start-ups, I have an evernote file the length of a playing field of investor feedback and we track metrics on all the pitch decks we send.
Here are my pieces of advice for what they are worth:
(I've put an answer under each of your questions).
1. I know for a fact that my offerings has value in the market but how do you see this as a potential?
I looked up your business - for any other readers here is the context.
DataCusp
Sales and Marketing Intelligence Solution
DataCusp is knowledge based outsourcing endeavor aimed at providing database solutions and research services to its clients across industries and domains.
Okay first thing I would say is, a product can be exceptionally complex but the explanation can be simple. You must jargon bust it will really hurt you.
You have about 3 minutes with a pitch deck to get an investors attention, on Angel List i'm guessing you have even less. Having to decipher what something actually does because of convolution can really hurt your chances of getting funded. Your job is to spend hours trying to get that message as tight and simple as possible, so an investor has that 'ah ha' moment. We sometimes spend 2-3 hours per mailshot to our database to articulate the problem as simply as possible.
I think there is a fear that simple, without acronyms = a bad business or a simple business. This simply isn't true, it just means a skilled communicator.
Watch this Ted Talk by Gemma Godfrey (sums it up pretty well).
https://www.youtube.com/watch?v=J7ABM4WNybI
I actually went to your website and it is still unclear to me exactly what you do.
I think the message should focus on 'the value' you add to the client e.g. cost, speed, reliability.
2. How to find and approach the right investor?
I think investors with domain experience will get your business faster than a 'non specific' angel. Angel List is a fantastic platform, also try Linkedin. Key to Linkedin is to keep the message very brief. I receive 10-20 Linkedin pitches a day and honestly they need to get to the point really quickly or else I just get lost in my daily work load.
3. What else can be done to make our profile interesting for investors?
You need to quickly address proof points
- potential clients
- sales pipeline
- testimonials from happy customers
- how quickly you can generate reports
- what cost saving
Your project isn't 'sexy' B2C, so over emphasis on the product will bore people. An interested investor can rummage into the product later, at the moment you are focusing on a hook.
4. Since, we are a start-up, we are trying to raise capital for sales, marketing and operational related expenses, do you think of us having any chance of generating some fund?
Certainly, however, sales & marketing is always treated with suspicion. Huge budgets are blown on 'sales & marketing' especially if the channels remain unproven. You will need to back up exactly where this capital will be deployed most effectively. VC's rarely invest unless these channels are proven because they just want to focus on cash in and spinning the CPA (cost per acquisition) vs LTV (Life Time Value) of the customer wheel.
At the moment, if I was being firm and professional. I would say you may get investment, but I would say you would struggle, the proposition isn't grabbing me. I am not suggesting this is a floor with the business but just a case of tightening the messages.
5. How do I calculate valuation considering that we have just started getting the traction with only few customers?
Valuation is what the market will pay for it. This takes into account laws of:
- Scarcity
- Supply and Demand (how many investors are fighting for how much equity)
etc.
Please avoid discounted cash flows etc from accountants, they always over value businesses. The way most investors in the US will look at it, is route to upside. E.g. how can you hit your 10x and how hard will that be and can you go beyond that.
6. Where else should we be pitching?
7. What collateral should we have ready?
Collateral? I imagine this would be a simple equity for cash swap? I don't think collateral would be necessary unless you are looking to service convertible loan notes?
If you would like any more info please feel free to get in touch.
Related Questions
-
What do (bootstrapped) startups offer to new sales hires? Commission only? What are some good examples to keep people motivated and still survive?
Generally bootstrapped startups should avoid salespeople, for a few reasons: a. they typically can't afford the base and overall comp required to attract sales people who can actually sell / or afford to support them with marketing, management, etc b. it will be very difficult to find the rare person with the right mix of sales and startup DNA along with the critical domain knowledge, consequently the startup is likely to settle c. the founders need to be very involved in the selling and customers will demand it That said, if the plan is still to hire a salesperson, find someone who has demonstrated sales success in startups and is excited by the early stage in company building. Create a comp plan heavily leveraged on sales results (unless you are in an industry where 100% commission is a common practice, would recommend against $0 base as this creates the false impression that your hire isn't passing time with one company while looking for another job with a richer comp plan - you want your rep focussed). Sell the vision and opportunity to be part of a growth story. I have written a several blog posts on hiring sales people into start-ups. You might find these useful: http://www.peaksalesrecruiting.com/ceo-question-should-i-learn-to-sell-or-hire-a-sales-person/ http://www.peaksalesrecruiting.com/start-up-sales-and-hiring-advice-dont-stop-selling-once-you-hire-your-first-sales-rep/ http://www.peaksalesrecruiting.com/hiring-start-up-sales-reps/ http://www.peaksalesrecruiting.com/startups-and-salespeople/ Good luck!EB
-
What is a normal churn rate for b2b saas company with an average monthly revenue of $850 per customer? Is 10% of the total monthly sales high or low?
10% of the total monthly sales churning on an absolute basis is near fatal. That means that within 5 months, you have 50% absolute churn per year, which reveals fundamental flaws with the service itself. Anything above small single digit churn is telling you and your team that customers are not seeing enough value in your product. I'd start by doing as many exit interviews as you can with those that have churned out, including, offers to reengage at a lower price-point while you fix the issues that matter to them. Happy to talk through this in more detail in a call.TW
-
How can I become an idea person, as a professional title?
One word: Royalties This means you generate the idea and develop it enough to look interesting to a larger company who would be willing to pay you a royalty for your idea. This happens all the time. Rock stars, authors and scientists routinely license their creative ideas to other companies who pay them a royalty. Anyone can do it. Your business, therefore, would be a think tank. You (and your team, if you have one) would consider the world's problems, see what kinds of companies are trying to solve those problems, and then develop compelling solutions that they can license from you. You have to be able to sell your idea and develop a nice presentation, a little market research and an understanding of basic trademark and patent law. The nice thing about doing this is that if you develop enough cool ideas you will have royalties coming in from a lot of different sources, this creates a stable, passive revenue stream that requires little or no work to maintain. Start in your spare time and plan on the process taking 3-5 years. Set a goal to have a few products in the market that provide enough revenue (royalties) to cover your basic living expenses. Then you can quit your day job and dedicate more time and increase the momentum. A good idea business should have dozens, if not hundreds of license contracts generating royalties. It's possible to pull this off. And it is a fun job (I'm speaking from experience).MM
-
How much equity should I ask as a CMO in a startup?
Greater risk = greater equity. How likely is this to fail or just break even? If you aren't receiving salary yet are among 4-6 non-founders with equivalent sweat investment, all of whom are lower on the totem pole than the two founders, figure out: 1) Taking into account all likely outcomes, what is the most likely outcome in terms of exit? (ex: $10MM.) Keep in mind that 90%+ of all tech startups fail (Allmand Law study), and of those that succeed 88% of M&A deals are under $100MM. Startups that exit at $1B+ are so rare they are called "unicorns"... so don't count on that, no matter how exciting it feels right now. 2) Figure out what 1% equity would give you in terms of payout for the most likely exit. For example, a $10MM exit would give you $100k for every 1% you own. 3) Decide what the chance is that the startup will fail / go bankrupt / get stuck at a $1MM business with no exit in sight. (According to Allman Law's study, 10% stay in business - and far fewer than that actually exit). 4) Multiply the % chance of success by the likely outcome if successful. Now each 1% of equity is worth $10k. You could get lucky and have it be worth millions, or it could be worth nothing. (With the hypothetical numbers I'm giving here, including the odds, you are working for $10k per 1% equity received if the most likely exit is $10MM and the % chance of failure is 90%.) 5) Come up with a vesting path. Commit to one year, get X equity at the end. If you were salaried, the path would be more like 4 years, but since it's free you deserve instant equity as long as you follow through for a reasonable period of time. 6) Assuming you get agreement in writing from the founders, what amount of $ would you take in exchange for 12 months of free work? Now multiply that by 2 to factor in the fact that the payout would be far down the road, and that there is risk. 7) What percentage share of equity would you need in order to equal that payout on exit? 8) Multiply that number by 2-3x to account for likely dilution over time. 9) If the founders aren't willing to give you that much equity in writing, then it's time to move on! If they are, then decide whether you're willing to take the risk in exchange for potentially big rewards (and of course, potentially empty pockets). It's a fascinating topic with a lot of speculation involved, so if you want to discuss in depth, set up a call with me on Clarity. Hope that helps!RD
-
How much equity is typically taken by investors in a seed round?
From my experience I would not advise you to go with Venture Capital when you're a start-up as in the end they will most likely end up screwing you. A much better source for funding would be angel investors or friends/family. The question of how much equity should I give away differs for every start-up. I remember with my first company I gave away 30% because I wanted to get it off the ground. This was the best decision I ever made. Don't over valuate your company as having 70% of something is big is a whole lot better than having 100% of something small. You have to decide your companies value based on Assets/I.P(Intellectual Property)/Projections. I assume you have some follow up questions and I would love to help you so if you need any help feel free to call me. Kind Regards, GiulianoGS
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.