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MenuCan a new startup raise its first 50K financing round via crowdfunding platform w/o a VC backing? What are the best deal incentives for the investor?
Assuming there is a functional product built, intial traction, paid customers & team in place. This is a software technology startup and as such please refrain from examples from any irrelevant platforms such as Kickstarter/Indiegogo.
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You are asking one question and inferring another. Do you want to know if it is possible to raise that amount on a crowdsourced site or are you asking for the best crowdsourcing site for your fundraising?
In short, yes. It is entirely possible to raise that level of funding without a VC and on crowdsourced platforms.
You obviously need to know the differences between "general public" crowdsourced audiences and professional VCs; they are looking for different returns. The casual crowdfunder is generally looking for something tangible (that is why sites like Kickstarter work so well) as well as a financial incentive.
VCs are looking for a return on their investment.
The casual crowdfunder is more likely to be sold on the idea of getting in on the ground floor and being part of something bigger than their usual life.
If you can clearly identify what problem your product is solving, and who will benefit, you can build your incentives around complementary frustrations and painpoints.
If your product is an accounting application for small business, for example, find partner services that also help small businesses.
If you have other questions, or I wasn't specific enough in some areas, please book a call with a couple of times that work for you and we can dig deeper.
To your succes,
-Shaun
First of all let's specify there are different kinds/models of crowdfunding platforms for business. There are reward based ones like Kickstarter/Indiegogo, and these are usually used as sort of pre-selling platforms; it seems it's not at all your case! There are, instead, equity crowdfunding platforms, that probably match with what you need. Some examples are EarlyShares, Crowdcube, Fundable or maybe Angelist too can fit very well for your startup, even though it's not exactly a crowdfunding platform, but I'd say better a crowdsourcing platform. In each case, still, you'll have to deal with VCs and investors, and satisfy their questions and requirements. What changes, mostly, is that you can get a higher audience. If, instead, you're looking for revenue shares platforms, I reviewed about 400 international platforms, and I looked a lot for one like this, but no one is really working with real revenue shares model (and probably it's not at all easy to do!). In case you need to dig in more, I'd be glad to set a quick call. All the best!
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How do you get exposure on AngelList to attract angel investors?
What of the following things does your startup have? > Founders who have graduated from prestigious universities / previously exited companies to known acquirers / worked for a known companies (with known being a brand-name company such as Google, Amazon, Facebook etc) > Three or more months of statistically meaningful growth (e.g. for easy sake, double digit growth of a number in the thousands) > At least one investor who is active on AngelList (defined in the ideal state by at least one investment in a company who raised their round through AngelList and ideally whose social graph is connected to "high signal" members of the AngelList network) If you have none of these things, then at least, have advisors and referrers who have a strong AngelList profile. And another option is to seek out the AngelList scouts and pitch them directly. They are more open to this than anyone else and I've seen companies with very little traction and very little social proof get featured because a scout believes in the founder and/or the story. Without any or most of the above, it will be difficult to stand out or build relationships via AngelList, in my opinion. I assume now AngelList operates on a concept similar to the LinkedIn "degrees of connection" model, whereby an entrepreneur can now send unsolicited messages to investors so long as there is a degree of connection between the investor and the company. I get a few unsolicited emails a week from companies whose advisers or investors aren't people I follow but that because of the way they determine "connection strength", these unsolicited emails still gain my attention. I assume this is the case for all investors. So the more that you can build your list of advisers and referrers, the more connections you can solicit. That said, AngelList's inbound email system is almost entirely ineffective for "cold" emails to really high-profile investors. Happy to share with you what I think to be your best options for raising profile for your company.TW
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Looking for guidance for where I can find investors for my app?
As Ken suggested, there is a wide breadth of mobile offerings and although there are some great "mobile only" funds, each investor / fund has their own thesis that makes them interested in some but disinterested in others. Also, if your revenue generating, you should seriously consider bootstrapping further. Revenue is treated very strangely in early-stage investing and *might* work against you. AngelList is a great way to research investors but not effective in actually connecting with them. Find investors who you are confident will be passionate about what you're doing based on prior job experience or what you know they are investing in. Happy to talk in a call to help explain this further if you need more clarity.TW
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How do startups figure out their pre-money valuation when when talking to investors before their company is making any money?
I'm both an active angel investor and entrepreneur who has recently raised capital. I'll start with what is standard in Silicon Valley and then apply various multiples and discounts where relevant. For an angel or early seed round, the current going rate is $3m-$5m pre-money via a capped note or priced round. Priced Rounds typically most often use the "Series Seed" docs and Convertible Notes typically are 18-24 month terms with a 15% discount. I don't mean to be argumentative but Marco is incorrect that valuation can be avoided by a capped note. And in general, there is no way to avoid setting a valuation except via an uncapped note, which is almost unheard of. Setting your cap and discount will have a significant impact on your cap structure, the same (and in some cases) worse than a priced round. This $3m - $5m range is what I'd call current market value in the valley for "ideation-stage" capital. This is that there is a team in place, typically some form of MVP and in some cases some very basic market data supporting the general thesis of the raise. In the other market I'm familiar with (Canada), the range for the same stage of capital is $1m - $3 with most being in between $1m and $2m and most preferring priced rounds over notes. These rounds rarely have a real lead since the raise is typically $500k or less, so if you price it reasonably, most (good) angels will accept the terms as is. The low and high end of the ranges are discounted and pushed by the credibility presented most often by the team (done it before, worked for a notable company, had some relevant success) or strong evidence of the thesis being correct. It's also the Founder's option to price the round at the top end of reasonable or provide what you might consider a discount, depending on the kind of investors you are courting. So while this is what I'm seeing as "current market conditions" there is price elasticity in any market. The best way you know if you've priced it right, is if people are buying. Any angel investor should be able to give you a conditional answer after the first meeting (subject to playing with the product, reading terms, meeting the rest of the team). Any angel investor in ideation stage capital who can't give you a yes, no or subject-to yes in the first meeting is not worth pursuing IMO. Any investor who can't close within 3 meetings or conversations won't close (9 times out of 10). Happy to talk to you about the specifics of where you're at, what might help you improve your odds and generally get you closer to the point where you're ready to raise.TW
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Among platforms for startup funding, AngelList is the 800 pound gorilla. Does it make sense to use simultaneously other platforms like Gust, etc?
Short answer: Of course! Many angel groups require you to submit through Gust because it offers a consistency and makes reviewing applications easier. But not all use Gust same as not all use AngelList... I haven't met an angel who frowns upon using multiple platforms. I would encourage you to leverage your twitter and Facebook or Instagram to meet angels and get in their radar (don't hassle or stalk) just try to get exposed a bit to them by being part of the same meetup group, follow the same blog, membership... Subscribe to their own blog.. And when you submit funding request considerations do please send a follow up email or a call or basket of fruits if you have contact them before.HV
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