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MenuHow do I find investors for my startup?
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There are many different kinds of investment that you might be looking for. I am afraid you will need to provide further details about your startup's niche, your investment goals, etc. before recommending any particular path. There are angel investors, there are VCs, etc. and also incubators / accelerators depending on what your business is and at which stage it is. Be sure to have a well-researched estimate of how much money you need to raise. I would be happy to discuss the possible options for you over a call.
Wow, this is a really broad questions. Is this your first funding round? A seed round? A series A? do you have revenues? Do you have a product?
Some very general points:
1. Decide if you want just money or 'smart' money i.e. an investor who can contribute more than just cash.
2. Can you raise at least 50% of it from your own network? If so you might consider Crowdfunding.
3. Do you have a lead investor? even if they are investing a minority of the round, this will make it easier to find other investors.
If you can give more information, I will be able to help further.
Start with friends and neighbors while looking for other sources. But in the end you will probably be happy if you don't have to get too many outside investors.
Take the first steps above, work your ass off, build passion and doors will open.
Best of Luck,
Mike
From the Trenches to the Towers Marketing
I will be glad to help as my time permits.
I have always thought of company investors the way boards at non-profits think of their board members with "The 3 Ws". Those 3 Ws being:
-Wisdom
-Work
-Wealth
Depending on how far along your startup is your company might need board members to have one, two or three of these W's. But any non profit and startup will tell you if the person has enough of wealth you're willing to make compromises on their wisdom and the work with which they can help you
Related Questions
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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
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Any opinions on raising money on Indiegogo for an app?
Apps are difficult to fund on IndieGoGo as few are successful, and we rarely take them on as clients. Websites like http://appsfunder.com/ are made for that very reason, but again, difficult to build enough of a following willing to pay top dollar for an app that could very well be free, already existing in the marketplace. A site that is gaining more traction you may want to look into would be http://appsplit.com/. Again, Appsplit Is Crowdfunding For Apps specifically.RM
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What roles should the CEO and CTO have in a VC meeting?
The more important first impressions to leave a VC with are: 1) That you both are credible and inspire confidence that you can execute the plan you're fundraising on. 2) That there is good chemistry and a great relationship between the two of you; 3) That you can adequately address the concerns/objections/questions the VC raises. The CEO is expected to do most of the talking because the CEO should be the best person in the company at articulating the vision and value of the product and company you're building. If your CTO is comfortable presenting part of the pitch, it would be ideal for the CTO to speak to the product slides. The most important thing is for the CTO not to be a "bump on the log" meaning that you don't want them sitting there for most of the presentation with nothing to say. If you feel that's the case, you really shouldn't bring your CTO. Most VC meetings will not get technical and under the hood. Each question answered should be answered by the person best qualified to speak to that question. You should make eye-contact with your partner and use subtle body language to find a way to cue the other person to speak to that question or simply offer "CTO, would you like to answer that?" Bottom line, make sure that the CTO can speak confidently enough about the product and vision, otherwise -unless specifically asked by the VC - come alone. Fundraising is a big distraction to building and a good VC will always respect that in a first meeting, the CTO can be excused from attending in priority of building product. Happy to talk to you both on a call about helping get you feeling a bit more confident and prepared before your meeting. I was formerly a VC associate for a $500m fund and have raised money from VCs as a serial entrepreneur.TW
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When raising money how much of equity do you give up to keep control? Is it more important to control the board or majority of shares?
It entirely depends on the kind of business you have. If you have a tech startup for example, there are pretty reliable assumptions about each round of funding. And a business plan and financial forecasts are almost totally irrelevant to sophisticated tech investors in the early stages of a company's life. Recent financial history is important if the company is already generating revenue and in that case, a twelve-month projection is also meaningful, but pre-revenue, financial forecasts in tech startups mean nothing. You shouldn't give up more than 10-15% for your first $100,000 and from that point forward, you should budget between 10-20% dilution per each round of subsequent dilution. In a tech startup, you should be more nervous about dilution than control. The reality of it is that until at least a meaningful amount of traction is reached, no one is likely to care about taking control of the venture. If the founding team screws-up, it's likely that there will be very little energy from anyone else in trying to take-over and fix those problems. Kevin is correct in that the board is elected by shareholders but, a board exerts a lot of influence on a company as time goes-on. So board seats shouldn't be given lightly. A single bad or ineffective board member can wreak havoc on a company, especially in the early stages of a company's life. In companies outside of tech, you're likely going to be dealing with valuations that are far lower, thus likely to be impacted with greater dilution and also potentially far more restrictive and onerous investment terms. If your company is a tech company, I'm happy to talk to you about the financing process. I am a startup entrepreneur who has recently raised angel and VC capital and was also formerly a VC as part of a $500,000,000 investment fund investing in every stage of tech and education companies.TW
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How important is a co-founder when it comes to raising capital?
I'm a single founder who was raised angel and venture capital. If your business is compelling enough, you could raise angel funding. But there is little chance you can raise venture funding without a team in-place. It's a negative signal to institutional investors that you haven't been able to lock down a committed team. That said, depending on the nature of your product and traction, it sounds like you might be past the stage of recruiting a cofounder and more into hiring a great team of employees. The differentiation being less title and more the amount of equity. It sounds like you are selling a physical product so the question is whether you have built the capacity to scale. If not, the importance of having someone on your team who has done that at scale, even at the angel level of funding, could be helpful if not required. Happy to do a quick call and give you more contextual advice.TW
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