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MenuDo a start-up should search for angel financing between seed and round A even if it's burn rate is low and have a budget to operate till round A?
There was a seed investment in my startup. The seed investor tends to run the idea on third parties and get an experience in pitching/negotiating while searching for an angel investment. Even if the outcome is negative the experience might give us feedback on the idea itself. It's a first startup for both of us. The reason not to do it - distraction of valuable time on preparation with lower probability to get financing and falling behind the schedule for round A.
Answers
Raising money is a choice, if you can self funded until the concept is proven and you start getting traction, don't give up equity early on. In any round, you give up a piece of the pie, the longer you are able to self fund, the better the end result for you.
You will be in strong position if you are able to stay out of asking for funding early on, but remember you need to have a good hold of the market and your numbers to understand when
My personal rule is... I only start businesses that self fund easily.
If I can turn an idea into a first sale, by end of day, I figure the idea is of little value.
If you can turn ideas into profit rapidly, with zero investment, then your business will succeed well.
You might find it good to hire someone to walk through your business with you + figure out how to simply refine your current business model to produce high profits.
This will instantly fund your business, so you can stop pitching + start profiting.
Do a bridge round only if you need the funds for critical operations. If you can postpone it or manage till A then avoid it, so that you get best valuation and retain more equity.
Related Questions
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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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What metrics are investors looking for in a fashion/clothing/apparel startup?
Team is more important than the startup itself. Investors prefer invest in the Jockey over the Horse. There may be n number of reasons for not getting through the funding rounds. If your startup is able to provide 10x return I can invest straight away. However, I will look at the team first and foremost and then I will look at the management skills and then I will come to other metrics like traction and scalability.DS
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Is it unusual for a founder to seek to cash out some equity as part of a fundraising round?
Angel Investors will understand that you have a need to draw a salary... but the idea of taking their cash and putting it to personal use would be a "no-go". If you were on your Series C of Venture Capital, raising $100M and you wanted to sell $3M of shares to buy yourself a nice house, for instance, that might be okay. But if you're raising $500k and you want to pocket $50k of that to clear your credit card debt (for instance), that would be a deal-killer. Two reasons: (1) it shows the investors you're not great at managing your own funds, and (2) it's hard enough for a company to survive and grow with the investment that Angels provide — they definitely expect every penny to go into the company's growth. That said, if your profits are strong and the reason for the equity sale doesn't set off 'red flags' (i.e. family medical expense?), maybe you can get away with it. But remember: investors get pitched by hundreds, even thousands of candidate companies. That's your competition. Some of those companies look just like yours, and *don't* have a founder who's looking to use some of their cash for an early exit. So, it would be a significant strike against.AS
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How long should a founder invest on creating a pitch deck? Are there any pitch deck templates? Should I have the deck reviewed by a pro investor?
A good deck doesn't sell a terrible story, but a bad deck can ruin a great story. Your primary goal should be to distill your story down to 10 slides max, with as *few words as possible* on each slide. Images, product shots and graphs are all more impactful than words. A good outline is as follows: 1) Vision 2) Problem 3) Market Opportunity 4) Team 5 & 6) Product Details 7) Traction / Evidence 8) Competitive Differentiation 9) Plan of attack / use of proceeds 10) Contact info / closing point. Happy to review your deck over a call. I've helped hundreds of Clarity founders with framing their investor presentations.TW
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How to facilitate a perfect introduction to a potential investor on Linkedin.com through my connections?
Just because two people are connected to each other on LinkedIn, doesn't mean that these two people have a strong connection to one another. So first, ask your Mentor directly whether (s)he knows this person well enough to make an introduction. Also, I'd suggest that instead of asking that the introduction be made via LinkedIn, that the introduction be made directly via email. The way this best happens is to email your mentor with a two paragraph email explaining why it is that you want an introduction to this person and explaining why you think this person would want to meet with you. Then your mentor can forward this email directly to this person with a request for an introduction. If the person replies to your mentor, your mentor will then connect you two directly. If the investor is interested enough to accept an intro, then you'll likely get a 30 minute to 1 hour in-person meeting or call scheduled. In terms of what that investor will be looking for, I've written a lot of answers to questions around seed-stage financing that I encourage you to review. I'm happy to schedule a quick call to give you some specific feedback on where you're at and how investors might perceive your progress to date. Best of luck with this connection!TW
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