earle27Brendan, thanks so much for this. Great job pulling it all together in a useful format with helpful recommendations. QUESTION: At the time of their seed stage raising efforts, what was AppMakr's stage as a company (or traction)? Had they launched yet or no? If so, what were the details? Thanks!10 months ago
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matter33My name is Miss matter Garba,i saw your profile today on (slideshare.net) and became intrested in you,i will also like to know you the more,and i want you to send an email to my email address (mattergarba56@yahoo.com) so i can give you my picture for you to know whom i am. However i believe we can move on from here! I am waiting for your mail to my email address above.(Remeber the distance, colour or language does not matter but love matters alot in life miss matter. (mattergarba56@yahoo.com)11 months ago
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Daniel McGuire, Founder & CEO at SKINNYpricesThis was great. A lot of entrepreneurs here at MassChallenge were just talking about this new way to raise capital. You hit the nail on the head. Thanks1 year ago
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45ideas -, Angel Investor at 45ideas9 year old 4th grade boy Rishi making a business idea pitch at Startup Weekend! Entreprenurs getting younger...very cool!
http://www.youtube.com/watch?v=48SZYmASY7c1 year ago
Nathan Beckord, Principal and Lead Consultant at VentureArchetypes, LLCSuper stuff. Noob entreps read in TC about all the startups raising money and assume it's easy; these numbers tell it like it is-- namely, that it's harder than it looks. And it comes down to (focused) hustle.2 years ago
Anatomy of SeedAn inside look into a $1M seed round. Brendan Baker @brendanbaker
Ringleader Collaborator Support Daily Schooling AngelList8000 startups reviewed with Daniel Odio AngelList, hundreds of Co-‐founder of Appmakr. conversaCons with founders www.danielodio.com Official Supportabout their fundraising, daily schooling from Nivi and Naval, engineering and business at Cambridge and Oxford. Appmakr lets anyone launch e: brendan@ox1.co their own iPhone app with no t: @brendanbaker Marc Ventresca, Oxford Economic w: www.brendanbaker.co coding. Over 5,000 apps have sociologist, expert in new market q: www.quora.com/Brendan-‐Baker been built, with 55M total user formaCon: hLp://bit.ly/htkT3l sessions. Anatomy of Seed Brendan Baker
We wanted to see what afundraising process looks like fora startup and get an inside look at how the industry is changing. Anatomy of Seed Brendan Baker
So we analyzed 500+ emails from Appmakr’s first raise to map the path they took through investor networks to raise $1M. The result? !Thoughts for startups and investors. Anatomy of Seed Brendan Baker
We tracked all kinds of stuff:The key actors: RejecCon Funding Seed Funds Angels VCs Intros InsCtuConal Actor
This is what it a seed round looks like. See for yourself: http://brendanbaker.co/anatomy.pdf! Anatomy of Seed Brendan Baker
It wasn’t easy. 173 Actors 55 VCs 55 Angels 28 Seed Funds Results 27 Middlemen 5 Corporate130 Rejections 2 Institutions14 Commitments 1 Angel Group Anatomy of Seed Brendan Baker
How do they all stack up? Anatomy of Seed Brendan Baker
Angels v Seed Fundsv VCs Anatomy of Seed Brendan Baker
Seed funds give big.Appmakr raised an average of $6.9K per potential investor, but not all were equal*: 15 Dollars per contact (‘000 USD) 12.3K 10 5 6.4K 5.5K 0 Seed Funds Angels VCs * Ridiculously small sample size. Will this hold with more cases? Anatomy of Seed Brendan Baker
But seed funds also took forever to decide. VCs and angels were quicker to respond. VCs 20.4 days Angels 22.4 days Seed Funds 29.8 days0 10 20 30 Response Time (days) Anatomy of Seed Brendan Baker
Old Style v New Stylev Time Wasters Anatomy of Seed Brendan Baker
There were three clear paths in the data: Old Style New Style Time Wasters Anatomy of Seed Brendan Baker
Old Style The process was driven by aninfluential first actor, whose weight carried to help Appmakr getdownstream intros and investments.( It propagated through interpersonal networks, and was driven by dynamics within these networks. ) Anatomy of Seed Brendan Baker
How the Old Stylers invested1 Started with a supernode, in 3 There were more commitments from this case a well-connected downstream intros. angel. 2 Several commitments emerged from the first intros. Anatomy of Seed Brendan Baker
New Style The process was facilitated by a credible market intermediary. Investors made decisions efficiently, without making new intros. ( It played out more like an efficient market, where investors evaluated the good (i.e. startup) and bought or not. ) Anatomy of Seed Brendan Baker
How the New Stylers invested 3 There were few downstream intros and no downstream1 Started with an ecosystem intermediary. In this case it’s 2 Investors efficiently declined or committed. commitments. AngelList. Anatomy of Seed Brendan Baker
Time WastersThese intros just wasted Daniel’s time and energy. None of them amounted to anything. ( The trick is to identify the time wasters early. More on that later. ) Anatomy of Seed Brendan Baker
How the Time Wasters invested (or didn’t) 3 There’s one late commitment, but Daniel1 There are many new introductions, but at already knew him. most 3 at a time. 2 None of them led anywhere Anatomy of Seed Brendan Baker
QWhat if you can’t tell the Time Wasters from the Old Style?Should you use tools to try the new style? Anatomy of Seed Brendan Baker
i.e. New Style v [Old Style + Time Wasters] 13.8K 10 Dollars per contact (‘000 USD) 10.4K 5 3.4K 0 New Style Old Style (incl Time Wasters) ATry the New Style (i.e. use tools). Appmakr found AngelList to be 3X more efficient than non-AngelList. Anatomy of Seed Brendan Baker
Thoughts for Startups and Investors ( From the analysis and Daniel’s experience.) Anatomy of Seed Brendan Baker
Startups 1Fundraising takes longer than you think. Be ready for the grind. Anatomy of Seed Brendan Baker
Startups 2There are periods of low investor activity. Avoid late summer and winter holidays. Anatomy of Seed Brendan Baker
Startups 3A large amount of your funds may come from a few people. These are your super nodes. Find them and support them. Anatomy of Seed Brendan Baker
Startups(however,) 4A large number of intros will lead nowhere and will waste your time. Don’t invest much in these interactions. ( Daniel’s Rule of 10: ‘If I don’t get >10 intros from someone, I’m not going to invest a lot of time.’ Use at your own peril! ) Anatomy of Seed Brendan Baker
Startups(Let’s take a quick pause…)How do you tell a super node from a time waster? Or aproductive investor from an unproductive one?1They’re willing and able to make a bunch of intros.2 Their eyes light up and they excitedly push a crumpled check into your hands3 You have a pre-existing relationship with them4You see phonein$3K and email less than $2K.)averaged $11.5K, them person. (In-person meetings Anatomy of Seed Brendan Baker
Startups It’s probably not about identifying themimmediately, so much as amplifying support for your super nodes and reducing the time and energy drain from your time wasters. (OK, back to the list…) Anatomy of Seed Brendan Baker
Startups 5With investors, there are leaders and followers. You’ll have higher conversion after getting a committed investor or two. Anatomy of Seed Brendan Baker
Startups 6 There are tools that can help. Use them when it makes sense.( ) AngelList, Techcrunch Disrupt, Venture Hacks, Founders’ Institute, Y Combinator, Launch.is, University competitions, Angel Groups General Assembly, AngelPad, Bootup, i/o Ventures, Hackers and Founders, NYCSeed, Founder’s Den, Seedcamp, General Assembly, Founder’s Roundtable, VC open house days, 160 Vark, Sunfire, Meetup groups, AVC.com, TheFunded.com, 500 Startups, Bothsidesofthetable.com, LinkedIn groups, chrisdixon.org, Techstars, steveblank.com and many more. Anatomy of Seed Brendan Baker
Startups 7Information is becoming more publicStartups can now build more with lessGet used to being open about yourtraction and raise details. Anatomy of Seed Brendan Baker
Investors 1 The market for early stage capital isbecoming more efficient. How does that affect your own approach? Anatomy of Seed Brendan Baker
Investors 2Proprietary dealflow quantity and quality will decline as a driver of returns. Anatomy of Seed Brendan Baker
Investors 3Market intermediaries (i.e. new startup tools) are gaining importance. More will come. How can you exploit these? (e.g. Start Fund) Anatomy of Seed Brendan Baker
Investors 4Advisory will become more important than connective.( Old school: “we can make introductions for you.” New school: “we can help you understand how to scale to 3M users on X platform.” ) Anatomy of Seed Brendan Baker
Investors 5 Reputation is gold. It will continue to gain importance in the near term as information becomes more public. Anatomy of Seed Brendan Baker
Thanks Startups: for building kickass companies. Investors: for helping them get there. Daniel Odio: for access to his email and story. Marc Ventresca: for guidance and a deep understanding of market formation.@mingyeow, @naval, @michaelaiello, @cjwake for feedback on ideas and first drafts. * Anatomy of Seed Brendan Baker
* Anatomy of Seed Brendan Baker
* 1 This is only one data point.The next 10 startups we map will confirm or refute the first findings. Anatomy of Seed Brendan Baker
* 2 Is post-hoc email tracking accurate enough?I think so. Even if the meeting is by phone or in person, there is rarely a meeting that isn’t set up or followed up by email these days. Anatomy of Seed Brendan Baker
* 3 Definitions are imperfect.So is the mapping. Judgments had to be made about what is VC v seed fund, what were really intros, engagement start and end, etc. Anatomy of Seed Brendan Baker
* 4 What about existing networks?It would be fascinating to overlay this onto a map of existing relationships (ex: ‘investor X made 5 of 30 potential intros’). If anyone wants to do this, get in touch. Anatomy of Seed Brendan Baker
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http://www.youtube.com/watch?v=48SZYmASY7c 1 year ago