Funding your ideas (angel or VC) - thoughts and ideas

Funding your ideas…
T.A. McCann

I just like to start things,
go fast and push the technical limits,
and work with great teams
to create incredible results
Background

Incubation
Microsoft - Hosted Exchange, MS Anti-spam, Exchange 2003, Mobile SDP (think iPhone app store), MSR
Polaris - started Message Gate and worked on ideas like Evenflow, OutlookBI and HelpShare
New companies including MOD Systems and Jump2Go
Vulcan (Evri – Virtual Worlds, Faceweb, Gist)
30-60-90 plan
Triage, Plan, Prototype, 4Ps of marketing, Company or Kill
Lessons learned: it always takes longer, pick a customer you want to embrace,
Know your own space

Where does it come from…
Your bank account
Bootstrap (work for hire)
Bootstrap from customers
Strategic investment by partners/customers
Angels
VCs
Choose what you need and can get…
The bigger the idea, the more latitude and connections and experience you will need to succeed

So, you really want investors….
Angles take just as much time as VCs
Relationships are key;
develop them now with all funding sources
vet your ideas, early and often, discover your champions
Other CEOs are your friends, leverage them
Your plan is your plan
Raise money at the right time
Plan – Promise – Prototype – Product – Performance

VC is about smart money…
Accelerates value as soon as they get involved
Brings smarts and experience to help to drive
Actively engages with your product and market
Brings credibility, higher likelihood of more funding
Brings people, knowledge, connections
Know what you are looking for (skills)

It’s a sales process
Qualify your prospects
Who you know, focus on personal intros
Previous investments/success in the space
General beliefs about future innovation (in your space)
Key connections with thought leaders (in your space)
Fund progress
$ total size, allocation, room for new investments, stage focus
Current success
Decision makers and process
Board member – how many boards, of what type, activity, commitment
Do your diligence on the person, find other CEOs
Drive the process and timeline
Align to the calendar (your milestones, their rhythm)
Show a vision (not too much)
Define a horizon and hit it
Create competition for your deal
Gang up your work, you need to drive the process

Why you…
25% of the VC decision is out of your control
Wrong space, wrong size, wrong partner, wrong metrics, wrong time, already invested, once burned…
You have the goods, act like it – exude confidence
My read on their decision
50% is the guy/team – smart, passionate, credible, connected, leader, motivator, tactical/strategic….
25% is the space/idea – how big, how much risk, how many other players, capital risk, likely exits…
25% is the progress, execution – can you get stuff done, good decisions, efficient with capital…

Summary
If it were easy everyone would do it
Love your customers more than your idea
Raise the smartest money you can
Know where to spend and save
If you were rich, would you still be doing it?

T.A. McCann
tam@gist.com
http://tamccann.blogspot.com
http://www.twitter.com/tamccann
http://www.linkedin.com/in/tamccann
206.229.9991

Strategy – magic quadrant
Create the smallest circle that is big enough
You can only change 1 thing/quarter
This is your elevator pitch
Lessons learned: it should not be complicated

Strategy – know your customer
Personify your customer
Focus on pain vs. opportunity
Know 10-50 by name
Sell them your PPT
Make sure they pay
Understand their toolset
Determine their buying habit and timeline
Lessons learned: this is the fun part and you should love it, iterate quickly

Operations
Plan and Pitch in PPT (lies), Operate in Excel (truth)
Time bound and list your goals – stay honest with yourself
Deliver email status updates every 2 weeks to your investors/board/advisors
Always cut yourself off one quarter earlier than you need and 2 quarters before you think you should
Lessons learned: good entrepreneurs will make too many sacrifices

Team
Winning the Americas Cup is like running a startup
Value = 5(passion) + 2(brains) + 1(experience)
The best advisors are only one small step away from conflict of interest
Outsource routine tasks, hire for thought leadership
Know your service providers (Atlas, Fenwick…)
Startups should never partner with startups

You are the VP of Marketing
Make yourself a brand and thought leader
Goto and present at conferences
Become a guest contributor
Communicate online and in-person
Blog (1-2 per month)
Twitter (1-2 per day, blend of personal, content and business)
Facebook (connect to Twitter and your blog)
LinkedIn
Understand what resonates, the message the space and timing, the competition
Sell, Sell, Sell your idea and yourself

Tools that cost very little money
Open source stack
Prototype + LowPro, Ruby/Rails, Java, AMQ, MySql
Textmate/Netbeans, SVN, Rspec, CruiseControl
Google is our friend
Google Domains (mail and docs)
Google forms (interview and VC feedback tracking)
App engine – web site hosting
Analytics – web data tracking
PBWiki – corporate plans and broad strategy, Unfuddle – bug and feature database and Skitch – screen caps and comments
Soft Layer – hosting, Amazon S3 – storage
Survey Monkey - end user surveys, Vertical Response – keeping the beta users engaged and GotoMeeting- presentations, TweetDeck– monitoring the Twitter stream

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Funding your ideas (angel or VC) - thoughts and ideas

by T.A. McCann

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