10 tips to make your startup attractive for investors [vc cafe]

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The presentation I gave at Launch48 in London 2010. How to make your startup more attractive for investors.

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  • Telling that you’re hire a professional CEO helps too (VCs love small egos to an extent)
  • If you really have no competition, perhaps you’re in the wrong businessBut, do not underestimate the first mover advantageList ALL competitors. How are you better or different?There’s a different between no competition (sound like an idiot) and no one else does what we do. There’s other companies that make similar technology, but they haven’t applied it in the same way, and their not going for the same customers and here’s how we are differentKeep it in context. Don’t fear other startups. You’re biggest fear is who owns the market. Other startups compete on funds, but not necessarily on the market. Position yourself smartly
  • Cliché but trueFor every tip I’ll give, the opposite is also probably trueDon’t underestimate a good story that takes 10 mins
  • Sell yourself – they’re investing in youIf you have a team, it shows you’re not all about ego. Say why the people that work with you are AMAZING. The advisors are for the benefit of the entrepreneur not the investorThe marriage you have with your co-founder is even stronger than the marriage with the investor. If there’s any tension, you won’t get money. Decide the responsibilities early – don’t be childish. You have to define the roles, talk about what you each want to do. You should each be talking about the stuff that you’re good at – don’t think about splitting an equal number of slides. If you’re technical – accept your role, and shut up until we talk about tech – you’re not the business guy. Or find another team - and know that things can change. It’s sensitive – put the ego asideFind the co founder with whom you’re comfortable cristising and getting crtisized
  • Read steve blank and ericreissYou know shit – your customers know shit. But all of them together know more shit than you. Don’t let feedback take you off your vision, but allow them to influence how you execute it. Try to understand where they’re coming from.Listen! Don’t’ cave in right awaySand hill road, there’s a uniform – it’s a noy’s club. Don’t get too obsessed with it.
  • Patents matter when it comes to acquisitionIn the beginning it is a nice to have to secure that the IP is protected. The lawyers can sleep much easier fif you’re protectedIf you’re pharma it is different.Technology depth depends on the investor – they want to feel that there’s real technology – in a consumer play it may be different. Graph theory, Thevc comic strip – robert von goebon
  • Don’t raise if you don’t have toEveryone wants to sell to 1%of China…It’s hard to know in the beginning what you’re niche will be. B=PIVOT if you need too. Don’t pick a niche that’s too narrow
  • Dangerous!!If you’re technology is so replicable, you’ve got a real problem.Don’t take them through the code but explain how it works.Are you going to fight them in court?Either you’re insecure or the idea is too fragile.Investors don’t signed NDAsBe very wary of who is in their porftolio– you’re idea will end up with the competitors – it is his fiduciary obiligation to share it!Part of your value is that you’re going to go do it. If you have an idea for a business – it’s not going
  • If you have a co-founder – one of you is invariably better at selling – know you’re strenghtsIf you have a close advisor that go with you on the meetings, it’s great. Use the resources you’ve got. If youre not good at it, take a co-founder…
  • Nobody looks at business plansHave it so you can send it You know shit when you write it, Conventional wisdom as cliché as iit is, in the end
  • You’re better off, if you can show tractionDo as much as possible as you can on your own (don’t develop a drug) If you build a consumer facing service you have more data, It’s better for you financiallyDon’t raise money cause you’ll have a salaryYou want to raise money only when you need to start hiring. Keep track on what you spend – expense it later (when you get the money)Get the servers, put some of your own moneyWho to raise from The best investors tend to be the most fairThe top tier VCs offer “fair” deals, not the best dealsPick a VC that has a high EQ (someone who understand the dynamics and sensitive to your needs)How much – depends on your personality as well. Even if you have money, you can still take the bus. The more money you take, the more you give up. But nothing is worse than going back and asking the well for more money. You lose face, and the investors hate it.
  • 10 tips to make your startup attractive for investors [vc cafe]

    1. How to make your startup attractive for investors<br />Eze Vidra<br />VC Café<br />Sep 24 2010<br />
    2. The secret to lightning fast funding…<br />
    3. 2006<br />2002<br />2004<br />2008<br />2010<br />
    4. 10 Tips for making your company more attractive to investors<br />4<br />
    5. Know your competition<br />[ ]<br />1<br />
    6. Articulate your idea<br />[ ]<br />2<br />
    7. Sell your team, not your advisors<br />[ ]<br />3<br />3<br />
    8. [ ]<br /> Get feedback from real customers<br />4<br />
    9. Patented technology?<br />[ ]<br />5<br />
    10. Know your market<br />[ ]<br />6<br />
    11. Open the kimono<br />[ ]<br />7<br />Photo credit: Antonio Perez Rio (flickr)<br />
    12. Be a salesman<br />[ ]<br />8<br />
    13. Business Plan<br />[ ]<br />9<br />
    14. 10 - Be honest<br />[ ]<br />10<br />
    15. Before we go<br />[ ]<br />…<br />When? Who? How Much?<br />“Short answer: [raise] enough to get your startup to an accretive milestone plus some fudge factor”<br />“As much as possible while keeping your dilution under 20%, preferably under 15%, and, even better, under 10%.”<br />NiviBabak, VentureHacks<br />Chris Dixon, <br />founder collective<br />
    16. Raising money can be time consuming. So learn and prepare to go forth and conquer!<br />16<br />Special thanks:<br />E: eze@vccafe.comT: @ediggs<br />

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