Startup Investor Strategy


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Trying to get funding for your startup?

Tons of quick tips in this presentation to help you out.

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Startup Investor Strategy

  1. 1. Getting Investment From Angels John Schmitt 5/18/11 “Getting Investment from Angels” 5/18/11
  2. 2. Searching for Funds: So Sexy! Finding a Mate Finding an Investor Lead Generation: Networking Networking Lead Qualification: First Date First Pitch Sales Process: 2nd-3rd dates 2nd-3rd round pitch Reference Checks: Meet the family Due Diligence Closing: 95% of leads fail 95% of leads fail Existential Importance: Genes propagate or not Business survives or not >1? Usually just 1 >1 encouraged “Getting Investment from Angels” 5/18/11
  3. 3. Searching for Funds ● ● ● ● ● As founders, this is often the hardest thing you'll do. Lack of experience raising funds Tons of time spread over months You don't see results until the end You get rejected 95% of the time ● ...Even when you “win” “Getting Investment from Angels” 5/18/11
  4. 4. Start Early Start before you need $ ● 6-9 months before ● It takes time ● To find leads (fishing) ● To work on your pitch (bait) ● To reel them in (convert) ● For them to decide ● Your small startup team is likely FAST ● Moves at the speed of skype ● Don't expect investors to move nearly as fast ● Moves at the speed of banks ● Often, investors have incentives to (slightly) delay ● “Getting Investment from Angels” 5/18/11
  5. 5. The “funnel” You get leads – Your network – – the “eHarmony” for startups You do first rounds You get to 2nd/3rd rounds You get $ # of potential investors In each step, your goal: … is to get to the next step Don't over-reach Also, throughout the process, you look for more leads! “Getting Investment from Angels” 5/18/11
  6. 6. Pitch Elements Nutrition: Value proposition to customers ● Market size ● Competitive landscape ● Marketing / customer-acquisition plans ● Exit strategies (esp. relevant to investors) ● Human capital (staff, advisors) ● Cap table ● Progress to date, with metrics ● Taste: How did you change the life of a customer? “Getting Investment from Angels” 5/18/11
  7. 7. Build a Great Pitch (iteratively) Don't wait till your pitch is perfect. ● It never will be Get it in front of people soon & often ● To get feedback ● To spread the word ● Feedback on your pitch doesn't just help your pitch. ● It helps your business! ● ● Hey, what's the competitive landscape like & how do you differ? What's your customer acquisition/marketing plan? ● Even once “near perfect”, you'll still always update it: ● To customize it to each audience ● To add “fresh” metrics / progress ● “Getting Investment from Angels” 5/18/11
  8. 8. Emotionally prepare for rejection. Everyone on your team is pitching/helping ● Everyone on your team is stressed ● Even with a great business & great pitch: ● Talk to ~100+ people ● Get 2nd rounds with ~20 people ● Get 3rd rounds with ~10 people ● Get investment from 2-5 people ● That's “success” ● And that involved hearing “sorry, but no” from ~100 people. ● “Getting Investment from Angels” 5/18/11
  9. 9. Networking & SEC rules Only take $ from family/friends who can afford to lose everything they invest.... … unless you are willing to lose them Take only “gambling money” You can only take $ from accredited investors ~$1M assets (other than house) or >$200k/year income You can NOT make public offers to sell private equity No broadcasting it on Facebook/LinkedIn “Getting Investment from Angels” 5/18/11
  10. 10. Networking: How big is your network? About how many people “know you”? What % do you really like? People who know you You Like It's not just your friends who will help. Often, an opportunity is found through acquaintances, even people you don't actually like. This is where the shallow/wide social graph helps best. “Getting Investment from Angels” 5/18/11
  11. 11. Good Networking is 1:1's NOT talking to the cloud You don't communicate well on Facebook/twitter/Linkedin. Everyone shouting to a cloud Few listen You communicate (/network) best through a series of 1:1's. I'm talking to YOU. Attention, listening, change. “Getting Investment from Angels” 5/18/11
  12. 12. Facebook wall posts Twitter Borrowed from: “Getting Investment from Angels” 5/18/11
  13. 13. So? Yes, it's very difficult & long ● Go for it anyway! ● We need the $ to grow the biz ● The $ comes along with engaged investors who offer advice & help. ● It's great practice. ● Entrepreneurs love challenges ● “Getting Investment from Angels” 5/18/11