Posts tagged: Funding

Pitching Perfect: Fundraising fashion right now – The One Page Pitch

By , August 24, 2013 9:27 am

For years start-ups have been sending investors and other potential funding sources their business plans. With more and more start-ups pitching these days, and funders having less and less time to review them all, a new trend is emerging about how to approach funders.  It’s the one-page pitch. Get to the point immediately.   Here are some basic questions the answers to which should be included:

·         What’s the problem?
·         How are you solving it?
·         Who’s your customer?
·         How will your solution make money (your business model)?
·         What stage is your company in right now?
·         How much money are you looking for?
·         What are you going to do with the funds?
·         What’s the payback horizon and how much return will the funder get on their investment?

What’s really good about the one-page pitch is that it can be a significant way to force you to clarify, condense and articulate your ideas.

John Ason, an angel investor, often speaks about the one-page pitch:  he has approximately 1-3 minutes to look at your idea. And it had all better be on that one page. And not single spaced with no white space on the page. If it’s not visually inviting, he won’t read it. John always offers very pointed and amusing illustrations of how he wants to invest. When asked what John looks for in a management team, his answer includes passion but he also says the combined age of the two principals should not be more than his age.  Another, related to return on investment, is that the payout should not extend past his lifetime – his event horizon (as is that of many investors) is a 10x earnings return on his investment in a reasonable time frame (usually less than five years).

To learn more about John, how he works, what he looks for when investing, what he’s invested in etc.
http://www.johnason.com/

Check out Martin Zwilling’s post on pitching angel investors – BTW these points hold true for VC and other pitches as well.
http://www.alleywatch.com/2013/08/10-guidelines-for-pitching-angel-investors/?goback=.gde_3032640_member_267586133#

Here’s a first time funder’s story
http://viniciusvacanti.com/2013/04/16/lessons-learned-raising-6-million/

 

Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.

Interesting Article & Event

By , November 10, 2012 11:01 am

Interesting Article:

Venture Capitalists and Investors
http://onstartups.com/tabid/3339/bid/91669/Surprising-Insights-From-HubSpot-s-35M-Mezzanine-Round.aspx

 

Interesting Event:

Hatchery – Are You Serious? – November 14, 2012
Wednesday, November 14, 2012 from 6:00 PM to 8:30 PM

http://ays1114.eventbrite.com/#

The Hatchery invites serious entrepreneurs to take part in its next open pitching event on Wednesday evening, November 14. Presenters will have five minutes to pitch their product or startup to a panel of angel investors. The panel will provide candid feedback and guidance on steps to improve the pitch for actual investor presentations. Further, the panel will provide opinions on whether the products or firm are commercially viable. Typically, panelists have seen hundreds of pitches from startup firms, and have a good feel for the ability of a new company to create a successful launch.

 

Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.

Funding Your Business

By , August 11, 2012 11:21 am

What do Angels and Venture Capitalists have in common?

Have you often wondered what the difference is between an Angel inventor and a Venture Capitalist? There really isn’t much difference except for the size of the investment in your business.

Angels are private investors who are looking for a better investment and return than traditional investment schemes, like in the stock or bond markets. The age of the company and other specifics are on their checklist: early or formation stage and they look for a payback and a return on their investment where revenues are between $2 million and $10 million. They would usually expect preferred stock in return for their money which would pay semi-annual interest for the use of their money. After 5 to 7 years they would expect to be paid back and exit.

Venture Capitals are on a higher plane than Angels and can be private equity funds. They invest in early stage companies expecting a high return for the high risk involved where revenues are in excess of $10 million. Venture Capitalists look for companies with a defensible market position, strong management team, positive EBITD and discernible growth characteristics.

So what do these Angels and Venture Capitalists look for, you may ask? Think about the program Shark Tank seen on ABC-TV on Friday nights. You may have seen Angel investor Kevin O’Leary quizzing the presenting owners of small companies. He asks, “How am I going to increase my investment?” “What are your goals for the business?” “I don’t like your valuation!” “What are your margins?” “What are your sales and in what timeframe?”

What is making him salivate or not over the company’s products? These attractions are not unlike what the Venture Capitalist looks for. Take a look at the following:

1.   Unique or proprietary products or services. A patent owned by you is a plus.
2.   Existing sales are evidence of consumer demand where revenue growth is greater than 20% to 50% year to year; gross margins are over 40%; and with a lean management team.
3.   Increasing sales would be the result of their investment by marketing or hiring additional personnel, which they will  oversee.
4.   Realistic valuation based on your sales and profits
5.   Exit strategy must be included in your plans, like selling the company or merging with another company.

While some of you may say that seeking funding from these people is not worth it. Think of this. If you did not have their investment you would not be able to grow your business faster, gain market share and have the benefit of their expert opinion and management expertise. Their contacts and relationships would help you gain clients and suppliers for increased revenue and growth. So it is worth it, but make sure that you benefit from the relationship as much as the investor would. It is a two way street.

Margo Moore teaches BE 261 Starting a Small Business, CEO 001 Setting a Course for Your Business, CEO 002 Knowing Your Market, and CEO 003 Formulating Your Financial Strategy.

A Contest No Small Business Can Afford to Ignore

By , July 21, 2012 9:12 am

The contest is sponsored by Daily Candy. The exposure is unbelievable. All you have to do is enter:
http://www.dailycandy.com/startsmallgobig/index.html?vwink=DC:Email:EDIT:NYC:20120716:16:771575:57

Daily Candy contest

 

Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.

News From the Fund Raising Front

By , July 14, 2012 10:06 am

The recent New York Venture Summit, held by young StartUp Ventures, was characterized, as it always is, by high quality panels of venture capitalists. While each panel focused on a different topic, the underlying theme is always “who will VCs find fundable” . The attendees, in addition to the VCs, were mostly companies who were presenting or otherwise seeking funding. They all want to know, “how do I get money?” and “how much is it going to cost me to get VC money?” YoungStartUp Ventures is focused on the funding of all types of technology so temper some of the comments below with your own experience in the fashion industry.

Some key insights, echoed numerous times by various VCs, and sometimes contradicted by themselves (see last bullet), about the current fundraising environment and what they are looking for:

• If you’re starting a company, the average time from startup to IPO (initial public offering) is approximately 10 years. Are you and your team passionate enough about your business concept that you can go this kind of distance?

• Two guys in a garage with a good patent lawyer is still a viable startup model.

• Stay focused.

• Have a good idea of how much money you want to raise.

• Test your key assumptions.

• Creativity on the part of management is a big plus.

• On the whole VCs are looking for the quality of the idea, how will you create value from it, and the team. Some VCs focus more on the idea. Some focus more on the team. One VC, after mentioning passion, quality of the idea, and the team brought up this insight: Gates, Zuckerberg, Ellison, Jobs, etc. would never, ever, be “the team” a VC would bet on. Go figure.

So there’s the insights. Use them as you see fit.

For a more general venue for fundraising that includes fashion companies, consider SeedCamp http://www.seedcamp.com/2012/06/back-in-the-big-apple-apply-to-seedcamp-new-york-by-sunday.html

Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.

VC TIPS ON RAISING $$$ — Read and heed

By , July 7, 2012 10:02 am
shutterstock_96005933

Image provided by Shutterstock http://www.shutterstock.com

On June 28 I was a sponsor and attended the New York Venture Summit sponsored by youngStartup Ventures. The event is geared towards tech – medical, IT and green/clean/sustainable companies. But there are also several VC panels which give attendees valuable information/advice about all areas of funding. The advice I heard applies to all companies. So I thought I’d share with you the key points echoed across multiple panels.

On the first panel I attended, this nugget showed up: VCs are more inclined to fund — or at least look kindly upon — a company that has a management team that has done it before. If a VC sees a recognizable name on the team, all the better.

The next gem was in answer to a question I posed — what’s your advice to a pre-revenue company to get your attention and funding? Alex Suh, Managing Director of California Technology Ventures, said, show me a quick animation of how your product works. So many start-up companies can’t do this. Now in fashion, depending on your product or service, that may be redundant because the fashion itself is the product and of course you’re showing it. But if you’re a fashion IT company, or provide some other product, take the information to heart.

On a later panel I heard some different (and perhaps contradictory) advice which was to focus on the quality of the idea and the value creation as well as the team. And an interesting point was raised about the team — if you look at Zuckerberg (Facebook), Gates (Microsoft), Ellison (Oracle), Jobs (Apple) not a single one of those people would have inspired investment by a VC when they came with the idea – in fact each of those people probably would have turned a VC off. Go figure.

Not sure you want VC money? Here’s a success story from a company that turned down eight figures:

http://www.businessinsider.com/jimdo-turns-down-vc-money-2012-6

Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.

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