It is really good to see entrepreneurs that attend our bootcamp use some to the advice we impart and the help we offer. Brett Owens, the CEO of local startup, Chrometa, was one of our first attendees and we recently found mention of him and his company in an Inc Magzine article, Get Your Wings. It looks like our Stay in Touch thoughts in this blog and in our bootcamp are paying off for Brett.
Click here to read the article
For any product you need to understand the various market segments that exist for that product. Then you need to focus your limited time and money on the (largest) segments that bring you the fastest revenue, with the lowest cost at maximum profitability. It's no different when selling stock as an entrepreneur. The market is the investor community, and the main segments include Family and Friends, Individual Angels, Angel Groups, and VC firms.
The stage of your company, your markets, your type of company, and the amount of money you need will dictate the best segment (investor) to approach to optimize your time and chances of successfully raising money. For example, if you need $50K it is not a VC deal but more likely a deal for Family and Friends, or Individual Investors. If the amount is $500K, then focus on Angel Groups, and if $5MM or greater, it's VCs. Amounts between $2MM and $5MM can be tough; too large for Angel Group, and too small for most VCs. So the real key is how much you need and for what -- the real business milestones we discussed previously.
We've been running our seminar, Angle for Angels: A Primer for Entrepreneurs on Raising Capital, since fall '08 and more than 50 people have attended so far. We have solicited feedback in the past and it has generally been excellent. But unsolicited comments are always the best so it was a surprise when we found a commentary from one of our participants, Vadym, of Coworking in Sacramento, in his blog.
Vadym obviously gets it; there is no magic formulae to raising money but by knowing how investors view entrepreneurs and their pitches, entrepreneurs can best decide on the right path for them armed with all the pointers we provide. So thanks, Vadym, for the post; there is only one thing for us to add -- yes, it was five hours, but one hour of that was lunch on us!
Check out Coworking in Sacramento!
So you've raised some money from friends or angels. What now? Well, you go about spending it and building value on your path to the major business milestones that will allow you to raise your next money at a much higher valuation. But along the way, your investors will want to hear how things are going. Collectively, we've invested in over 20 start-ups in the past 8 years. One thing we've noticed is the worst outcomes have been in start-ups where the CEO disappears once he/she has the money. Getting information is like pulling teeth. This shouldn't be the case! Your investors want to stay in touch and be informed about how things are going, good and bad. Some of the best CEO's we've worked with send out a single paragraph every Friday night to the investors to clue them in on how things are going. While we don't necessarily suggest a weekly update is needed, you should certainly strive to send out an update at least monthly. Remember, many of your investors can give you help beyond just their checkbooks. In order for them to be of use, they need to have a good understanding of how things are going and how they can help. After-all, it was their money, and now it's partly their company too! They are highly motivated to help you be successful!
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