FUNDING CRITERIA

To anyone doing a startup, “Time matters”. Owen mentioned that committing large amounts of time to R and D is a bad mistake.
Timing has to be in your favor, things have to be aligned. Your technology and the timing is key. You can build something great but is there a demand for it?

Owen recommends 2 person teams, I hear this magic number a lot, google, yahoo, etc. Startups with 2 founders is the magic number. It shows a demonstrations team work, difference in dynamic. With a team of two you have a sounding board.

Another key thing is to have a prototype complete.

Showing you have tech leads on as founders is the DNA of the company it is important. Moment by moment technology changes.

Angels and VCs like to see a good sized market, show a clear path to revenue.

TYPE OF STARTUP COMPANIES

Network Effect
-Hard to invest in these
-Risk
–e.g.: Gaming companies
–e.g.: iPhone apps
–e.g.: YouTube lost 40 or 50 million a year
-not real innovation

Application Oriented
-look at market
-build an application
–e.g.: ticketfly.com
–e.g.:quickbooks

Innovation
e.g.: google’s rank algorithm
e.g.: Advertising space, customer segmentation of ads
Investors believe or don’t believe in the innovation you have.

Some companies have pricing power, if coke raised it’s prices they would be ok.
If a copper wire company raised it’s prices it would take a toll on them

Some examples of companies that have a little higher prices are:
zappos.com has customer loyalty.
Amazon charges more then others.
Wholefoods charges much more then others.

Team
Having a good team culture is important.
Be honest and be transparent that is what is important.

WHAT MAKES A COMPANY FUNDABLE
Big Market
Team

A “good business” is not necessarily fundable.
A lot of great biz that will be successful without funding.

GOOD TRENDS
-how do u derive meaning out of data
-New ways to data mine
-Project management tools
-Online learning
-Digital advertising
-Billboard industry
-Local search
-Building a better Craigslist
-Building better Email

I believe the best way to do this is to find someone who can make a warm introduction for you via email. Then taking it from there. If you can find someone that you know who knows the investor.

Sending an email without knowing an investor before hand is hard because investors get 100′s of email a day from potentail companies to invest in.

Listening to Jason Calacanis’s on the podcast This Week In Startups he talks about the best way to contact investors via email. Some great advise from him, never send powerpoints, don’t email investors at strange hours of the night with your business ideas. Screenshots or a URL are good. Listen to these few minutes, they are very good: mp3.

Howard Morgan from First Round Capital says he will never open a .doc file. He doesn’t want to get a computer virus.

This is the email:

Hi Mr [THEM],

This is dot dot dot, I’m taking on this market, I’d love to tell you more if your interested. Here is my URL.

[YOU]

Generally an investor will pass you a term sheet, this is something that is non binding but is a layout of how the company will change, what the investor expects and if it is a good term sheet will motivate the startup team to progress the company.

Some more intesting info on term sheets:

• How to Negotiate a Term Sheet, Part I

Some terms you should know about term sheets:

• Drag Along Rights

Types of investments an investor will make:

• Convertible Debt

Rolling

• Nate Westheimer (NYTM Organizer, Flybridge Capital Advisor) has been holding weekly office hours for some time (Fridays 11:00-12:30).
• Rose Tech Ventures holds weekly office hours (Wednesdays 4:00-5:00pm).
• David B. Lerner (Director Columbia Technology Ventures) holds Office hours for people associated with Columbia University (by appointment).

One day only

• RRE is holding office hours Friday March 12th
• Flybridge Capital Partners is holding office hours Wednesday March 3rd.
• Dogpatch NY – Polaris Ventures is holding office hours February 18th
• Zelkova Ventures is hosting office hours February 26th.

The Startup Success Podcast, Sramana Mitra and Bootstrapping

It was a great event, very informative and the presenters took an interesting approach to telling everyone about how VCs think and work.

Information on the presenters at the Bootcamp:

Check out the video of the whole talk below! The presenters go overview of the VC industry, the venture capital fundraising process, company formation types (LLC, corporations, etc.), term sheets, and what to do after investment. There’s also a discussion about whether VC funding is right for you and your business as well.

The video runs just over three hours and you can listen to the audio while working.

The slides from the event:

2)
Talk about product.
(e.g.:iPad product)

3)
Talk about how we are going to generate revenue.

4)
Your needs
e.g.:
2-3 biz dev people
Higher a PR agency
Bring on developers

5)
Money and how much you are asking for and the time.

6)
Exits for investors and us.

Taken from David Rose:
VC Pitches is about investing in the PEOPLE!
Angel pitches are ~15 minutes or under
VC pitches are less then 30 minutes
-1) You must show integrity
-2) You must show passion

Just some side notes, never say the following words to investors, they invalidate previous things you mentioned!:

• Honestly
• Truthfully
• To be Frank
• Frankly
• Not for nothing
• Realistic
• Kind of