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TAG: Strategy

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Startup Rookie Questions-Timing, Money and Everything in Between

TheFunded.com Discussion

Posted by Anonymous on 2009-01-18

Tags: Preparation Strategy

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What to Do with $1 Mm in the Bank Company Won't Need for Another 12 Months

TheFunded.com Discussion

Posted by Anonymous on 2008-12-31

Tags: Operations Investment Strategy

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Should We Stop Fundraising and Focus on Our Mousetrap?

TheFunded.com Discussion

Posted by Anonymous on 2008-12-03

Tags: Preparation Strategy Bootstrapping

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Understanding the Process Better

TheFunded.com Discussion

Posted by Anonymous on 2008-11-21

Tags: Pitching Strategy Process

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A Pitch is a Conversation Not a Lecture

TheFunded.com Advice

Posted by sparrow on 2008-11-20

Tags: Pitching Strategy Style

PUBLIC:

It's an easy trap to fall into. You've labored on your powerpoint presentation, you got nice graphics into it, you followed Guy's advice http://blog.guykawasaki.com/2005/12/t..., you practiced your pitch, and now you're ready to rock and roll.

You're a little nervous but feeling good. You go in and start your presentation, and you're on slide two, and the VC asks "What's the business model here""
No problem, you're ready for him. "I'll get to it on slide 7, let's go through the product first."

Stop! I know it' s hard to change the flow, but expect to do it. Go ahead and jump to slide 7 and give him 10 seconds to read the slide and then explain the model. 10 seconds should be enough since you don't have that much text on a slide, or you shouldn't and even if you did, it wouldn't matter since most VCs have ADD and won't take more than 10 seconds to read anything. The one exception is anything related to finance. But to get back to my main point (VCs are not the only ones with ADD), focus on what the other side is interested in and answer the questions in the order that they are presented.
Usually, one question will lead to the next and you'll find that you're referring to the presentation as support material rather than guiding the discussion.
So why do you need the powerpoint deck" As I just mentioned, it's support material, but it also helps you make sure you've covered everything. When things slow down in the conversation or when your time is almost up, go back through the presentation, and double check that you haven't missed any critical information.
As part of the conversation you'll hear some criticism or doubt about your product, your direction or something else in the presentation. Your gut reaction is to argue, mine is. They're not getting it. Stop yourself. Instead ask question to help you clarify why their thinking is different than yours. There are several reasons to do this.
1. They don't know your company and probably the space it's in nearly as well as you do. On the other hand, they've been exposed to a lot more companies than you have. You're getting free advice. Listen to it and try to absorb. I've talked to three VCs in the last 4 weeks, and two of them gave me good insight which helps me fine tune my model.
2. If they have this objection other VCs might have it too. Listen, learnd and maybe next time you do a pitch you'll be better prepared to answer this issue, or tackle it in your presentation.
3. Arguing has the potential of making you look defensive and uncooperative. Will they really want to invest in someone with these traits.

Having said that, if they challenge one of the basic assumptions of your plan and you've considered and rejected their arguments, it's perfectly OK to present this. "Yes, we've heard from other people that they thought that the markets can't be any bigger than 250,00 users, but actually a Gartner report in Feb of 2008 shows that there are at least 5,000,000. The reason the market is understimated is that most of these people are in Asia and the web analytics don't count them."
Here you scored a point. You thought of the problem researched it, and can provide supporting data.

In summary, try to reach a good balance of give and take. Talk about your product, show that you're excited about it, but listen. I certainly try to.

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Seeking Help on Operation Decision

TheFunded.com Discussion

Posted by Anonymous on 2008-11-19

Tags: Preparation Strategy

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Seed Round: Smart Money or Any Money?

TheFunded.com Discussion

Posted by Anonymous on 2008-11-14

Tags: Preparation Targets Strategy

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Ball Passed to an Associate Before the Call?

TheFunded.com Discussion

Posted by Anonymous on 2008-11-05

Tags: Pitching Strategy Associate

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Sell the Technology or Use It to Build a Business?

TheFunded.com Discussion

Posted by Anonymous on 2008-11-05

Tags: Operations Strategy Liquidity

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To Take a Meeting or Not?

TheFunded.com Discussion

Posted by Anonymous on 2008-11-03

Tags: Pitching Strategy

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Overcoming Gatekeeper Type Hurdles?

TheFunded.com Discussion

Posted by Anonymous on 2008-10-30

Tags: Pitching Strategy Gatekeeper

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Hold, Sell, or Raise Money

TheFunded.com Discussion

Posted by Anonymous on 2008-10-30

Tags: Funding Sources Strategy Crisis

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First Agree on a Second Date Before Trying to Meet the Parents

TheFunded.com Advice

Posted by RichieBlueEyes on 2008-10-14

Tags: Pitching Strategy Terms

PUBLIC:

This is basic advice, applicable to any sales situation and a mistake people often make. If you are meeting a potential client (or investor) first make sure they are interested in your product (your company) and agree to go out again (meet again) and provide more background on yourself (your materials) before trying to to sneak into the bedroom and score (discuss terms). Often times terms come up early, I'd recommend saying "first lets see if we click before talking specifics" and drag it out a bit... a meeting or two .... before talking numbers. This way, you know there is an actual interest, potentially leading to a term sheet before entering any type of negotiation which can cause the whole thing to go sour if there is a disagreement. However, if you already are all over each other, you're more likely to settle the disagreement then storm away unhappy. This holds true for selling anything. First gain interest, then sell. Many people just jump the gun and try to sell before knowing if they customer wants anything and while it can work, it changes the tide of leverage.

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Founders Investing Back Into VC Limited Partnership Fund?

TheFunded.com Discussion

Posted by Anonymous on 2008-09-24

Tags: Closing Investment Strategy

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A Primer for Early Stage Fundraising

TheFunded.com Advice

Posted by J on 2008-09-14

Tags: Preparation Strategy Early Stage

PUBLIC:

Raising money for early stage companies has become more challenging. Traditional angels are more organized and difficult to reach. Most early stage venture funds have exited the field, and the remaining funds are (1) overwhelmed, (2) extremely focused, (3) incompetent, or (4) incubators.

Within this challenging environment, it is still possible to succeed if you know the "new" rules of the game. Here are some tips to consider with your early stage fundraising.

Structure: Almost all professional North American investments are made into Delaware C corporations. Lawyers greedily sell LLCs to charge you for conversion. If needed at inception of your fundraising, convert to a Delaware C corp structure with 2 to 5 million authorized shares to avoid closing friction.

Geography: Most angel and early stage investors focus on a strict investment region so that they can spend time with portfolio companies. Unless you are SERIOUSLY planning to move, don't bother to pitch a firm more than 100 miles away in the early stage. It's literally a waste of your time and theirs.

Traction: Every early stage investor will want to see traction before they invest, whether that is a prototype, a patent, or a committed team of experts. Gone are the days of funding a dream and a PowerPoint pitch. You alone are going to need to make the initial investment in your idea, committing both time and money to get your idea off the ground.

Relationship: Having a standing relationship with your early stage investors makes a big difference, so start attending regional entrepreneur networking events as soon as you have an idea. Don't wait until your idea is ready for prime time, as this is already too late.

Format: Avoid embarrassment by knowing about round types and raise amounts. A friends and family round is usually a purchase of common to get the company off of the ground, but can also be part of the angel round. Angel investors tend to participate in convertible debt or equity rounds that raise between $100K and $1.5 MM. Venture capitalists lead Series A rounds for $750K to $5 MM in preferred equity, sometimes more. The average Series A round varies widely by sector and geography.

Focus: More and more early stage investors are focusing, and they will rarely invest in competing businesses. This means that you should do your homework before pitching a fund. Just check their portfolio page to get a sense of what they are doing.

Pitfalls: Be very weary of convertible debt from venture funds, since, if that fund does not invest in future rounds, you will be completely unable to raise further capital. Avoid corporate venture firms, as these investors scare off other professional investors, since everyone will ask why the big parent corporation just doesn't buy you.

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Avoid Information Overload Early On

TheFunded.com Advice

Posted by J on 2008-09-13

Tags: Pitching Strategy

PUBLIC:

Many entrepreneurs send a long introductory email and attach a ton of information when contacting an investor for the first time. There is the infamous multi-paragraph email and the 30+ slide PowerPoint that includes information on the vision, strategy, technology, and financials. Sometimes there is also the executive summary and even a full business plan.

The reality is "less is more." If you can say three words and get to the next meeting, then you have succeeded. Send just enough information on the business in the body of an email to get to the next encounter. Here are some reasons why:

Relationship: Investors want to get to know the people involved as much as they want to know the business details, so most investors want to have a few interactions before making any decision. It's very rare to close a financing in one meeting and even less likely after one email. Your goal should always be to get to the next encounter.

Mistakes: Providing too much information gives ample opportunity for a professional investor to find mistakes in your work. An active investor will see dozens, if not hundreds, of deals in one month, so it's likely that you have less perfect information than they do. Don't be judged too early on by perfectly reasonable mistakes caused by your lack of information.

Trash: Given the large volume of dealflow that professional investors are seeing, professional investors are likely to look at simple deals first, coming back to deals with a lot of clutter and materials later on. If you overload your initial email, it may be either (1) thrown immediately in the trash or (2) dumped on a junior associate "to process."

Confidentiality: Your initial materials, even your initial email itself, will likely end up with a competitor and certainly with another investor. Investor confidentiality is correlated (1) the length and (2) the strength of your relationship with that investor. Even in cases of an excellent relationship that has survived over time, confidential information still manages to leak.

PRIVATE: Members Only

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Best for Negotiating Terms: in Person, Phone or Email?

TheFunded.com Discussion

Posted by Anonymous on 2008-08-17

Tags: Negotiation Strategy

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The Fine Line Between Shopping a Deal and Pissing a Firm Off

TheFunded.com Discussion

Posted by Anonymous on 2008-08-14

Tags: Negotiation Strategy Multiple Offers

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Game Theory and Syndication

TheFunded.com Discussion

Posted by Anonymous on 2008-08-07

Tags: Negotiation Syndicate Strategy

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Ways to Get Leverage Once You've Received a Term Sheet

TheFunded.com Discussion

Posted by Anonymous on 2008-08-07

Tags: Negotiation Strategy Leverage

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Pitch Feedback Requested. Please Help.

TheFunded.com Discussion

Posted by Anonymous on 2008-09-09

Tags: Preparation Strategy

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Seed or Series A

TheFunded.com Discussion

Posted by Anonymous on 2008-07-30

Tags: Preparation Strategy

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Growing Slowly with Clients and Revenue While Also Pursusing High Risk Upside Projects

TheFunded.com Discussion

Posted by Anonymous on 2008-07-25

Tags: Operations Strategy Incorporation

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CEO's Focus: Fundraising or Execution

TheFunded.com Discussion

Posted by Anonymous on 2008-07-10

Tags: Preparation Strategy

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Sereis C Investment

TheFunded.com Discussion

Posted by Anonymous on 2008-07-09

Tags: Negotiation Strategy Terms Crisis