Posted by Anonymous on 2008-11-03
Tags: Funding Sources Experience
Posted by Anonymous on 2009-12-06
Tags: Funding Sources Model VC
Posted by Anonymous on 2008-08-09
Tags: Venture Business Resources
Posted by Mr.Smith on 2008-01-24
Tags: Preparation Resources
The Funded has some excellent resources for a first-time fundraise. You need to dig a little, as not all of these posts have floated to the top. Members should agree with the good posts more so that they stick out! Also, you need to be a member to see the discussion, where a lot of the good pointers are.
Overview of Fundraising:
-- The Game of Innocence
-- Avoid An Llc For Vc
-- Venture Legal: A Conflict Of Interest And A Complicated Mess
Raising the Capital:
-- Practice In The Second Tier
-- Reduce Time By Going Online
-- Pick The First Investors Really Wisely
-- Don't Confuse Raising Money With Running Your Business
-- Keep Funding Prospects Informed Of Your Progress
Negotiating the Deal:
-- The Term Sheet Shuffle
-- How To Set Valuations
-- Need Advice: What Kind Of Valuation Can I Expect"
-- Kill The Participating Preferred
-- Avoid "Participating Preferred"
-- Avoid Exclusivity
-- Closing Costs
Posted by Anonymous on 2007-11-09
Tags: Funding Sources Angels
Just reading a post about having many shareholders as a result of pitching angel groups, and it got me thinking about my own experiences. In my last company, we had two separate angel groups invested with a total of nearly 50 shareholders between the two, some shareholders with just a $25,000 total stake. This presented a tremendous headache when trying to secure shareholder approval for future rounds or a the ultimate merger. Read on for some advice.PRIVATE: Members Only (746 Characters)
Posted by Anonymous on 2010-05-21
Tags: Funding Sources Article Founders
Posted by Anonymous on 2010-01-26
Tags: Funding Sources Early Stage Myth
Posted by Anonymous on 2009-06-13
Entrepreneurs build companies and hope to make money.
Investors invest and hope to make money.
Customers buy products and hope to make money.
Advertisers advertise and hope to make money.
Employees work and hope to make money . . . . . . . . .
Using a Finder or Consultant to help you raise money is perfectly OK.
A Finder or Consultant who asks for any money upfront is not OK. If the Finder / Consultant doesn't believe in your product or service enough to base his / her compensation on the successful raising of money - then why should an investor believe in what you are doing.
The only time a Finder or Consultant should be paid is if you need extensive help with your business plan, etc. You can avoid this by creating a Board of Advisors (one of whom can help with your business plan) that would be paid in stock options down the road.PRIVATE: Members Only
Posted by Anonymous on 2009-04-10
Tags: Funding Sources Angels
Posted by SevenX on 2009-02-11
[The Founding Member has suggested that this post, originally written in response to a query on the discussion board, be reposted here for broader visibility.]
No web site site can promise to find you money. Period. In fact, perhaps the best way to figure out whether a site is legitimate is the extent to which it DOESN'T promise to find you money!
Of the various possibilities out there, there are realistically four categories, in pretty much the following order:
1) Angelsoft.net: doesn't promise anything, is primarily a site that investors use themselves, doesn't expose any of your information publicly, has by far the best free search engine for legitimate early stage funding sources, and lets you prepare and send applications and videos for free directly to a limited number of screened, legitimate investment groups. If you want to pay $250 extra, you can promote your offering by posting it in a pool that 15,000+ accredited investors (and ONLY accredited investors) can browse through. They publish their stats online, and they show that between 1.3% and 5% of posted deals get funded. So your odds are between 20:1 and 75:1 against. (As Winston Churchill said about democracy: "It's the worst form of government there is...except for all the others.")
2) Vator.tv: the biggest public pitch site, legitimate, but wide open. Good news is that it's free, and that you'll likely get a lot of views of your video. On the other hand, very few of them (if any) will be from legitimate investors. Instead, you'll probably be approached by more than a few service providers, which may (or may not) be what you want, and scammers. But it's good for general exposure, and they are adding a bunch of neat new features, including micro-blogging for company updates so that interested parties can follow your corporate news. So if you're not concerned about the public nature of the site (or if you think that's a good thing), it makes sense. (Just be very, VERY wary of any "funding" leads that result from your posting.)
3) The legitimate attempts at investor matching: there are VERY few of these out there (and virtually all are not in compliance with SEC regulations) including for-profit ones (such as FundingUniverse) and not-for-profits (such as ActiveCapital (the only truly SEC-approved, legit one) and TheFunded's sponsor, IdeaCrossing). They mean well, but have few investors (usually starting from a local group or area: Utah in the case of FundingUniverse, Cleveland, Ohio for IdeaCrossing), and the for-profit ones are not cheap.
4) Everyone else: there are several dozen of these (perhaps even a hundred or more), ranging from out-and-out scams (any one in which you get an instantaneous response promising money, asking for money, or asking for financial information), to sites that function primarily as lead-generators for service providers. I don't personally know of a single company that has had a good experience with FindThatMoney, FundFinder, GoBigNetwork, RaiseCapital, Go4Funding, etc. etc. etc.
The bottom line is that raising capital is very, very (did I say VERY?) tough, particularly in this economy, and only a teeny, tiny fraction of companies will EVER get outside equity financing. The stats suggest that's something like 0.25% for venture money, and 1-2% for angel money.
So anyone who promises you quick and easy money is either well-meaning-but-delusional (the rare exception) or a scumbag-with-a-hand-heading-to-your-pocket (the vast majority.) As a first pass heuristic, if an "angel group" is not listed on either the Angel Capital Association web site (http://www.angelcapitalassociation.or...) or the Angelsoft Group Finder (http://angelsoft.net/entrepreneurs/an...) you should be extremely wary of any claims they make...but then, of course, you would be anyway. Right? Right??
Remember the immortal words of Robert A. Heinlein: "There ain't no such thing as a free lunch."PRIVATE: Members Only
Posted by Anonymous on 2010-09-01
Tags: Preparation Founders Sources
Posted by Anonymous on 2010-01-10
Posted by Anonymous on 2009-10-01
Posted by Anonymous on 2009-01-25
As it is becoming harder to raise capital from venture capitalists, existing investors are facing situations where they need to lead new rounds in their own portfolio companies. This presents a big problem for valuations, especially if an investor only has convertible debt. Recently, I've heard a few stories about existing investors promising to lead a round, then pulling out or dramatically changing the terms. Worse, investors will sometimes string you along with a singed term sheet until you are out of cash, and then completely change the deal to take control.
Here are some tips if you think that you are going to need money in the next 18 months.
Know where insiders stand: You need to know where if your insiders will participate or lead a new financing event, and you should also ask them what their specific expectations are for your company performance. Assume that any inside round will be flat.
Pursue other options: Even if your insiders agree to lead a round, you should do your best to have an alternative financing option available. You will never get a fair price for your equity from insiders, since they are pricing, selling, and buying the equity at the same time and since they see all the warts and bruises.
Raise now, not later: Don't wait to raise money. Raising will take twice as long and will be twice as hard in this market. Try to raise enough capital to operate for more than 48 months, if you can.
When in doubt, do debt: If things are not moving fast enough and you have only three or four months worth of cash left, press your existing investors to do a convertible debt round that will give you eight to twelve months of low growth operating capital.
Insider sheet to attract outsiders: If everything else is failing, you may want to have your insiders draft a term sheet with a lot of room for new investors to participate. It's often easier to find outside investors with a "legitimate" term sheet in hand.
Good luck!PRIVATE: Members Only
Posted by Utahentrepreneur on 2008-01-18
Tags: Funding Sources Location
Unless you're an entrepreneur in the major tech markets, you are essentially raising money "in the middle of nowhere" (in the minds of the investors in the major tech markets!) Frequently these smaller markets may have a small cadre of venture type investors (sophisticated angels or VC firms). For the unwary entrepreneur, pitching in local markets first can actually backfire! Members, read onPRIVATE: Members Only (2214 Characters)
Posted by Anonymous on 2008-07-14
Tags: Preparation Resources
Posted by treeman on 2008-03-30
Tags: Funding Sources Experience
i am astonished to find that some VC's still dont understand that ad networks pay their publishers. the worst of the lot seem to be those VC's that have an enterprise background.
So unless you are pitching a conventional deal where buyer pays seller, just avoid these and you will say a lot of time and hassle.PRIVATE: Members Only
Posted by anon on 2007-11-20
Tags: TheFunded.com Resources
Not trying to make more work for you Ted but...
I would like to see a Glossary of VC terms added to this site. It is something I would have found very useful several years ago and I am sure many people must feel the same way.
Its one thing for a VC to explain that he is going to have a Step-In trigger, its quite another knowing what they could mean for you if it is envoked!
Posted by calbin on 2009-11-04
Initially my business partner and I were so enamored with our idea that we didn't get feedback from our potential cutomers. This lead to a two year journey that should have taken 6 months.
Early on my partner and I said that we were not going to put our families in jeopardy for our venture. No credit cards. No risky loans. No robbing our 401k. We stuck by that and it was a wise choice.
From the outset we received tons of accolades from friends and family so we went to investors who said they liked our idea but couldn't figure out who was going to pay for it. The gift came in two forms 1) Not getting funding early which would have almost certainly been spent on a dead end road and 2) forcing us to make our idea stronger and better.
What our lack of funding made us do is go back to basics. We know we had the seed of a good idea but struggled to come up with a sustainable model. Along with lots of hard work we talked with potential customers and came up with a solid way to generate revenue. Our potential customers are now signing letters of support saying they like our product and find it beneficial for their business and are willing to be contacted by investors. We have never had this in previous attempts to raise money and now feel confident in our plan.
A potential investor we met early on who now heads an angel fund believes in our new plan and is working to get us funding. Our CA lawyer helped us craft a very sharp executive summary and in the next few weeks will begin making warm introductions.
Don't despair if you haven't gotten funded yet. It could be a gift in disguise.
So what I am asking of The Funded community is can you recommend any investors/angels/groups/VC's in the consumer space (specifically investors who might have a penchant for wine)? Thanks in advance and I will keep the community posted.PRIVATE: Members Only
Posted by Anonymous on 2009-10-08
Posted by Anonymous on 2009-02-11
Posted by fnazeeri on 2008-09-02
Tags: Funding Sources Angels AngelsSoft
This service launched today....I heard about it last week from the company (which was reaching out to bloggers in advance of the launch). While I haven't used the service (and I'm in no way affiliated with the company) it sounds pretty interesting. The company (AngelSoft) has been around for 4-ish years and provides a software solution for about 400 angel networks representing about 10K HNWI. The software is used to manage deal flow, diligence, funding and exit. Now they've launched an addition where entrepreneurs can "insert" their deal into the pipeline.
You can read more here http://www.altgate.com/blog/2008/09/p... including a video overview/demo.PRIVATE: Members Only (331 Characters)
Posted by Anonymous on 2008-07-12
Tags: Preparation Resources
Posted by Anonymous on 2008-04-20
Tags: Funding Sources Contests
Each year over 160 small startups apply to the CCTO for recognition of their new clean tech technology. The contest is "supposed" to determine who has promising clean tech technology in five categories. The sponsors of this tech event pay lots of sponsor fees. The contestants are well treated with lots of educational events, food, beer, wine and pseudo comradeship.
Beware of the innocence or do good image of the CCTO organization. This is a commercial enterprise that wants to take your technology to benefit themselves. Some of the Utility sponsors actually want to thwart your business. Some of the CCTO sponsors are professional "green washers". While they say one thing in public, behind the scenes they are doing activities that will undermine your renewable business technology and strategy. Take for example all of the CTTO Utility sponsors are opposing pending 2008 legislation in Sacramento AB1807 and AB1910 that would significantly reduce Green House Gases in California. These bills are mirror bills of successful European Renewable programs that now has 445 million people operating under a Feed in Tariff (FIT). A FIT would significantly grow the market for renewable energy in California over 20x+ from the paltry .2% to a significant market share. The California CCTO Utility sponsors and their hired lobbyists are doing everything behind the scenes to thwart AB32 (mandates reduction of GHG's) and keep the status quo.
The sponsors and judges seek competitive business plans and technology. Contrary to publicly stating they they reveal the names of the judges at or before the judging event, the CCTO keeps the names of the judges top secret to allow the sponsors and their associates to have free access to any of your private and confidential business plan materials. You would never give your business plan to your competitor but if you compete in the CCTO, your best plans, technology and business strategy is being given to your competitors for free analysis. Would you want your business strategies resold by a consultant to a competitor" Would you want your pending patents scrutinized by a competitor so they can clone them. The patent attorneys at the Wilson Sonsini firm represent some of your competitors. Do you educate your competitors.PRIVATE: Members Only (848 Characters)