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Podcast title Investor Connect Podcast
Website URL http://investorconnect.org/
Description Hall T Martin interviews angel and venture capital investors on how they invest and talks with CEOs who discuss their sector and what to look for. Hall T Martin also leads the Startup Funding Espresso series in which you can learn about startup funding and investing in the time it takes to have an espresso. https://investorconnect.org/
Updated Wed, 26 Feb 2020 04:41:58 +0000
Image Investor Connect Podcast
Category Business

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1. Founder Vesting
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Description: I’ve talked with numerous startups who has a founder that no longer works with the company and has taken their equity with them. One solution to this problem is called Founder Vesting   Many startups choose to structure the founder shares as restricted stock. This reserves some shares which must be “earned back” by the founder over time.  The longer the vesting schedule the more shares the founder earns.  The corporation holds the restricted shares until vested. Vesting founder’s shares incentivizes them to stay with the company and remain engaged with the business.  If the founder leaves early, then the unvested shares could be used to compensate their replacement.   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!  

2. Investor Connect - Episode 343 - Henry Yoshida of Rocket Dollar
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Description: In this episode, Hall welcomes back Henry Yoshida Founder and CEO of Rocket Dollar Inc. Rocket Dollar was founded in 2018 with the belief that retirement is changing. They believe that people should not be limited in their investment options as they work towards the retirement they envision for themselves. Rocket Dollar makes it safe, simple, and fast for people to take control of their retirement savings. Henry is a successful entrepreneur and an experienced angel investor. He was the founder of the venture capital-backed robo-advisor retirement plan platform Honest Dollar (acquired by Goldman Sachs), and MY Group LLC (acquired by CAPTRUST), a $2.5 billion assets under management investment firm. He was a Merrill Lynch Vice President, and proudly serves as a Central Texas Angel Network Partner, Techstars + Capital Factory mentor, and NextGen Venture Partner. In this episode, we catch up with Henry and what he has been up to since our previous episode. Since we last spoke, Henry has been progressing his business and spending most of his time on the entrepreneur operator side of things. He shares some of his investing experience with both the best and worst experiences he has encountered and shares what he ultimately thinks is key- balance. In a startup, you have to come to work and you have to execute every day, but there's always a limited lifeline for every startup by definition until it's no longer a startup.  

3. Pari Passu
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Description: The terms sheet sets out terms such as Pari passu, Last Money in Rules, Exclusivity and confidentiality, and Conditions of Financing Pari passu is a Latin phrase meaning equal footing and without preference. This clause basically states that if the startup issues any new classes of stock then it shall have equal rights with prior classes. This applies to liquidation preferences, voting rights, and so on. The term prohibits the founders from creating a new class of stock that puts existing investors second in line. Last Money In Rules term says whoever puts in the most recent funding calls all the shots. The exclusivity term seeks to prevent the founders from engaging other investors for some period of time. A 30-day duration is typical. Tied closely to the idea of exclusivity is the confidentiality clause. The investors do not want the founders to reveal any deal terms or other information to competing investors. Conditions of Financing terms require founders to formalize items such as employment and non-compete agreements with the startup and legal assignment of all inventions and other intellectual property to the startup entity. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

4. Investor Connect - Episode 342 - Nick Iovacchini of KettleSpace Inc.
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Description: In this episode, Hall welcomes Nick Iovacchini of KettleSpace, a New York City-based drop-in coworking that partners with local businesses. A former college baseball player, Nick has been an entrepreneur since leaving college. He used his experience in the restaurant space to co-found KettleSpace as a way to provide affordable coworking spaces as well as support local restaurants. Nick discusses the advantages of a partnership between coworking and food service. He also highlights some of the challenges in the space and provides advice for investors looking into the coworking sector. Finally, Nick talks about the future of KettleSpace, and why he believes it will translate to markets beyond NYC.

5. Drag-along Rights & Protective Provisions
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Description: The terms sheet sets out Drag along rights and Protective Provisions Drag along rights give the investor the right to force the shareholders (founders and others) to sell the startup. Drag along rights are common in VC deals. The primary reason for a drag along rights clause is that the lead investors want out and require others to join. Protective provisions state that if the founders want to take any action that might affect preferred shareholders’ investments, the founders have to inform the preferred shareholders and get their collective approval first. Here’s a list of common protective provisions: • Merge, sell, or liquidate the company, or any transaction that results in a change of control of the company. • Change the capitalization structure of the company • Issue stock senior to or equal to the stock held by the preferred share investor( s). • Change the certificate of incorporation or bylaws. • Change the composition or size of the board of directors. • Pay or declare dividends. • Take on a debt obligation such as a loan. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

6. Investor Connect - Episode 341 - Manuk Hergnyan of Granatus Ventures
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Description: In this episode, Hall is joined by Manuk Hergnyan co-founder and managing partner of Granatus Ventures. Granatus Ventures is the first Venture Capital firm in Armenia to provide funding, expertise, and networks to promising technology-driven startups based in or having core value-add activities in Armenia. Granatus Ventures is backed by an experienced team of investment professionals with a passion for building great companies. Granatus was established in 2013 and has offices in Yerevan, London, and Singapore. Manuk is the founder and managing partner at EV Consulting, a leading management advisory and corporate finance firm, with offices in Yerevan and Moscow. In this episode, Manuk shares his thoughts on what he is most excited about in the industry as well as advice to new investors and startups. He says that being in the venture-capital industry, it provides you with new opportunities every day. The startup ecosystem in Armenia is in very dynamic evolution. There are new and exciting opportunities in deep tech and companies that apply scientific knowledge and discoveries for commercial opportunities. Some of the applications help address the most fundamental problems that humanity and societies are facing. There is a lot of power of technology to solve those issues.

7. Information Rights
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Description: The terms sheet sets out the Information Rights for the investors.   The Information Rights section defines what information and reports are required and the reporting schedule, and sometimes which investors are entitled to receive the information. The standard set of financial reports that investors require include profit and loss (P& L) statements, balance sheets, and cash flow statements. For early stage companies these are typically unaudited financials. For a startup that is up and running, founders should recast the business plan as an operating plan that clearly outlines the key milestones the team intends to achieve. Typical milestones for a growing startup include sales goals, new product introductions, new customer segment plans, and team expansion. In most cases, reports are provided quarterly.     It’s a benefit to founders to limit the number of investors who will receive reports and financials. Many startups have sensitive or proprietary information, so it makes sense to keep the distribution list small.   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

8. Investor Connect - Episode 340 - Brian Morin of Soteria Battery Innovation Group
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Description: In this episode, Hall is joined by Brian Morin of the Soteria Battery Innovation Group. Soteria Battery Innovation Group is dedicated to enabling portable electric power without the risk of fires, no matter the circumstances. Their material architecture eliminates the spark on the inside of a battery that can cause fires. Soteria’s goal is to ensure that materials are available to every battery manufacturer with local production from a broad supply base so that every device - whether a hearing aid or an electric bus - can have a battery that is virtually impossible to self-ignite.  Brian has over 200 international patents and applications on subjects ranging from advanced molecular metals to high-performance fibers to plastic additives. He has several billion dollars in sales of products based on his inventions, which are used in brands such as Nike, Head, Freescale Semiconductor, Intel, IBM, Rubbermaid, and others. He sees his strength as leading the commercialization of innovative technology. In this episode, Brian shares his unique take on the state of investing in his sector. According to Brian, the market opportunity is immense. The industry is growing very quickly, averaging a 20-22% annual growth rate. He also speaks about challenges, both regulatory and technical that startups may have to overcome. While regulatory does play a role, you first have to deal with a very conservative market. The industry is very conservative about changing anything because of the risk of safety and the immense cost of safety. Finally, Brian talks about how Soteria fits into this landscape and what they are currently working on.

9. Board Rights
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Description: The terms sheet sets out the board composition. For an early stage company, the board is comprised of three (3) individuals with one (1) representative being the CEO of the Company, one (1) representative being the Lead Investors or his designee (the Series A Director), and one (1) representative being an individual mutually agreed upon by the Lead Investor and the CEO of the Company. For a growth stage company, the board typically consists of 5 persons, 2 chosen by the company, 2 chosen by the investors and a fifth person from the industry who provides domain knowledge. For some investors, there’s also a board observer member named by the preferred share investor who attends the board meetings. The board observer can ask limited questions but does not have a vote in any board decisions. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

10. Investor Connect - Episode 339 - Paul O'Brien of Media Tech Ventures
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Description: In this episode, Hall welcomes back Paul O'Brien of MediaTech Ventures. MedicaTech Ventures is an Austin-grown venture development group and holdings company that connects capital and people in the media and technology industries. An online technology and startup veteran, Paul is known as SEO’Brien for his extensive past in the search industry. Paul works in Venture Capital Economic Development, serving investment in entrepreneurs. He has a passion for media innovation and investment and seeded MediaTech Ventures, a media industry venture development group. In this episode, Paul catches us up on what MediaTech has been doing since our last interview. MediaTech's perspective in media innovation is that these ecosystems and economies need to develop and mature to serve investor interests the best. The best way to do that is to serve and teach entrepreneurs. Paul explains how MediaTech develops an understanding of all the resources available for investors and startups. You’ll also learn more about the upcoming SXSW event, Funded House. Funded House is an integrated series of meetups, lounges, speaker panels and parties with a focus on helping funded startup leaders navigate the difficult task of growing their business. Paul shares why it came about and what makes it special.

11. Governance and Control Terms
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Description: The terms sheet contains several investor rights relating to Governance and Control.  Here are three of them:  Right of First Refusal   The Right of First Refusal clause says that if a founder sells his or her shares, then the preferred share investor gets the right to buy those founder shares first. Doing so results in increasing the investor’s equity ownership in the company. Participation Rights This clause says that if the startup company sells shares to raise more funding, the current investors have the right to buy the shares first.  Registration Rights If the startup registers its stock on the public markets, then the startup must also register the investor stock shares and pay the legal fees for it. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

12. Investor Connect - Episode 238 - Mikael Krogh of Investigate VC
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Description: In this episode, Hall welcomes Mikael Krogh, Managing Partner and Founder of Investigate VC. Mikael has experience as both an entrepreneur and investor across four continents, Europe, Asia, Australia, and North America. Investigate is a Singapore-based VC investing in startups with the Network Orchestration business model – companies facilitating information sharing and transactions within their network and sharing the value created with that network. In this episode, Mikael shares his thoughts on how the industry is changing and evolving. He says we’re at a point where technologies enable disruption of virtually every industry. More than ever before in history, there's an opportunity to launch something with the potential to disrupt the industry you're starting up in. He goes on to say that, if you have an idea that involves AI and big-data analysis, you can have the infrastructure up and running in a matter of two minutes to support that idea. If you had the same idea five years ago, you'd need to build up the physical infrastructure before you could build the product, and this change is an incredible enabler.

13. Warrants
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Description: You may come across the term warrants in a terms sheet. Warrants are a type of security that gives investors the option to buy more stock over a designated time frame, at a specific price.   Three parameters define the details of a typical warrant clause: the term, the coverage, and the price.   The term sets the window of time the investor has the option to exercise the warrant.   The coverage sets the number of shares the investor is entitled to buy.   The price sets the price at which an investor can purchase the shares. This is typically the same as the current price.   Warrants are used to ‘sweeten’ the deal by enabling an investor to buy more shares later.   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today.

14. Investor Connect - Episode 237 - Jason Todd of Thinker Ventures
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Description: In this episode, Hall is joined by Jason Todd of Thinker Ventures, business development and consulting firm specializing in startups and small to mid-size growth companies. An entrepreneur with a background in sales/marketing, programming, and eCommerce, Jason uses his expertise to grow and develop small companies and startups. Jason gravitates to companies that have a good idea where they are at and can articulate where they want to be. Jason advises investors to get a good grasp of the space they're investing in before committing. For entrepreneurs, he emphasizes the importance of objective market validation and a flexible approach to development. Jason talks about the startup scene in the Midwest region and the particular challenges and advantages that come with it. Jason also discusses his investment thesis and highlights some companies he's had success with. Jason stresses the importance of a compelling growth story and responsiveness to feedback. Finally, Jason talks about one of the sectors he finds particularly promising - Artificial Intelligence - and provides some advice for investors looking into that space.

15. Pay to Play
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Description: Pay to play is often used in terms sheets.    A pay to play clause is intended to create an incentive for existing preferred share investors to invest on a pro rata basis in future financing rounds. The clause spells out that, if the existing investors choose not to participate in future rounds, they will lose some or all of their preferential rights.   For example, if a preferred investor in a down round chooses to invest then he maintains his anti-dilution rights. If he chooses not to invest, then he loses those rights.   Other disincentives for not participating include - Losing some preferred rights. - Losing all preferred rights and protections, such as forcing the investor into common stock. If you fail to pay, then you can’t play.   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

16. Investor Connect - Episode 236 - Daniel Hallawi of KapVista
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Description: In this episode, Hall welcomes Daniel Hallawi of KapVista, a global platform showcasing emerging companies across 15+ countries to over 15,000 high net worth, professional, and international investors. Through an investor-focused website and tailored matchmaking, private companies can present their company to potential investors, advisors and board members. As a natural by-product, KapVista also provides a marketplace to find potential co-founders, team members, advisors, board members and individuals who can help grow the start-up ecosystem. After leaving a successful career in the corporate world, Daniel became fascinated with the startup world. Daniel created KapVista as his response to the massive disconnect between founders and investors. He found that there was nowhere to go for founders to connect to the resources they needed to grow. Daniel talks about what he looks for in a founder. He encourages startups to be laser-focused on investors from day one–and realize that the little things such as punctuality and follow-through matter. Daniel highlights the evolution of the VC and Private Equity space, as well as the increased competition both for investors and startups. Finally, Hall and Daniel discuss some of the hot sectors, both in the U.S. and Asia.

17. Anti-Dilution
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Description: Terms sheets use anti-dilution clauses to protect the investors. Anti-dilution comes into play during down rounds in which the founders raise funding at a lower valuation than a previous round. There are three scenarios: No Anti-Dilution Protection - Investors and founders share in dilution from any follow on rounds funding. Full Ratchet Anti-Dilution - With full ratchet, the investor’s share price is adjusted all the way down to the level needed so that two things happen: a. The new investor gets their percentage. b. The current preferred share investor with full ratchet anti-dilution protection maintains their ownership percentage in the startup, A full-ratchet scenario dilutes founders ownership dramatically, so this method is unfavorable to founders. Weighted Average Anti-Dilution - The Weighted Average method takes into account the total number of shares outstanding. The more shares owned by an investor, the less dilution they receive. This method is favorable to founders. Founders get diluted, but not as much as in a full ratchet scenario. Preferred share investors get diluted a little bit, as opposed to not at all in a full ratchet scenario. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

18. Investor Connect - Episode 335 - Matt Johnson of Johnson Venture Partners
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Description: In this episode, Hall welcomes Matt Johnson of Johnson Venture Partners, a micro VC fund investing in high-growth startups in the Southeast. Matt's curiosity about the founding stories of successful companies led to a passion for early-stage investing. While JVP is sector agnostic, Matt points to his particular interest in machine learning, cognitive computing technology, and early-stage innovation in general. Matt also emphasizes the opportunities in using network effects to build teams of investors to source deal flow. For startups, Matt advises that founders get to know the investor and understand their goals, regardless of the type of funding you're after. Matt also talks about some of the platforms and tools available to assist investors to unlock crucial data. Matt discusses his fund's thesis and highlights some of the companies he's worked with. Finally, Matt talks about the importance of discipline and focus, whether you are an investor or an entrepreneur.

19. Liquidation Preference
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Description: Liquidation preference is a right commonly found in terms sheet. It provides the investor the right to receive their investment back and then the remaining profits are distributed pro rata to other stakeholders. It’s often expressed in multiples such as 1X, 2X, or 3X. This means the investors with those rights will receive 1X their investment before distributing the remaining exit funds based on their equity-based division. Liquidation preferences come in three forms. Participating preferred - they get their liquidation preference and share in the equity pro rata with the other investors. Non-participating preferred - the get their liquidation preference but do not share in the equity pro rata with the other investors. Participating preferred with a cap - the get their liquidation preference and share in the equity pro rata with the other investors up to a Cap. Investors often use this to compensate for what they consider to be a high pre-money valuation. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

20. Investor Connect - Episode 334 - Rob Wray of BlueStar SeniorTech
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Description: In this episode, Hall welcomes Rob Wray, CEO of BlueStar SeniorTech. BlueStar provides aging-in-place technologies to seniors, particularly those in families with veterans. Multi-faceted businessman/admiral: fluent in technology, people, processes, energy, defense, and general P&L business Rob is a Mechanical Engineer from the Naval Academy, Admiral Wray. He spent seven years of active duty as a nuclear engineer on surface ships, carriers, and submarines. Transferring to the reserves, he enjoyed a varied 20-year career in business, in manufacturing, hospitality, technology, consulting, and construction. After mobilization to Baghdad, he was promoted to Admiral and placed back on active duty for the past six years. Rob recently retired as a two-star. He has a Masters from Georgetown University, is a licensed professional engineer, holds a patent, has written two books, and is a frequent professional speaker on leadership and management. He has 14 present or former service members in his family, 4 of which are aged 80 or older.

21. Key Terms in the Terms Sheet
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Description: Here are some Financial Parameters to look for in a terms sheet: Type of Security: Convertible Preferred Stock, Series A Convertible Preferred Stock, or Series Seed Preferred Stock. Investment Amount: How much is being raised. Pre-Money Valuation: What the business is worth before the investment. The pre-money valuation can also appear in the “Price Per Share” section.  Price Per Share: The price per share is calculated by dividing the agreed on pre-money valuation by the total number of shares outstanding in the startup. The share price calculation is where the term “fully diluted” shares outstanding comes into play.The term “Fully diluted” means  the options pool and other forms of stock such as warrants must be included in the share total. Conversion: Refers to the rate preferred shares can be converted to common. Dividends: They are either Cumulative Dividends or Non-Cumulative Dividends.  Which determines if dividends are paid out along the way or at conversion.   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

22. Investor Connect - Episode 333 - Brett Commaille of Hlayisani Capital
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Description: In this episode, Hall welcomes Brett Commaille of Hlayisani Capital. Hlayisani’s investment philosophy is focussed on the acquisition of either significant minority or majority ownership stakes in market leading organizations that are high-growth and high-impact revenue generating private equity businesses. With over 20 years of investment and management experience and 12 years Venture Capital, Brett currently serves Investment Principal and Director of Hlayisani Capital and Hlayisani Fund Managers. Brett is an Angel Investor, Venture Capitalist, Entrepreneur and Business Development Specialist who has built a career in investing into and growing small and medium sized businesses both in South Africa and internationally. Brett is the founder and Lead Partner of AngelHub Ventures. Brett gained diverse corporate experience with Deloitte, PWC (South Africa and Middle East), and Standard Bank’s Corporate and Investment Bank. He set up a venture capital fund for Remgro Ltd called Invenfin, where he served as CEO. Brett founded AngelHub Ventures, one of the most active venture fund investors in South Africa.     

23. Founder Friendly Terms Sheet
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Description: Terms sheet lean to the founder or to the investor. One that leans to the founder is called a founders friendly terms sheet. It has some of the following characteristics: The term sheet provides that the Preferred Shares will receive the same number of votes as the number of Common Shares it could be converted into.  The liquidation preference is limited to the original purchase price of the shares, plus any declared and unpaid dividends. The option pool for future hires is not included in the pre-money valuation. The term sheet is silent regarding individual founder or employee performance reviews. The term sheet is silent on the issue of non-competition, which makes it possible for founders to find work after they leave the company. For at least the first two (2) years of operations, the company will not agree to pay the legal expenses of any investor as a condition of investment. The term sheet is silent on dispute resolution, which leaves the door open for the company and its investors to go to court rather than arbitration. These are some key points to look for you in a proposed term sheet that indicates which party it favors. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

24. Investor Connect - Episode 332 - Jon Trauben of Altitude Investment Management
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Description: In this episode, Hall welcomes Jon Trauben of Altitude Investment Management. Altitude Investment Management, LLC is a U.S.-based global venture capital fund manager investing in the legal cannabis industry. The manager's strategy is to invest in a range of early-stage to growth companies that support this rapidly-growing industry, both in the United States and globally. Jon is an active participant in the cannabis industry as an investor, association member, mentor, and board member. He brings a wealth of experience and management expertise with a 25-year record as a seasoned commercial real estate, capital markets, and finance executive. Jon has held senior positions on Wall Street while at Barclays, Credit Suisse, Cantor Fitzgerald, and Hunt Companies where he was a business leader, lender, trader, and investor. While at Barclays and Credit Suisse he was a Managing Director and senior member of the real estate finance group and was a participant in all major business management, strategic growth, and capital allocations. In this episode, Jon shares what he finds exciting in the cannabis industry as a whole today. According to Jon, there is a massive built-in customer base that is estimated in the US to be $50 billion dollars of demand. The customer base exists and the creation of this industry is all about creating a legal channel for safe, tested quality products.

25. VC Quick Valuation Method
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Description: In raising funding, valuation is a key number the CEO and investor must come to agree with. As a startup you must determine your target valuation. There are several methods. One method is the VC Quick Valuation Method This method starts with the exit of the startup. You assume the exit value your startup is being acquired for. You then work backwards to calculate what your startup must be worth now based on that target exit value. Here’s the VC method by steps: 1. Estimate your exit value. Use simple exit value estimation using industry trends or estimate using Price/ Earnings multiples. 2. Calculate the post-money valuation 3. Calculate the pre-money valuation. 4. Finally, calculate the equity percentage owned by the investors. Remember, option pools can have a big impact on valuation Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

26. Investor Connect - Episode 331 -Paul Rosen of GlobalGo
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Description: In this episode, Hall is joined by Paul Rosen, Executive Chairman for Global Go, a consulting firm specializing in the U.S. and international cannabis/hemp market. Paul began as an attorney in Canada, before turning to a career as an entrepreneur in a number of sectors. In 2010, Paul entered the cannabis industry in Canada, which ultimately led to an investment career. In this episode, Paul talks about the cannabis industry, highlighting both the pharmaceutical and CPG sector applications. He talks about the risks and idiosyncrasies of the emerging cannabis industry. In addition, Paul discusses the state of startup investing in general, and as it relates to emerging, high-profile industries. Paul details his early-stage investing thesis, highlighting the importance of team, a growth market, and a strong go-to-market strategy. Finally, Paul discusses the regulatory side of the cannabis industry and focuses on some of the most promising opportunities and applications in that industry.

27. Valuation: Risk Mitigation Valuation Method
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Description: In raising funding, valuation is a key number the CEO and investor must come to agree with. As a startup you must determine your target valuation. There are several methods. One method is the Risk Mitigation Valuation Method. The Risk Mitigation method assigns dollar values to the startup’s accomplishments in each of four categories: Technology, Market, Execution, and Capital. Technology Risk Mitigation -- 125 • Prototype developed: $75,000  • 3rd party validation: $25,000  • IP filed: $25,000  Market Risk Mitigation -- 175 • Market research: $25,000  • Early adopter program in place: $100,000 • Channel partners established: $50,000  Execution Risk Mitigation -- 500 • Experienced founders: $200,000  • Prior exit: $250,000  • Detailed execution roadmap in place: $50,000  Capital Risk Mitigation -- 150 • Early funding: $50,000  • Only two angel rounds needed: $100,000 If you add up all the values you get a pre-money valuation, $950,000 in this example. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

28. Investor Connect - Episode 330 - Eva Yazhari of Beyond Capital Fund
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Description: In this episode, Hall welcomes Eva Yazhari, Co-Founder and CEO of Beyond Capital Fund. Eva shares Beyond Capital Funds thesis. They are a social impact fund that invests in for-profit social enterprises throughout India and East Africa. They invest in businesses within the health care, waste/water/sanitation, and alternative energy/clean technology sectors. Beyond Capital focuses on improving the quality of life and standards of living for consumers at the bottom of the pyramid. Though they seek market-rate financial returns, Beyond Capital is structured as a nonprofit, which allows them to emphasize fidelity to their social mission alongside their financial mandate. Eva has 14 years of experience working in venture investment and asset management. She was previously a Vice President at EnTrust Capital Inc., an asset management firm where she managed the Shareholder Activist fund manager investment portfolio. As a member of the investment team at EnTrust, she specialized in fund due diligence and underlying fund portfolio analysis.

29. Valuation: Step up Valuation Method
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Description: In raising funding, valuation is a key number the CEO and investor must come to agree with.  As a startup you must determine your target valuation.  There are several methods. One method is called Step up Valuation It uses ten factors. Each factor adds $250K to the valuation To calculate your total pre-money valuation add $ 250,000 for each: - Total market size over $500M - Business model scales well - Founders have significant experience - More than 1 founder committed full-time - MVP developed, customer development underway - Business model validated by paying customers - Significant industry partnerships signed - Execution roadmap developed and being achieved - IP issued or technology protected - Competitive environment favorable You may give partial credit for items that have some progress made. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

30. Investor Connect - Episode 329 - Vik Sasi of Dreamers VC
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Description: In this episode, Hall welcomes Vik Sasi of Dreamers VC. Dreamers VC, founded by Will Smith and Keisuke Honda is a venture capital fund bridging established Japanese corporate investors with early-stage, US-based companies. The company was conceived from their shared passion to improve the world. They invest in innovative companies, alongside top-tier lead investors, to improve lives through the application of emerging technology. When appropriate Dreamers VC supports expansion by connecting companies to their global network of capital and strategic partners. Generally, they make the first investment into a Seed, A, or B round, and maintain follow on capital for the growth stages of our investments. Vik was previously on the investment team at AmFam Ventures. He began his career as an Analyst for the Clinton Foundation’s Health Access Initiative and as a Strategic Advisor to the Haitian Ministry of Health, with additional stints in investment banking at Morgan Stanley and venture capital at Healthbox. In this episode, Hall and Vik speak about the Dreamer fund and what they specifically look for. According to Vik, Dreamers is a purely opportunistic fund. Nearly 100% of the deal flow is inbound. It all boils down to the team, organic growth and potential for uncapped upside. Vik also touches on what he sees as challenges startups face and offers his advice. It’s really simple, just stay in your lane, run your race, try not to get caught up in trying to keep up with the Joneses.

31. Market Comp Valuation
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Description: In raising funding, valuation is a key number the CEO and investor must come to agree on. As a startup you must determine your target valuation. There are several methods. The first method is called Market Comp. In short, you look at other companies of a similar sector, stage and revenue and determine how you compare. The steps for creating a market comp valuation are as follows: 1. Create a short profile of your startup based on revenue, sector, and subsector.  2. Find similar startups with known valuations to use as comps which is short for comparables. 3. Compare your startup profile to the comp’s profile and determine how far ahead or behind you are. 4. Adjust the valuation for their differences. In the Market Comp valuation, use several comparisons. Don’t just rely on one. Market Comp works well when there is a heavy concentration of companies so it’s fairly easy to compare. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

32. Investor Connect - Episode 328 - Amrit Robbins of Axiom Exergy
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Description: In this episode, Hall welcomes Amrit Robbins of Axiom Exergy. Axiom Exergy's cloud-based platform provides active power management services for buildings with large thermal loads. Today, 60-70% of a typical building's electricity bill is driven by w it consumes power, and 28% of all electricity consumed by US commercial and industrial buildings is used for thermal services ($56 billion/year and growing in the US alone). Amrit began his career wanting to accelerate the clean-energy future. As an entrepreneur and engineer, he realized that the most promising solutions would be economy-driven rather than policy-driven. Amrit talks in-depth about power management and refrigeration industry, and how it is traditionally a high-volume, low-margin space. He discusses how Axiom has approached this space by essentially putting unused data to good use, using AI techniques. Amrit also talks about some of the challenges Axiom overcame in building into this space. Finally, Amrit highlights how refrigeration technology could be part of the key to mitigating the climate crisis.

33. How to Write a Compelling Pitch Deck
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Description: The startup pitch is a key step in raising funding. You must be able to talk about your company in a compelling, coherent, and comprehensive manner in a short amount of time.    Your pitch should contain the following: The Attention Getter: Lead with the most compelling reason why you have a great business.  State the Problem you are solving: It must be big enough to warrant customers to pay for it. Show the Solution: Discuss the core product and how it is packaged and monetized. Try saying what it does in 6 words or less. Size the Market: Do this at the Macro level and the Micro level in dollars and growth rate. Identify the Competitive Advantage: What gives your business a 30% increase in revenue over your competition? Discuss the Business Model: Is it recurring, a transaction fee, or other? Show the Team: Demonstrate you have a complete team and they have experience. Show the Growth Story: Sales, team, product, and fundraise are in motion. Show the Investment Opportunity: How much you are raising, and what is raised so far in interest, committed or invested? Make sure you hit these points in your next pitch. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

34. Investor Connect - Episode 327 - Vinay Singh of Fireside Ventures
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Description: In this episode, Hall welcomes Vinay Singh of Fireside Ventures. Fireside Ventures is an early-stage investment platform focused on consumer brands. From prototyping and consumer testing to a longer initial gestation period, and a greater need for mentorship, they understand the highly specific needs of a consumer startup. Vinay spent his early career at Hindustan Unilever as a marketing manager for multi-core brands. With his extensive expertise working in digital marketing with McKinsey & Co., and Bankbazaar.com, Vinay has a unique perspective on the intersection between consumer brands and technology. He has also spent time as an entrepreneur, as the founder and CEO of Stepni.com, which was later acquired by Quikr.

35. Why Do So Many Startups Fail?
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Description: Some wonder what causes the failure rate for startups to be so high. Is it because they are doing new, unproven things? Was it because the market changed or the customer preferences shift? Or was it because they didn’t have funding or access to key accounts. The cause of startup failure comes back to one ultimate source: the team. Just about every failed startup comes down to the team not being able or motivated to execute. It’s often the case, they underestimated the work and what must be done to succeed. The team you choose must be able to handle this. Pivots, restarts, and unforeseen events are part of every startup’s journey. The team must be prepared to regroup for this. As the company grows, the team must be able to cut costs, attack new markets, and turn on revenue streams. The team must be able to work without funding for a period of time. Failed startups point to a lack of funding, encroaching competition, regulations, and the list goes on. But the right team can take those in stride and continue to grow the company. CEOs, ask yourself: Is my team able to adapt to the changing conditions? Investors, ask yourself: Is the deal you’re considering to invest in have the skills to work through all the ups and downs? Look hard at their ability to do all of the above and not just what’s on the current plan. Plans change, strategies shift, and markets move, but the team is the constant in which you invest. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

36. Investor Connect - Episode 326 - Sergio Paluch of Beta Boom
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Description: In this episode, Hall welcomes Sergio Paluch of Beta Boom. Beta Boom is a pre-seed fund focusing on startups in emerging tech hubs around the world. They believe that tech innovation has no boundaries and that founders from underserved groups present one of the biggest opportunities of this era for both investors and society. Beta Boom invests in and supports all founders in emerging tech hubs, and focus on reaching female founders, minority founders, younger founders, older founders, and anyone else that does not fit the old pattern. Before founding Beta Boom, Sergio was the founder and CEO of Boom Factor, a Silicon Valley innovation consultancy where he led numerous product design and development projects for over 50 clients ranging from YC-backed startups to Fortune 500 companies like Bank of America. In this episode, Hall and Sergio speak about the current state of investing in startups and how it’s evolving. According to Sergio in just the two years Beta Boom has been operating, he’s seen a lot of new, early-stage funds, incubators and accelerators that are opening and targeting underrepresented founders. He thinks that domain expertise, passion, and perseverance are stronger indicators of founder success, than pedigree or qualities that come from privilege, and in addition to that, founders from diverse backgrounds can better address opportunities in huge, and often overlooked markets.

37. Why Founders Equity Requires Vesting
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Description: I had a startup the other day approach me about investing. In the discussion it came up that one of the founders recently left and took half the equity with him. It appears there was no vesting on the founders equity. Vesting means one has to earn the equity by continuing to work in the business over a period of time. Founders think they don’t have to vest their equity since they founded the company, but it’s important that founders do so. The primary reason is to make sure the founder stays active in the company for a reasonable period of time. Other founders and employees will be working for equity so it’s not fair for a founder to stop working and take all their equity with them. Investors funding a startup often require unvesting founders share and have them earn it back. If a founder leaves then the unvested shares go to those who continue to work in the business. Even if there’s no investment driving the decision, founders should put an agreement in place that determines what happens if one of the founders leave. With an agreement in place, a founder can leave at any point and his or her unvested shares will go back into the company. This protects the founders and the investors. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

38. Investor Connect - Episode 325 - Yigit Ihlamur of Vela Partners
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Description: In this episode, Hall welcomes Yigit Ihlamur of Vela Partners. Vela Partners is an investment firm, composed of five partners supported by technology, commercial and legal advisors. Their main focus is software companies, with investments spanning from angel to VC stages. Before Vela, Yigit Ihlamur worked in Google’s Cloud division, at the company’s headquarters in Mountain View, on product strategy, management, and startup partnerships. Yigit’s tenure at Google also included several years spent in the company’s European headquarters in Dublin, where he was initiated into European business and technology working on technical operations for G Suite. In this episode, Yigit shares his advice to first-time investors in startups, in particular in the machine learning and data sector. According to Yigit, see as many companies as you can. It’s easy to get excited about a good story and dream of what can happen. Visit with at least twenty to thirty companies before deciding so you can benchmark those companies.

39. Who Should Have Access to the Cap Table and Down Rounds
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Description: Who should have access to the cap table in a startup? The Cap Table which shows the ownership of each investor and those from the company is reserved for investors, board members, the CFO, and the corporate attorneys. For employees, you want to create a culture of openness. Employees and other shareholders get visibility into their ownership but in general they cannot see the ownership of others. You want to discourage employees buying/selling shares with each other or investors as they should receive liquidity with everyone else. On another note, what is a down round? A down round is when a startup accepts an equity investment at a valuation lower than the previous established valuation. This comes from raising too much capital at too high of a valuation previously. Those who have a burn rate that is too high or have pivoted to a new business model may be subject to down rounds. This hurts previous investors, founders, and employees whose options are now worth less. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

40. Investor Connect - Episode 324 - Greg Baker of Alumni Ventures Group
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Description: In this episode, Hall welcomes Greg Baker of Alumni Ventures Group. Alumni Ventures Group (AVG) is a different type of venture capital firm. Designed for individual investors, AVG makes this key asset class available to millions of individuals who previously haven’t had access to a high-quality, diversified venture portfolio. Greg started his career with an MBA as a mechanical engineer and then moved into corporate strategy, corporate development and a startup before eventually moving into venture capital. In this episode, Greg shares his thoughts on what excites him most right now. He points to the acceleration of developments in healthcare, biotech, and everything in between. He also shares his advice to first-time investors. Greg says flexibility matters most since, in the end, many startups don't end up where they planned. For startups, he advises entrepreneurs to "get your product out there and find out what the customers really are looking for." In other words, it's vital to know and learn from your customers. Greg talks about the evolution of growth funding, as well as some of the biggest challenges startups typically encounter. Finally, Greg highlights the biotech sector as an area with good opportunities.

41. Some Common Misconceptions about Fundraising
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Description: One common misconception about fundraising is that you must know an investor before you can approach for funding.  It’s best to have some validation from your own group before approaching those outside of your core. Start with your current network and work out from there.   Identify the right type of investor for your deal based on risk and return.  Angels wants three to five times their investment. Venture Capital wants 10x their investment. Family Offices want five times their investment but are often more patient for the return. Choose the right investor for your raise and then find those investors and initiate a conversation. Later follow up and build a relationship. Another misconception is that once an investor has said ‘yes’, then it’s a ‘done deal.’ In most cases this is not so. The ‘yes’ marks the start of the diligence phase which in most cases lasts 4 to 8 weeks.   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

42. Investor Connect - Episode 323 - Geraldo Melzer of A.B.Seed Ventures
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Description: In this episode, Hall welcomes Geraldo Melzer of A.B.Seed Ventures. A.B.Seed Ventures focuses on investing in startups that seek seed investment, with a SaaS B2B business model. Their proposal goes beyond capital and network. They support entrepreneurs with the best SaaS marketing and sales practices in areas such as inbound marketing, inside sales, channels and customer success. In this episode, Hall and Geraldo talk about the quickly growing Brazilian market. According to Geraldo, in 2010 the investment was about 10 million dollars and in 2019 was up to 2.5 billion in venture capital. Latin America, specifically Brazil, is waking up for VC investment and the market is maturing.   Geraldo also shares his advice to investors before writing their first check. If you have uncertainty around the environment, the sector, the segment, and the business model that the company is working on, your capacity to evaluate, analyze, and help will be minimal. So Geraldo suggests investing in something that you can study. This will help you form educated opinions and mitigate the risk.

43. Red Flags in the Cap Table
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Description: In looking at cap tables, there are several red flags to watch out for. Look for shares that are actually issued and not just verbally promised. Is the cap table up to date with cancellations and repurchases? Many startups consider their cap table to be a work in progress so don’t be surprised if it contains “what ifs” and other “redos.” The cap table is typically available in three versions: First: The capitalization as it currently exists, Second: The capitalization of the business as a fully-diluted version including any options, warrants, contracts, convertible debt, that could become shares, Third: A proposed version including new employees, pending lawsuit settlements, or planned raises. Check to see if there’s an attorney behind the scenes who is following up on the details as the management team is generally distracted by sales, development, and other issues. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

44. Investor Connect - Episode 322 - Atin Batra of Twenty Seven Ventures
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Description: In this episode, Hall welcomes Atin Batra of Twenty Seven Ventures, a VC firm focusing on education and the future of work technology. Atin is a serial entrepreneur and began his investing career with a corporate accelerator before starting his firm. Atin explains how he came to focus on the Education Technology and Future of Work sectors. Atin provides valuable advice for both investors and startups looking to get into these sectors. He emphasizes the importance of understanding market dynamics and the nuances of the various business models. Atin also talks about the evolution of the Future of Work sector amid the changing habits and needs of the workforce. Atin discusses some of the challenges specific to the EdTech sector, as well as a few of the technologies he finds particularly promising.

45. Calculating Equity Ownership
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Description: I was approached by a listener the other day who was contemplating investing in a friend's business. He was the first money in and was trying to figure out how much equity his investment bought. There’s an equation for determining equity ownership. There are three terms in the equation. Pre-money valuation -  how much the company is worth before investing. The investment amount, and post money valuation which is how much the company is worth after the investment. Pre-money plus investment = post-money For example, if you had a business with a pre-money valuation of $4M and the investment going is $1M, then the post money valuation is $5M. The equity ownership by the investor is investment divided by post-money. In this example $1M divided by $5M is 20%. Let’s say in another case, the pre-money valuation is $19M, the investment is $1M, so the post-money valuation would be $20M. The investor would get $1M divided by $20M or 5% in this scenario. In every valuation discussion, the startup is negotiating the pre-money valuation up and the investor is negotiating it down. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

46. Investor Connect - Episode 321- Brian Phillips of The Pearl Fund
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Description: In this episode, Hall is joined by Brian Phillips of The Pearl Fund, an early-stage VC fund specializing in Opportunity Zone (OZ) investments. Brian's background in computer science led to numerous jobs with tech startups. Through these experiences, he developed an interest in entrepreneurship non-profits. Ultimately, he ended up starting a fund to take advantage of the Opportunity Zone laws that promote funding of business in low-income census tracks. Brian explains the ins and outs of Opportunity Zone investing, how to do it, and why it can be so advantageous for the investor. He also explains why meeting the Opportunity Zone requirement can give startups a leg up when it comes to securing funding. While OZ investing is currently dominated by real estate, The Pearl Fund is part of a small but growing trend of funds focusing on startups. Additionally, Brian details many of the requirements that startups and investors must meet to be OZ qualified. Finally, he highlights some of the sectors that fit best with the OZ asset class.

47. Traction vs. Momentum
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Description: Many investors look for traction in a startup to gauge their progress. Traction stated as a single number on a pitch deck can be hard to judge as sufficient for an investment. Many investors tell the startup “nice traction, but we’d like to see more.” Instead of traction look for momentum. Momentum demonstrates things are continuing to progress and move forward. Sales, team, product, fundraise are the core four to look at. Investors look at these four because they represent the results of the startup’s work and not that of the market’s progression. Momentum must be shown over time in numerous updates by email, phone, or in person. It takes four touches before an investor gets a sense that there is momentum and it will continue. Startups should always have some engagement with customers ongoing- such as alpha testing, beta customers, MVP customers, etc so as to have something to talk about with investors. For startups pursuing the enterprise sale show your momentum through the sales funnel with your large customers. It typically follows the model of interest, qualification, trial negotiations, pilot test, full product launch, ongoing support. Show how prospects are moving through the funnel and customers are upgrading and expanding seats. It’s the continuing forward progression that counts. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

48. Investor Connect - Episode 320 - Laura Baldwin of Golden Seeds
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Description: In this episode, Hall welcomes Laura Baldwin, Managing Director of Golden Seeds. Golden Seeds is an investment firm dedicated to pursuing market returns through the empowerment of women entrepreneurs and the people who invest in them. The group was founded in 2005 and is headquartered in New York City, with active chapters in Atlanta, Boston, Dallas, Houston, and Silicon Valley – and active members throughout the country. Golden Seeds’ Angel Network has grown to become one of the largest in the country with over 275 members nationwide. Laura has more than 20 years’ experience in finance, treasury, corporate development, and investor relations roles, with progressive growth in responsibilities. Laura talks about the increase in women entrepreneurs, in sectors such as FinTech, Cybersecurity, and others. For investors, Laura emphasizes the importance of communication between investors and the entrepreneur. Beyond personal connection and trust, she says it is also critical for entrepreneurs to have a clear value proposition. Laura advises entrepreneurs to make sure that they and the investor are "on the same page [and] want the same things." She explains what Golden Seeds looks for in a startup, and highlights some of the more promising startups they've worked with. According to Laura, capital access remains the biggest challenge for women-led startups. Finally, she points to FinTech as one of the biggest sectors of opportunity now.

49. Contractor Funding
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Description: Many enterprise software programs come from service businesses solving a problem for their clients. In searching for a solution on the market, they find none, so they build their own. Later, other clients come ready to buy it. I call this contractor funding, and it’s one of the most overlooked forms of funding in the startup space. In this method, you sell a customized version of what you want to build to an anchor customer for a substantial one-time fee, say $250K. Then, you use the funds to build out the platform you envision, to which the customer gets a non-exclusive license. The advantage here is you have a customer telling you exactly what they need and what they will pay for. They improve the product by testing it and telling you what changes to make. They become a happy customer which you can use to attract prospective customers. After three more of these engagements, you will have $1M of investment in your platform with zero dilution. For your raise, consider using contractor funding. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

50. Investor Connect - Episode 319 - Jyri Engestrom of Yes VC
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Description: In this episode, Hall welcomes Jyri Engestrom of Yes VC, a small seed-stage fund focusing on community-driven startups. Jyri started out as an entrepreneur and uses his experiences with successful startup exits to inform his investing philosophy. Jyri advises investors to look for startups that are part of a larger social movement. Startups that can turn a small community into a global movement are the ones to look for. As Jyri puts it, an idea gets traction when people "realize that it's something that is better for the world and it also works as a business". Jyri talks about his partner, Caterina Fake, and her experience as an early investor with Etsy. Jyri also talks about the partnership dynamic between cofounders, and how important it is to have effective mediation strategies in place in the event of a disagreement at a critical juncture. Jyri explains Yes VC's strategy of smaller, early-stage investments in companies that show potential for organic growth without requiring huge injections of capital. He highlights a few of the startups they've invested in, and why. Finally, Jyri talks about the importance of attribution in marketing, as well as some of the sectors he finds especially promising.

51. Treat Each Other Nicely in the Startup Community - People Talk
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Description: It’s best to play nice with others in the startup community. While it may seem diverse and diffused, I’ve found word travels fast. The startup world is transparent and highly viral. So much of what happens regarding deal-flow and investing  is based on reputation and trust.  It takes a long time to build but can be destroyed in seconds.  While some play the rough game, it’s not the norm. Those who do are just protecting their time as requests for help are practically endless.  Always treat everyone with respect and give as much as you take. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

52. Investor Connect - Episode 318 - Larry Cynkin of GreenBar
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Description: In this episode, Hall welcomes GreenBar founder Larry Cynkin. Larry ​is a serial entrepreneur who has been CTO or VP Engineering at five startups, with experience in industries ranging from health care to personalized e-commerce to ed-tech. Larry started his career as a software developer, with a degree in Computer Science from Brown University. He eventually moved into software management and has always had an affection for startup companies. After working with several startups he eventually moved into being CTO. In this episode, you’ll hear more about his path in helping startups and investors. According to Larry, he helps non-technical or not-so-technical executives and founders run, manage or plan for software development and software product development. From an investor perspective, he helps mitigate the risks of software execution.

53. Spend Time with them First
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Description: Before the fundraise, startups should spend time with the investor first. It’s less about the amount of face time and more about the number of interactions over the phone, email, in person, and otherwise. It’s best to connect with investors before you start your fundraise so you have a basic relationship established.   You can use the approach “I’m not raising funding now, but I will be in six months” to open the dialog. Then, spend the next few months getting to know them and updating them on you and your deal. Investors are interested in knowing about not just the product you are building, but also the team you will assemble. With most VCs, their diligence process focuses heavily on the team. So, you want to use your time showcasing what great things they can do.  The more that investors see you making good decisions in this phase, the faster your fundraise will go in the next one. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

54. Investor Connect - Episode 317 - Sid Mookerji of Silicon Road
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Description: In this episode, Hall is joined by Sid Mookerji of Silicon Road, an early-stage fund, accelerator, and advisory group focused on retail and eCommerce. After founding a custom application development firm for eCommerce and retail, Sid saw the opportunity for a good exit and entered the world of venture capital.   Sid talks about what excites him in retail today and provides advice for investors looking to get into eCommerce and retail. For startups, Sid advises focusing on customer and market fit. Sid also discusses how the changing landscape of retail has exposed needs and led to innovations in both eCommerce and brick-and-mortar retailers.   In addition, Sid highlights a few of the startups Silicon Road has invested in, and why. He points to change management as one of the biggest hurdles for larger retailers, and he explains how startup innovation can help. Finally, Hall and Sid discuss two areas of technology currently disrupting the space: Last-Mile Delivery and Augmented Reality.

55. It’s About Execution
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Description: It’s About Execution Some startups think their business will succeed based on the idea, the technology, the market or something else. They think their technology will win the day, or that their idea is so great, or the market is growing so fast that they will succeed based on that alone. For the investor, all of these are important, but in the end it’s execution that matters most. Execution turns the technology, idea, or market into a winning business. In your pitch, demonstrate your past execution successes and talk about how you will execute on the idea. Show how you will execute on your technology and how you will execute to penetrate the market. Investors determine investments based on the startup's proven ability to execute. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

56. Investor Connect - Episode 316 - Pierre Rogers of PuroTrader
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Description: In this episode, Hall is joined by Pierre Rogers of PuroTrader, an online cigar-trading platform. Purotrader was created by two aficionados to bring more transparency and access to the global cigar market. The site aims to educate connoisseurs, stimulate conversation and more importantly monitor market trends within the industry. In this episode, Pierre shares exciting developments in non-traditional business models. He offers advice to investors interested in the libation space (fine beverages, cigars, etc.), pointing out the importance of leveraging industry relationships. For startups in the space, Pierre emphasizes how finding your niche is critical. He highlights some of the challenges in the space and explains how PuroTrader has approached the market using data analytics. Finally, Pierre talks about some of the future applications of the platform, and how he sees the space evolving.

57. Importance of Historical Numbers
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Description: Most startup pitches focus on their future. It’s bright. The numbers are growing fast and will be big. The sky’s the limit. Just how much do investors put behind those startup forecasts. The answer: It depends on the historical numbers the forecast is based on. If there’s a consistent track record of historical growth, then the forecast has credibility. If there’s no historical record, then the forecast does not. Always show your historical numbers to establish a baseline and show how you can move from the historical to achieve the forecast and the systems that will take you there. Most startups hang their forecast on market potential alone. You need to also show how you can execute to obtain it. This could be a new team member, another product, or a new market segment. Help the investor connect the dots and don’t expect anyone to take a flying leap without a good reason. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

58. Investor Connect - Episode 315 - Orrin Ailloni-Charas of RedCrow
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Description: In this episode, Hall welcomes Dr. Orrin Ailloni-Charas of RedCrow, a healthcare-focused, early-stage startup investing network. Orrin's background in medicine led to consulting roles with various healthcare startups. He received his MBA from Columbia, and now has a career straddling both the business world and medial and clinical world. Orrin explains how RedCrow incorporates crown-based evaluation and analysis to fully validate startups. Orrin talks about the environment of innovation in healthcare. He explains some of the advantages and challenges of investing in healthcare, and the importance of understanding the startup's competitive, regulatory, and capital risks. For healthcare startups, Orrin emphasizes the importance of good IP with strong protections. He also talks about the advantages of good partners, and how capital risk is a particular risk in the healthcare industry.

59. When Should You Raise Funding?
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Description: I’m often asked when you should raise funding. There are funding requirements to consider. Calculate your cash burn and estimate the need for new cash. There are also preparation and timing issues. Start your preparation six months in front of the launch Launch your fundraise six months before you need the funding. Use the six month preparation time to introduce the deal to the investors and educate them on your current status. There are seasonal issues to consider. I wouldn’t start in early June but rather wait till late August to kick off a campaign. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!  

60. Investor Connect - Episode 314 - Tracy Deforge of The Player's Impact
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Description: In this episode, Hall welcomes Tracy DeForge of The Players' Impact, a group that connects professional athletes with the world of startups and investing. Tracy has worked in the sports industry for her entire career. At The Players' Impact, she is focused not just on involving athletes as brand ambassadors, but also in bringing startups to market. Tracy advises entrepreneurs to keep in touch with both their market, as well as potential future investors. Tracy and Hall also talk about the blurring of the lines between the traditional funding stages, and what that means for startups. In addition, Tracy talks about how The Players' Impact works as a group of investors making early-stage investments, rather than a fund. Finally, Tracy talks about the number one challenge for startups - finding the right funding partners - and highlights some of the most promising sectors.

61. The Only Startup without Glitches is the One that is Dead
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Description: There are truisms in the startup world you can always count on. A few that come to mind are: All software has bugs. All startups take longer than expected (to generate revenue, finish the product, fill in your favorite one here). And my newest one is: The only startup without glitches is the one that is already dead. If the business is up and running and especially if it’s growing there will be glitches. Some call them hiccups. You should expect things will not always go as planned and be prepared to deal with it. If things are running without a glitch then most likely you’ve stopped doing new things that will grow your business. Glitches are an indicator that you are stretching your business in new ways. And that’s a good thing. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

62. Investor Connect - Episode 313 - Karthee Madasamy of MFV Partners
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Description: In this episode, Hall welcomes Karthee Madasamy of MFV Partners. MFV Partners' approach is to back visionary entrepreneurs developing deep technologies and solutions that disrupt traditional verticals and ecosystems across automotive, manufacturing, retail, agriculture and knowledge services. Karthee has been a VC investor for 15 years, following a career as an entrepreneur with an electrical engineering background. Karthee talks about how technology is disrupting some of the established traditional industries like automotive and agriculture and provides great advice for investors interested in the deep tech space. He discusses the pitfalls of commercialization, and how important it is to think through before you dive in. Karthee emphasizes that startups and investors need to understand how solving a problem in science or engineering will ultimately lead to a product and customer. In addition, Karthee talks about the evolution of investing in the deep tech space, and how it is often focused on the later stages. He also talks about some of the companies that MFV has worked with, as well as some of the challenges particular to the deep tech space. Finally, Hall and Karthee discuss the state of capital availability in a general sense, and what that might mean for future innovation.

63. I'm Not Raising Funding Now, But...
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Description: While unforeseen events can overtake a startup, many CEOs simply don’t plan ahead when it comes to fundraising. For every $1M you want to raise, it will take you one calendar year to raise it. Most of the time, an entrepreneur who approaches me is raising funding today and is looking for a check now. In some cases, they need their funding within the next thirty to sixty days or something bad is going to happen. Most startups end up educating their investors during the fundraise. But there is another approach one can take. I once had an entrepreneur come to me saying, “I’m not raising funding now, but in six months I will be. May I keep you informed of our progress?” Of course, I said yes, because I wanted to see how it turned out. Over the next six months, the CEO sent me monthly updates about his progress. When he launched his fundraise formally, he was able to close it in just a few months. He used those six months to educate the prospective investors about his deal. This is a great technique for introducing your deal to a prospective investor. More investors sign up to track along since there’s no pressure to engage in the fundraise. It takes four touches or more to introduce your deal and educate the investor about it. It’s a good idea to start that process sooner rather than later in your fundraise. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

64. Investor Connect - Episode 312 - Amy Salzhauer of Good Growth Capital
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Description: In this episode, Hall welcomes Amy Salzhauer of Good Growth Capital. Good Growth Capital is a venture capital platform focused on early-stage technology companies. Good Growth Capital's General Fund focuses on the east coast, filling the gap with early-stage technology investing, with partners located in Charleston SC, Boston and NY. The fund leverages proximity to closely support founders and connect portfolio companies. In this episode, Amy shares her background before investing. Initially, she began working with scientists to get data for her doctoral dissertation at MIT. She was interested in why certain technologies successfully leave or don't leave the lab, even if they might have either a positive economic impact or a positive social impact. This then led to a Master's at Cambridge University in Plant Sciences with a focus on Molecular Biology, followed by an MBA at the Sloan School of Management at MIT. Writing her dissertation, she thought about how she enjoyed the work, and ended up starting multiple companies and becoming CEO of Ignition Ventures.

65. Tomorrow’s Valuation for Today’s Fundraise
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Description: I recently saw a pitch deck from a seed stage startup which had a small amount of revenue. The deck claimed a valuation of $50M because a similar company exited at that valuation. I asked about his valuation, and he said he claimed $50M because “that’s what my company will be worth.”     I reminded him that the example company who exited with a $50M valuation had $15M in revenue at the time of exit. He said, “I’ll have that too.” I often see entrepreneurs calculating valuations for today's fundraise using tomorrow’s revenue. Today’s revenue determines today’s valuation. Your business tomorrow determines your valuation tomorrow. Investors match investments with the current state of the business. As you increase sales, team, product, and IP, your valuation goes up. The takeaway here is raise only as much as you need to get to the next level. Otherwise, you’ll be raising more funding on a lower valuation, which means you’re giving up more equity than necessary. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

66. Investor Connect - Episode 311 - Joe Jesuele of HomeJab
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Description: In this episode, Hall welcomes Joe Jesuele of HomeJab, a nationwide real estate media production company. HomeJab applies innovative technology and user-friendly customer experience to make on-demand, professional-quality media services available to the real estate market. HomeJab’s professional videos, HDR photography, aerials, and immersive 3D virtual tour services are the most comprehensive offering of immersive digital media in the marketplace. Using HomeJab, Customers can schedule shoots with a professional photographer or filmmaker within the day. After shooting, HomeJab delivers edited products online within 24 hours, making it one of the fastest and most efficient media services available. Joe has a long-standing background in the real estate industry, working as a broker, lender, and builder. While building houses, Joe saw an opportunity and founded HomeJab. Wanting to give himself the best chance of selling properties in a tough market, Joe produced 3D models, walk-through videos, and drone videos. This resulted in property sales in less than 30 days. He realized the good visual content that he was creating led to success. With no one else was doing this in the market, HomeJab was born.

67. Investor Connect - Episode 309 - Gil Hernandez of GXH Capital
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Description: In this episode, Hall welcomes Gil Hernandez of GXH Capital. GXH Capital is a minority-owned venture capital firm to alter the diversity landscape in tech. They invest in startups with missions that will help the world. Their goal is to invest in diverse founders and founders that are committed to helping the underrepresented. Hall and Gil speak about his background and what led him to GXH. Gil has an extensive background in finance, and accounting and has worked at both Apple and PwC. This has given him experience working in large corporations and working with start-ups. Gil also shares his advice to investors before writing their first check. According to Gil, the key is diversity. Look beyond your immediate circle because if you only invest in companies with warm intros and first connections you’ll miss out on amazing opportunities.

68. The Growth Story: You Must Have One
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Description: Many entrepreneurs approach me for funding. I find the biggest misconception is that you must first raise funding before you can launch and grow your business. In reality, the ones who raise funding have a growth story and can communicate it effectively to investors. Investors funding startups look for market validation and product validation - the product works and people will pay for it. There are some investors who fund deals based solely on the team, the space, or the technology, but these are rare examples. Most look for what I call the “Growth Story”. They look for an operational revenue model in the business with increasing numbers on sales, team, product and fundraise. In talking with startup entrepreneurs, I find they avoid discussing their current revenues because they think the investor wants to hear big numbers. I tell them that investors don’t expect startups to have big numbers. Instead, the investor looks for repeatable and predictable numbers. If your company is pre-revenue, then you can show how the business model is successful based on the unit economics level. At the core, this shows that you can generate leads, qualify, and close them for revenue that exceeds the cost of acquiring and fulfilling the customer. Over time, you can improve these numbers. Scott Adams once wrote “Losers have goals. Winners have systems.” A startup pitch deck filled with forecasts alone is just a set of goals. A pitch deck showing how the business model currently works is a system. It’s best to show up with a pitch deck showing how your system is working today. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

69. Investor Connect - Episode 310 - Wenyi Cai of Polymath Ventures
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Description: In this episode, Hall welcomes Wenyi Cai of Polymath Ventures. Polymath is a company builder focused on emerging markets, with offices in Mexico City and Bogota. They are specifically interested in sectors experiencing global disruption enabled by technology in an emerging market setting. Wenyi's background gave him experience with emerging markets, and he applies this familiarity to Polymath's approach to startups and investing. Wenyi discusses the exciting state of venture capital in Latin America, as well as her advice to those wanting to invest in emerging markets. Wenyi also talks about some of the differences and similarities between established and emerging markets. Wenyi points out that, for many industries in emerging markets, there can be numerous problems throughout the value chain. She urges startups in emerging markets to stay focused on their core competencies, and not try to tackle a whole value chain at once. In addition, Wenyi explains venture-studio model, and how it works. Finally, she highlights fin-tech and ecommerce as areas of growth potential in emerging markets.    

70. Impact Investing
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Description: Today, we’ll talk about Impact Investing. There’s an old saying about angel investors: “They want to make a little money, have a little fun, and do a little good.” The ‘do a little good’ talks about how investors want to make a contribution to the community with their investment. Some do it through Impact Investing, which means the startup provides a community service beyond generating revenue and providing jobs. Impact investing is one way to narrow the field of startups to consider for investing. Each investor has their own set of things they care about, so if you are an impact startup beware -- the definition of impact is in the eye of the beholder. Or, as they say, ‘To each his own’. If you want to invest in impact startups, look for their impact metrics and not just their financial metrics. Financial metrics include cost of customer acquisition and lifetime value of customers, among others. Impact metrics, on the other hand, focus on the community benefit, such as how many students graduated, or a reduction in carbon footprint, or the number of rhinos saved from destruction. A good impact startup will have some evidence of the benefits they are generating for the community. Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding. Let’s go startup something today!

71. Should you Raise a Seed+ Round?
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Description: Today, we’ll talk about whether you should be raising a Seed+ round. In startup funding, you raise funding in stages. There’s the seed stage, when you have developed the product to some level and potentially have some users. Startups typically raise $500K to $750K for this round. You don’t want to raise more at this stage if you can help it, as you’ll be giving away too much equity due to your low valuation. The next raise is the Series A raise, where you typically have an annual revenue run rate of $500K or more. At this point, you can raise $1.5M to $2M - or perhaps more if your growth rate justifies it. If you find your startup has raised a Seed round but is not quite ready for a Series A, then you may want to consider a Seed+ round. A Seed+ round is essentially another raise at the Seed level, usually with the same terms. The key to remember here is that each round of fundraising brings dilution, and too much fundraising will become a problem later. Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding. Let’s go startup something today!

72. Investor Connect - Episode 308 - Bá Minuzzi of UMANA
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Description: In this episode, Hall welcomes Bá Minuzzi of San Francisco-based UMANA. After starting as an entrepreneur at an early age in Brazil, Bá became interested in capital and joined an investment firm, before starting her own investment boutique focused on real estate. She later moved to the U.S., diversifying her portfolio and expanding into the wealth management space. She recently launched UMANA, which is built as a multi-family office of self-made high net worth individuals. UMANA skews towards tech sectors, with an emphasis on impact investing as well. Bá emphasizes how important it is for founders to get a deep understanding their industry and market. As she points out, this is the best way to understand how your brand and company will get the traction. Bá talks about the confluence of the entertainment and investment worlds, and how celebrity endorsement is a game-changer when building traction. In addition, she illuminates her role as a "matchmaker" between high net worth individuals and promising startups, and what that process involves. For startups, she emphasizes how fundraising isn't always easy, and that you shouldn't take past success for granted. As Bá points out, staying in touch with investors and having a strategy for follow-on fundraising before the money starts to run out is critical for the long-term success of a startup.

73. Focus on your Ideal Customer
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Description:   To launch your startup, identify a large market then target a small segment of that market to attack first. Choose your first segment based on ease of access and a close fit to your initial product. In other words, focus on your most ideal customer, and then grow your business from there. Most startups want to take on the world but their efforts are easily diffused. It can be difficult to be all things to all people in the early days of your startup. You’re looking for wins, testimonials, and proof that customers will buy your product. Start with the ones who are the best fit and then expand the circle from there. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

74. Investor Connect - Episode 307 - Martin Mulvihill of Safer Made
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Description: In this episode, Hall welcomes Martin Mulvihill of Safer Made, a VC firm specializing in early-stage companies that bring safer products and technologies to market and protect our health and the natural world. With a background in chemistry, Martin has brought his passion for sustainable, environment-friendly chemistry to investing. For prospective investors in the health and wellness sector, Martin advises getting to know the leaders in the space. Martin also emphasizes the need to understand, at a high level, each of the product components. This might include branding, food packaging, formulated goods, and more. For founders, Martin talks about how they must have a clear idea about things like inventory management, channel approach, and supply chain. When looking at potential investments, Safer Made focuses on companies with a competitive advantage in terms of their product, and a consumer-targeted approach. Martin elaborates on their investment thesis and highlights how the challenges can vary widely depending on the specific product being made. Martin also highlights the packaging sector as a particularly robust area with room for growth.

75. 409A Valuations
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Description: As soon as your startup establishes a stock incentive plan and issues stock options to employees or other stakeholders, it’s time to work on a 409A valuation. This is a valuation of your startup for assigning a cost basis to the stock options. The U.S. tax code in section 409A requires private companies to show that their common stock options are issued at fair market value. This is similar to the property tax on your house in which the government assigns a valuation to your house for tax purposes. The 409A valuation does not mean your firm is actually worth that valuation. It’s only used to calculate your taxes. The market value goes up and down based on the state of the market and what value you have built into the business which increases every day for some companies. Employees, founders, and other investors are taxed on the value of the stock options they own and to avoid potential tax penalties, the startup must get a formal valuation opinion at least once every 12 months. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

76. What to Do when the Investor Says No
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Description: Changing the product, the price or the promotion? Today, we’ll talk about What to do when the investor says no. In raising funding you’ll hear “no” quite often. There are many reasons why investors do not invest. Sometimes, they are busy with other deals. Other times, they are looking for a deal in another sector or stage. If they are saying no because they are interested in investing and want to invest in your sector and stage, but not your deal, then what should you do? There’s an old saying in sales, “No good salesperson takes no for an answer.” Naive salespeople take this the wrong way and basically put their foot in the door till the customer buys something. A better salesperson pursues the opportunity by changing the pitch, the product or the price. If investors are saying no and it’s not for reasons of timing or a good fit, then you could change the price, which in this case is the terms of the deal. Offer a better valuation, additional warrants, or other incentives. You can also change the product by improving the business with increased sales, a higher-level team, or a better product. You could also change the promotion by repositioning the deal from one type of business to another. For example, you could reposition a deal from the EdTech sector to the impact sector. In summary, don’t take no for an answer but don’t just put your foot in the door and harangue the investor. Give them a better deal to invest in. Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding. Let’s go startup something today!

77. Startup Communication with Investors
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Description: It’s important for a startup to have regular communication with investors during the fundraise. It keeps the investor up to date on your progress and helps build the relationship. For updates, find  a cadence that fits your business. For fundraising, every two weeks is a good pace. After funding move to monthly or quarterly updates. In your communication in person, over the phone or in email talk about sales first. If you’re pre-revenue talk about activity with  beta customers and prospective. Always have some engagement ongoing with the customer - no engagement means no traction.  No traction means no funding. If you don’t have customers then start engaging with customers in some manner. Call out team members who did something great. Show what team members are doing to increase your customer engagement. This provides another angle for showing the progress you are making. Talk about how the product is moving forward. Highlight customer usage and the customer ROI which is what the customer is getting from the use of the product. Use anecdotes till you have numbers but get to numbers fast.  For example, take one customer and calculate their ROI from their usage of the product. Show all three levels of the fundraise and include interest, committed, and invested numbers. If the investor indicates they are considering a $50K investment, that’s interest.  If the investor commits to investing, that’s committed. If the investor funds are in your bank account, that’s invested.   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

78. Raise the Bar in Networking
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Description: I receive requests for introductions from many sources. Startups want to meet investors. Advisors want to meet growth companies. The list goes on. Over the years, I’ve learned to raise the bar. I could take whatever attachment they have and make the introduction. Instead, I raise the bar by requiring the requestor to make it better. I ask for a proper email address that represents their business instead a hotmail address. I ask the requestor to write a short paragraph about the purpose of the introduction. If they don’t have a focus, then I ask them to find one before sending it. I’m happy to make an introduction. I want it to be successful. I’m surprised by how many drop out after I ask for a short note explaining the reason for the introduction that I can use in the followup. If you want an introduction, then provide a few sentences describing the purpose of the introduction and why you are asking for it. If you ask for an introduction, offer something in return or pay it forward. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!  

79. Anecdotes Tell, Numbers Sell
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Description: I was recently talking with a startup who had a photo service. He spent $3K to test out his business model. He found he could sign up one photographer for every dollar spent and how much revenue he could generate with each one. As he spoke, I found myself engaging with his pitch when he had numbers. He talked about how he spent his $3K to demonstrate the cost of customer acquisition and the average lifetime use. Later in the discussion, I found my eyes glazing over when he started talking about how “everyone loves this service.” “It works great.” and other statements that spoke generally about the product but not specifically about the business. With investors, anecdotes tell, but numbers sell. Use numbers when you talk about your business. Demonstrate your expertise and the results of your research with specific facts. Show the unit economic numbers around your business model and make the case that you have a business that works. Make sure you don’t show up with general anecdotes as you may see the investors interest wane. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!  

80. Your One Key Metric: Mobile Apps
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Description: Every startup has one key metric to grow their business to the next level. The one key metric for mobile app businesses is user engagement with the app. This measures how much time or how often the user engages with the app. The user needs to engage on a regular basis and over time increase the usage. Some focus on total number of users but if most of those users don’t use the app more than a few times, then there’s no way to grow the business and later monetize. Others focus on downloads but this too fails to measure activity that leads to growth and monetization. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

81. Your One Key Metric: SaaS Businesses
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Description: Your One Key Metric: SaaS businesses Every startup has one key metric to grow their business to the next level. For a software as a service business it is the CAC: LTV ratio CAC standards for Cost of Customer Acquisition and represents the cost of signing up the customer including marketing, sales, and any other related expenses. Lifetime value and stands for the total amount of revenue from the customer. This is typically calculated by looking at the churn rate which is how many customers are dropping out each month. The metric compares CAC to LTV. A base ratio of 1:3 indicates a business model that is successful. In this example for every $1 spent on acquiring the customer the customer is spending $3 on the service. For venture funded companies the ratio needs to be 1:5 or better Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

82. Your One Key Metric: Network Effects
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Description: Every startup has one key metric to grow their business to the next level.  The one key metric for network effect businesses is organic vs. paid users. The share of organic users relative to paid users should increase over time because as the network expands, more users want to join. Users can come from those who are friends and contacts of other users. For two-sided marketplaces, users can come from both the supply side as well as the demand side. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

83. Your One Key Metric: Medical Devices
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Description: Every startup has one key metric to grow their business to the next level.  In applications requiring FDA certification, revenue is not the key metric, but rather FDA approval is. For medical device companies the key metric is cycle time through the 510K application and approval process.  The purpose of a 510k submission is to demonstrate that your medical device is at least as safe and effective as an existing medical device on the market today. The cycle time for approval varies based on type of device and ranges anywhere from 50 to 300 days. Your key metric compares your performance against the standard cycle time for your type of device. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

84. Investor Connect - Episode 306 - Kerry Rupp of True Wealth Ventures
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Description: In this episode, Hall welcomes Kerry Rupp, General Partner at True Wealth Ventures. True Wealth Ventures is an early-stage venture capital fund run by women. They invest in women-led companies with products and technologies in the sustainable consumer and consumer health sectors that more efficiently solve the next generation of challenges. They believe that because women make the vast majority of consumer and healthcare purchases, having them on the management team designing, marketing, and servicing products is extremely beneficial. In this episode, you learn more about Kerry’s background before early-stage investing. Right out of college she went into coding which was short-lived but got her into the tech space. She then spent 20 years in the early-stage-technology space working at early-stage companies. In her career, she has worked with everything from product management, biz dev, marketing, strategy, apps, and sales. She partnered up with former business associates to run one of the first accelerators in the market and fell upon investing in startups. They did not set out to create a venture fund next to an accelerator but realized they knew a lot about which startups were good and needed funding. The right model for the accelerator was to create an investment vehicle. It sprung out of the accelerator and was the right thing to do at that time.

85. Your One Key Metric - CPG
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Description: Every startup has one key metric to grow their business to the next level. For consumer product companies selling through retail, the key metric is same-store sales. You track ongoing sales by units per store each week or month. This metric tracks your organic growth rate of the product and can range anywhere from 1 to 10% month over month. If selling online the CAC: LTV ratio applies which is the cost of customer acquisition compared to the lifetime value. This is the same as recurring revenue companies. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

86. Investor Connect - Episode 305 - Sasha Shtern of Zero G Capital
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Description: In this episode, Hall welcomes Sasha Shtern of Zero G Capital. Sasha is a seasoned entrepreneur with deep ties to the Denver startup community, and known for investing and operating companies in manufacturing, construction services, and technology. In addition, Sasha is the co-founder of Rocky Mountain Blockchain and co-organizer of Ethereum Denver, one of the largest blockchain organizations in the region. Sasha got his start as an entrepreneur at an early age in eCommerce, and gradually build on that success investing in the community. Sasha talks about some of the investment opportunities in the Midwest and Mountain West, and how determining valuation is key, particularly when talking about startups across different regions. He explains how the differential in valuations between the middle of the country and the coasts can create opportunities for startups and investors. Sasha emphasizes the importance of capital efficiency and using early earnings to generate initial growth. He also discusses how there are fewer barriers to starting a business, and what that means for investing. Finally, Hall and Sasha discuss how the best founders can transition from being a technician to a salesperson and be good at both.

87. Your One Key Metric: eCommerce
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Description: Every startup has one key metric to grow their business to the next level.  For eCommerce, the key metric is sales conversion rate. Your conversion rate is the percentage of visitors who make a purchase.  For most sites, the conversion rate is 1 to 5 percent. You can find it manually by dividing the number of people who bought a product by the total number of visitors.   In many sites, there are micro-conversions going on throughout the site that lead to a purchase. For instance, a user clicking on a product on a category page is a microconversion, because it takes the customer down the path to a sale.   You can use these smaller conversions to better understand your overall conversion rate. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

88. Investor Connect - Episode 304 - Vickie Zisman of Bastet Communication
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Description: In this episode, Hall welcomes Vickie Zisman, Owner at Bastet Communication. Vickie is a skilled corporate communications professional. She has led corporate activity in marketing, marcomm, events, as well as investor/partner/international relations. She has worked in corporate PR, digital media & social networks as well as the cross-cultural business environment in the private and non-profit sectors. Her background in marketing and communications has put her in contact with entrepreneurs and eventually led to her making introductions and connections between startups and investors. Vickie speaks about her experiences with startups and investors and their contrasting points of view. She emphasizes that, for most investors, technology needs to be market-ready, and able to be translated into a solid business. She also highlights the importance of personal chemistry and shared vision between startup and investor, and a healthy partner relationship. Vicki also talks about the characteristics of the Israeli startup market and provides advice for investors looking into that space. Finally, Vickie explains how she achieves the best deals possible between both startups and investors, as well as what she sees as the biggest hurdles affecting today's startups.

89. You’re Three Pivots Away
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Description: The first vision of a business may seem grand and clear.  Upon launching the business you’ll find it doesn’t exactly fit with the market so you pivot.  It takes 3 pivots to get to the growth phase of your startup.   The first is the Target Market pivot-- you take this when you find the right market. You then have to change your business model to fit the economics of that new market.  I call this the business model pivot in which you find the right way to structure your business. Next comes the Team pivot-- finding the right people to grow and run that new business model. The originally envisioned business almost never is the one that takes you all the way to a growth stage.  You’re three pivots away from it. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

90. Investor Connect - Episode 303 - Brian Deutsch of XV Capital Group
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Description: In this episode, Hall welcomes Brian Deutsche, Founder of XV Capital Group. XVVC focuses on seed-stage investments across industries in the US. Before XV Capital, Brian was a CPS by trade with a focus on chemical manufacturing. Brian then went on to grad school to get an MBA to transition into the world of investment banking where he was an M&A advisor in the world of consumer and retail. There was a focus on food, beverage, multi-site, retail, and direct-to-consumer. Brian helped early-stage businesses with their positioning and preparing for their fundraising. That's what led to his passion to be more deeply involved in the world of early-stage companies and now investing in them.

91. What Documents do you Need?
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Description: Before you launch your fundraise, you’ll need to build some basic documents for pitching the investor and following up their due diligence. Start with a basic pitch deck, ten to 12 slides, that includes a non-confidential introductory version of your deal. For first presentations to an investor, keep it simple and focused on the core. The goal is not to tell the investor everything. Instead, tell him the key value points in your deal, along with basic details such as how much you are raising, and what you are going to accomplish with the funds. You’ll also need a terms sheet that an investor can sign to join the fundraise. You want to be able to take funding when offered. If you don’t have a lead investor yet, then start with a convertible note with a standard discount rate, interest rate, and cap rate. For your diligence box or what some call a dataroom, you should gather your documents regarding articles of incorporation, entity filings, patent filings, income statement, balance sheet, and 3-5 year financial projections. With these basic documents in hand, you are ready to engage investors. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

92. Investor Connect - Episode 303 - Josh Chapman of Konvoy
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Description: In this episode, Hall welcomes Josh Chapman, Managing Partner of Konvoy Ventures. Konvoy Ventures is an early-stage venture capital fund that focuses exclusively on video gaming & esports. Josh has a background in finance and has worked at both BlackRock and Morgan Stanley. He decided that he wanted to use those skills and be a life cycle company. He then decided to get into the venture space and launch his firm. According to Josh, Konvoy is entirely focused on investing in technology startups behind video gaming and sports. He says there is also a large need for focused investment capital in the industry. Konvoy is incredibly excited about the future of video gaming. They've gone from 100 million people in 1995 that played video games to now north of 2.6 billion people that play. That breaks down between about 2.1 billion on mobile, 1.1 billion on PC and about 700 million on game consoles. The future is very bright for the industry.

93. Where to Look for Funding
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Description: I’m often asked where startups should look for funding. There are many sources. First, start with your family and friends, as they already know you and believe in you. Second, expand the circle to include current and previous coworkers. If accelerators are appropriate for your deal, then consider those not only in your geographical area but also in your sector. Most accelerators take companies from across the country. Many are now offering funding of $150K or more. Third, look for a local network of angel investors. Fourth, ask around for family office investors in your area. These are high networth individuals who have organized their startup investments into a formal process. Finally, approach venture capital, but only if you have a deal that fits the VC funding model, which looks for a 10X return, a scalable business model, strong growth and an experienced team. There are literally tens of thousands of investors in the startup world today. The key is to gain an introduction, make a pitch, and then follow up to close. In summary, it’s best to start with those you know and use their funding to show support and momentum to those further out in your network. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

94. Investor Connect - Episode 302 - Paul Sethi of 2048 Ventures
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Description: In this episode, Hall welcomes Paul Sethi of 2048 Ventures. Paul is a co-founder and Managing Partner at 2048 Ventures. For 7+ years prior to 2048 Ventures, Paul was CEO of Redbooks, leading sales data and intelligence platform for the marketing industry (acq. by List Partners - May 2018). He also co-founded Robuzz, an advanced ML/NLP practice, with a real-time alerts and data extraction engine built for enterprise. Paul has been a first-check angel for over a decade, including in Flexport, SeatGeek, Transfix, Knotel and LearnVest. He serves as an Advisor to Transfix and OpenFortune. Early in his career, he was a public company investor focused on the tech sector. 2048 Ventures is an early stage venture capital firm. They invest in exceptional first-time entrepreneurs who are building businesses differentiated through technology. Based in NYC, and invest in founders from New York, Boston and Emerging Tech Cities.  

95. What Type of Investor Should You Seek?
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Description: For early stage funding there are several types of investors. Angel, VC, Family office, or customer funding. So which type is right for your deal? This depends on your type of business, the return and timeframe for that return. VCs want standard business models in high growth sectors with a 10X return in seven years. Angels want 3 to 5 times their money in 3 to 5 years and have capital preservation in mind. They often look at businesses in non high-growth sectors. Family offices are not time sensitive and can be very patient money but do expect outsized returns for that patience. They will also look at businesses in non high-growth sectors. Potential customers are also candidates to fund your deal by pre paying or buying customized versions of your product. While this is not an investment, the cash earned works like funding to build your business. In launching your fundraise, consider which investor fits your business type, return, and timeframe. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

96. Investor Connect - Episode 301 - Michael Mealling and Steven Jorgenson of Starbridge Venture Capital
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Description: In this episode, Hall welcomes Michael Mealling and Steven Jorgenson of Starbridge Venture Capital. Michael co-founded Masten Space Systems, was CTO of Seraph Group (a seed-stage VC fund), is the CEO of the Waypaver Foundation, and the President of the Moon Society. He has helped build several startups over the years ranging from telecom consulting to social media. Steven is a founding partner of the Space Finance Group, Quantum Space Products, Space Angels Network, and Integrated Space Analytics. Steven is also an active angel investor in numerous other aerospace startups, giving him valuable personal experience as both the Investor and the startup Entrepreneur, as well as extensive experience as a professional investment fund manager. Starbridge Venture Capital is a venture capital fund focused on the overlap between the space technology sector and traditional technology investments. There is true innovation happening across multiple sectors of space science and technology and at a pace that is quite obviously accelerating.

97. What Deal Structure Should You Use
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Description: There are two primary deal structures for your startup fundraise. There’s the convertible note which is a debt instrument that converts to equity later. However, if you want to use a straight debt instrument you should use a promissory note. Then there’s equity. It gives ownership rights in the company. The ownership is set by the valuation put on the company. An equity deal often comes with additional terms such as board seats, voting rights, and more. Most startups use the convertible note to kick off their fundraise because it doesn’t set the valuation of the company which drives how much the investor gets for their investment. You will find setting valuation is a major step in the fundraise process. Until there is a lead investor and the valuation is set, there will be many investors who want to “just be in the deal,” but not spend time setting the valuation. At some point in the fundraise an investor will express interest in joining but wants equity. If they are investing $100K or more, then they are a candidate to be the lead investor. After the equity investment is made, the convertible notes convert into equity. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

98. Investor Connect - Episode 300 - Grant Newlin of Newlin Ventures
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Description: In this episode, Hall welcomes Grant Newlin of Newlin Ventures. Grant started his career as a management consultant at UI, before moving to investment banking, M&A, financial planning, and eventually working in food tech with Kraft Heinz. He ultimately started working with New Stack Ventures doing angel deals, before founding his firm, Newlin Ventures. Grant talks about how the angel and VC investment worlds have changed in recent years, and what excites him about the food tech space, whether it is in CPG, agricultural, restaurants, or software. He explains how food tech differs from other traditional tech businesses, particularly when it comes to fixed costs and volume. Grant also talks about how funding for food tech companies often follows a different roadmap than other startups, and how getting positive gross margin in the beginning is key. He touches on how the food tech space has evolved, and what role the larger CPG giants and small startups are playing. Grant discusses his investment thesis in the food tech space, and some of the technical and regulatory challenges to expect. Finally, Grant advises would-be startups and investors in food tech to five some consideration to building in-house to ensure product control.  

99. How much funding should you raise?
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Description: Every day I ask entrepreneurs how much they are raising. Most begin with the big number--the full and complete raise they anticipate to run. This ranges usually between $1m and $10M. It’s good to have the big picture in mind. Some actually consider raising it all at once because “they want to get the fundraising out of the way.” I remind them that raising too much money on a round will cost you equity that you don’t have to give up. Your valuation is low at the beginning. It’s best to raise only the funding you need to reach the next milestone, and no more. As you grow the business, your valuation will go up and you’ll give away less equity. Consider breaking your fundraise into tranches. It will save you time and make each fundraise easier. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let’s go startup something today!

100. Investor Connect - Episode 299 - Reed Berglund of iSnap
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Description:   In this episode, Hall welcomes Reed Berglund of iSnap. Reed is a tech startup advisor and CEO of iSnap, a SAAS company with a platform that is helping businesses collect customer video stories and gauge customer satisfaction. As an advisor, Reed supports a portfolio of the company's capital, content, time and experience. The current portfolio of companies includes S4M and Hanna Essentials. Reed was CEO and Co-Founder of Fullbottle whose company was one of the early entrants in influencer marketing across on Instagram, Facebook, and Snapchat. A marketplace for creating and acquiring visual content from photos to videos from creators around the Globe.