Category: Fundraising

Series A sweet spot

Series A Sweet Spot Combines Size & Slope

I often get asked how much revenue is needed to successfully raise a Series A.  I can tell the entrepreneur wants me to confirm what they might have read in…

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negotiating valuation cap

Negotiating Valuation with Investors

I know, you just want me to show you the scorecard and associated secret formula investors use to decide a supposedly “fair” valuation for your company.  Unfortunately, you are only…

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bootstrapping

How Long Should You Bootstrap?

With as little as it costs to get a software startup off the ground these days, many entrepreneurs start off as what we call “bootstrappers” rather than fundraisers.  There’s nothing…

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bridge round

The Fundraising Chasm

Not much different than the famous chasm described in Geoffrey Moore’s book “Crossing the Chasm”, funding your startup venture over time also has a chasm.  This fundraising chasm doesn’t trip…

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customer success

Your Most Valuable Resource

When I ask entrepreneurs what their most valuable resource is, I ALWAYS get one of two responses: money (aka – funding, cash) or people.  And it’s hard to argue about…

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startup fundraising

Using Verbal Commits to Secure Your First Investors

Almost no investor wants to be the “first check written” for your round of funding.  This makes total sense if you think about it from their perspective.  If you don’t…

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series a

A Series A Isn’t Just a Large Seed Round

Here’s a scenario I commonly see.  A startup raises $1M in total seed funding to turn their MVP into a real product and figure out a profitable and scalable customer…

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negotiation

Tell Me Your Price and I’ll Tell You My Terms

I didn’t invent this quote (can’t remember where I heard it) but what a great one to help remember that with most business-related transactions, price is definitely not the only factor.  Three…

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equity crowdfunding

What You Should Know About the Equity Crowdfunding Rules

FINALLY!!!  After years of waiting for equity-based crowdfunding rules (aka Reg CF) to be adopted and put into effect following legislative approval of the JOBS Act of 2012, it’s finally…

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pitching event

Preparing for a Pitching Event

I’m not talking about a stand-up presentation in front of an individual investor or VC firm but rather some form of on-stage pitching event.  It might be called a “demo…

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Defending Your MVP or Prototype Stage with Investors

While you are still in the idea phase, investors tend to focus on vision, promise, potential and personality traits of the founder(s) because that’s all you have for them to…

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bridge note

Bridging a Gap Using a Convertible Note

Most startups think of a convertible note as the most common fundraising vehicle used during the pre-seed and seed stages (see related article titled “Convertible Note Basics“).  What they might…

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10 Basic Fundraising Terms You Must Understand

Every field of study has its basic vocabulary of words and phrases that come up over and over again. This vocabulary is so fundamental that it is used to explain…

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Investors Write Checks for Outcomes, Not Activities

In a previous article, I described various ways to determine how much money to raise (you can read it here).  If you’ve decided and communicated how much you are raising, you might…

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market sizing

Sizing Your Market

Market sizing is a very important element of your business plan and pitch deck.  The size of your market a question you’ll get asked all the time by investor prospects. …

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Setting the Max Authorized Amount on Your Convertible Note

Let’s assume you have already determined $500K is the ideal amount of money to raise in your current fundraising round (see related article titled “How Much Should You Raise”) and…

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convertible note extension

Extending Your Convertible Note

You didn’t plan for it to happen this way but you’re reaching the maturity date (end of term) on your convertible note and didn’t raise money in an equity round to cause…

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exit strategy

Answering the “Exit Strategy” Question

You’ve just completed a great investor pitch with heads nodding and good interaction.  You’re about to ask “Does this opportunity interest you enough to explore an investment?” when instead you get…

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The “Yeah, Right” Rule

Similar to the “So What” rule, every time you make a claim, prediction or forecast, imagine your audience is thinking to themselves “yeah, right!” in skeptical fashion immediately after seeing/hearing your…

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SAFE versus convertible note

Comparing the SAFE to Convertible Notes

Made available by Y Combinator in 2013, the SAFE investment instrument was intended to improve on the highly popular convertible note used by startups during the seed stage or as a short-term bridge between…

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establishing valuation

Establishing Valuation Before Revenue Traction

Once you have a product in the market with an increasing number of paying customers, your valuation will increasingly be driven based on financial and operational metrics.  Don’t get me wrong,…

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elevator pitch

Your Elevator Pitch Only Needs to Accomplish One Thing

There’s a reason it’s referred to as an “elevator pitch” – it must be expressed in a couple of sentences and no more than 10 seconds.  And that might even be…

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investor research criteria

Investors’ Research Varies Widely Before Making a Decision

It stands to reason that each investor is different in the way they go about making their investment decisions, both in terms of time spent and the type of research…

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negotiating valuation cap

Justifying the Valuation Cap Amount in Your Convertible Note

In a previous article I explained what convertible notes are and when they are commonly used (see article titled Convertible Note Basics).  Now I’d like to dive into one of…

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startup fundraising

How Much Should You Raise?

Hopefully you are reading this before you decide how much to raise.  I’m referring less to very early seed funding just to get your minimum viable product (MVP) built, which…

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describing problem

Use Storytelling to Describe the Problem You Solve

In a previous article I suggested the proper flow and order of topics for your pitch deck (see article here).  Now I’d like to dive into the Problem section with…

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pitch deck

Pitch Deck Flow (Topic Order)

Your pitch deck will become the single most valuable communications tool to use with external audiences of all types.  You will use it for multiple purposes.  If you ever decide to…

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convertible note basics

Convertible Note Basics

This article isn’t intended to get into every detail of convertible note mechanics. But I get enough questions about when to use them and what the basic components are that…

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When Prospective Investors are Looking for Predictability

If you’re fundraising during the very early formation of your company, your ability to predict the future will be very difficult.  Of course, you can imagine and dream what might…

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Consider Everything Short of a “Yes” a “No”

I recently heard Dr. Robert Wiltbank from Willamette University use this analogy and loved it so much I had to share it with others.  Entrepreneurs are, by nature, very optimistic.  It’s one…

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closing an investor

Getting to Closure with an Interested Investor

Some investors want to be the last one to commit and few want to be the first.  It’s mostly a safety and survival technique.  Think about it from their perspective. …

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fundraising

Having Trouble Raising Money?

Fundraising is rarely easy and is usually a far underestimated undertaking by entrepreneurs that haven’t done it before.  In the fundraising section of this blog, I describe ways of approaching the…

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startup fundraising

Don’t Spend to Your Fundraising Goal Until It’s in the Bank

I know, I know – your idea is hot, your business plan is solid and you got an awesome reception from the recent demo day you participated in.  You’ve got simultaneous dialog going…

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Stuck at 75% of Your Fundraising Goal – Now What?

Here’s the scenario. After finding your first investor and then having a flurry of activity over a month or two (see related article titled “The Domino Effect of Fundraising”) that…

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The domino effect of fundraising

The Domino Effect of Fundraising

Fundraising can seem like herding cats.  You get some initial momentum, potentially from a pitching event, and have a bunch of conversations but can’t seem to get the funding commitments…

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so what rule

The “So What” Rule

I use this rule all the time when advising startups and early stage companies.  Actually, it has application in any sort of sales pitch, regardless of your company’s stage.  I…

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“And Then Magic Happens” – Are You Accidentally Making This Claim?

I just came from a startup pitching event with about 100 angel investors and VC’s in the audience.  The startups only had the typical 5 minutes to give their pitch,…

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pitching event

Why Participate in a Pitching Event?

The immediate response is obvious: to facilitate the fundraising process.  But what other benefits can you expect to gain from participating in a pitching event?  How about these for starters:…

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