Wednesday, July 11 by David Askaripour in Funding | 7 Comments
Last night I was fortunate enough to be able to sit in on a venture capital presentation. A friend of mine was pitching his idea to a few investors and I was taking mental notes of what the VCs were asking. Below are a few questions that were asked and my analysis.
On a scale from 1 to 10, how passionate are you about your idea?
The investors were trying to gauge how serious and confident the entrepreneur was about his company. They also wanted to know how confident each partner was on a scale from 1- 10. They stressed that commitment level was extremely important.
Do any of your partners have other obligations that would distract them from the company?
They basically wanted to know if any partners had other jobs or family-oriented responsibilities that would distract their focus.
If we were to bring in a CEO that wanted to make changes to the business that would be in the best interest of the company, how comfortable would you be with that?
They wanted to see how flexible and open the entrepreneur would be to relinquishing some power in the best financial interest of the company. They wanted to test his comfort level.
What are the backgrounds of each partner — where are they located, what have they done in the past, and what do they each bring to the table?
The investors were definitely more interested in the quality of the team than the actual idea. They clearly stated that the “team is more important than the idea.” I agree, without a strong team that each bring unique value and dedication to the table, you can’t get far.
Are you looking to sell the company once it’s established?
They wanted to know if you’re in it for the long-haul or not.
How far along are you to launching? And what are the milestones that you’ve already established?
They wanted to see that he was setting goals and achieving them.
I hope these insights into a VC presentation gave you an idea of the sort of questions to expect when you’re trying to raise capital. This was just a snippet of the entire meeting, but it’s enough to get you thinking on that level and to get you started on preparing for your pitch!
Friday, June 22 by David Askaripour in Funding | 4 Comments
A friend of mine just sent me a link to Plan Heaven, a site focused on linking entrepreneurs with investors. Never used their service, but I think that it has some cool features than may be worth exploring.
For those of you aggressively pursuing investors and trying to raise some capital for your startup, spending the monthly $49 for the capability to share video presentation of your idea, a business plan, and the chance to go one on one with a Angel / VC might not be such a bad deal.
What I really like about this service is the “video” option. You and your team can record a video presentation of what you are doing with your startup and upload the video to the site. Plan Heaven will then update potential investors with your video and see who bites at the opportunity to learn more. Personally, if I shot a video for this, I wouldn’t release any proprietary information — just keep in short, simple, and give ‘em just enough for them to want to learn more.
Monday, April 16 by David Askaripour in Funding | 3 Comments
I came across this article from a post in MP Nation. If you are running a business and have ever thought about joining an incubator, taking on partners, or seeking Angel or Venture Capital, then you should read this:
Equity math for startups »
Friday, February 16 by David Askaripour in Funding | 6 Comments
A few days ago I was fortunate enough to sit down with a VC (venture capitalist) to chat for a few minutes about my projects. Nothing formal or anything like that. Just a chat. I was introduced to this VC from a mutual friend that thought it would make sense for us to meet and get to know one another.
It was an interesting meeting. Of course he was interested in learning about Mind Petals and how it got started n’ such. I was glad to share the story of Mind Petals and how it got started, where we are going, and what’s happening with the community.
We both went into the meeting knowing that there would be no investment offer, but, nonetheless, he was still very interested in the “popularity” of the network.
One question that he continued to ask was “how do you measure your traction?” I figure that this is a typical question that VCs ask. He narrowed his questions further by asking for metrics such as: visitors, page impressions, unique visitors, etc… You know, the usual traffic questions.
As he asked these questions, I couldn’t help but think about the questions that he “wasn’t” asking. Such as… what’s the potential of the network, how does it help young entrepreneurs, what sort of influence do you have, what type of businesses are your members involved in, etc…
I think that these type of questions would have given him a better idea of the community and what we are really up to. But I guess VCs take the SAT approach to determine whether or not they are interested in your company or not.
What’s the SAT approach? Well it’s something that I just made up. This approach can best be explained when you think about what colleges look for when accepting students.
Think about it, the number one determinant of getting into a good college is your SAT scores. You can be brilliant, creative, and extremely intelligent and still have low SAT scores. SAT scores mean nothing in the larger scheme of things and they cannot measure innate intelligence.
Colleges accepting students into their schools based on their SAT scores is akin to VCs investing in companies based solely on their metrics (for websites) and revenues.
Just as colleges so easily dismiss students from entering their school because of a number, VCs blindly throw away opportunities because they can’t see the true potential; because they are blinded by not seeing a site with tons of traffic or millions in revenue.
Young entrepreneurs such as us are shaking up the entire industry. We are creating business models never before seen. These old metrics and checklists to see if we are capable of receiving funding or not simply just won’t work anymore.
We are playing on a new field and I guess it’s going to take time for VCs to have a better vision of what has potential or not. By that time, it’ll probably be too late and the tides will have turned as they begin to “chase us.” Then I guess we can dismiss them, eh? I predict that this will be the case for more and more young entrepreneurs as our ventures mature.
I’ll leave you with this saying: “People fear what they don’t understand.”
Tuesday, August 22 by David Askaripour in Funding | Leave a Comment
Imagine waking up in the morning, eating breakfast, going to class, studying for your exams, then proceeding to run your own Venture Capital firm. Well that’s exactly what the students from the University of Utah’s School of Business are doing.
With the collaboration of professors and professional investors, these investment-savvy students have the ability to invest capital into business of their choosing through their University Venture Fund (UVF). Such a program is great because the group heavily invests in companies that aren’t “safe” enough to go public or businesses that are deemed too “risky” from banks. That should bring a smile to the young entrepreneur who is currently running a start-up and looking for capital.
Forget the books! Forget the boring lectures! Forget the presentations! These students are learning the ins-and-outs of investing, start-ups, and entrepreneurship while using real money to make real investments — they are not only learning but they are actually doing. This student-run fund is the first that I have ever come across and it looks like one of the most promising educational experiences that an entrepreneurial student can ever be involved in.
Let’s be honest, who better to seek and invest in young start-ups than college students? Students are the ones creating these “risky” businesses that nobody seems to want to invest in, so it only makes sense to empower a bunch of students to fund them. Over the years we have become extremely savvy and intelligent when it comes to understanding what works and what doesn’t, notably with web-related services.
UFV is definitely one of a kind as it takes the number one spot for the largest student controlled venture fund in the nation. If these funds continue to pop-up around our colleges, many young entrepreneurs can look forward to brighter days when it comes to seeking capital.
I think many of us will agree with the legendary Warren Buffet when he states:
“If this were around when I was in school, I’d probably still be in school.”
Wednesday, August 16 by David Askaripour in Funding | 3 Comments
When first starting a business many entrepreneurs have little to no cash on hand. When I first started out I had big dreams of getting millions of dollars from some Venture Capitalist willing to throw bags of cash at me. Nope. It never works like that.
I firmly believe that one of the best sources of funding that you can receive as a start-up is from your family. I was fortunate enough to raise a few thousand dollars in seed funding from my family when I first started out.
It’s more realistic to seek funding from family than to envision receiving bucket loads of cash from investors dying to pump cash into your business. In fact, it’s quite the opposite as VCs turn down most proposals within seconds of reading them. The odds are against entrepreneurs ever seeing the face of a dollar from any VC.
Knowing that, close relatives and your immediate family can be a lifesaver for the budding entrepreneur in dire need of capital. You probably won’t have to worry about strict contracts and disgustingly high interest rates when dealing with angel investors such as your family.
As a new entrepreneur, you must understand that starting a business without a lot of cash to back you is going to be commonplace. It’s going to be tough, but you have to be creative and just stick with it.
Don’t drive your car anymore? Then sell it. Have a ton of books that you’ve read? Then sell them on Amazon. Have a bunch of camcorders, phones, and gadgets that are of no use to you? Then get rid of them on ebay.
These are just a few ways to help fuel your business. It’ll be up to you – the entrepreneur – to really think about the best ways to seed your new business. With a little bit of creativity and some follow-through, your efforts can go a long, long way.
Keeping Sharp:
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