The Fundraising Field Guide Book

The Fundraising Field Guide

The Fundraising Field Guide was written to help early-stage tech startup founders decipher and navigate the fundraising process. It provides an overview of the soft and not-so-soft challenges you will need to prepare for as part of your fundraising journey, including things like reaching out to investors, dealing with rejections constructively, preparing materials and financials, understanding valuations and deal terms, and how to manage the legal process.

I hope you enjoy the book and get lots of use from it. I’ve adopted a ‘free-to-download-and-donate-if-you-like-it’ model because hey, if you’re fundraising, you’re bootstrapped right? If you do enjoy it, however, please consider donating to one of the charities in the “Get & Donate” section of this site to support organizations that are helping people around the world with their social entrepreneurship challenges.

To download the book, go to the book’s main website –

http://fundraisingfieldguide.com/donate

Continue Reading

Seedcamp Podcast, Episode 26: Will Bunker of Silicon Valley Growth Syndicate

In the ‘Seedcamp Podcast Series’ we talk with key people in the tech startup industry to hear their stories and gleam key advice and learnings from their experiences.

We had the chance to sit down with Will Bunker during this year’s Collision Conference in Las Vegas. Apologies for the noisy background, but conference areas are not particularly great!

An accomplished entrepreneur and investor, Will Bunker co-founded One-and-Only.com in late 1995. He and his partners grew the company into the largest online dating site and eventually sold the firm to TicketMaster-City Search for $45 million in June of 1999. Soon after, the company was rebranded as Match.com.

Mr. Bunker has a passion for working with early stage entrepreneurs, helping their firms grow and working towards an exit with the highest possible valuation. A long time resident of the Silicon Valley, where he lives with his wife and two teenage children, Will serves on the screening committee of the Band of Angels, the oldest funding organisation in the Valley. He also serves as a member of the Silicon Valley Founders Institute.

The Founders Institute is a global launch network that helps entrepreneurs create meaningful and enduring technology companies.

If the above player doesn’t work for you, you can also listen directly from our Soundcloud page.

Listen to similar episodes like this:

Subscribe on iTunes or by pointing your podcast player to the link below…

http://feeds.soundcloud.com/users/soundcloud:users:126198189/sounds.rss

Continue Reading

The Top Ten Fundraising Fails

2634356788_8583bf48c4_z

Fundraising isn’t easy, even if done well, its fraught with all sorts of ambiguity and frustrations. To that very point, I recently wrote a blog post about the fundraising mindset in order to help you set a tone on approaching the process.

That said, there are things you can do to make it go better than others and things you can do to make it go worse… and in the spirit of the ‘Tonight Show’s’ top ten list, below are my top ten things that will likely cause a fundraising fail situation.

Avoid them and learn from your mistakes and you will increase your likelihood of success.

– 10 – Presenting with a style that doesn’t capture the right attention. Yes, being over the top and dropping ‘f bombs’ might get you attention, but is it the right attention? Is it focusing the attention on what your message or just you? Also, what about a boring slide deck? Or a a deck that is missing product shots? Do these represent you well? What if you say your product is simple, but then your deck is really over complicated.. does that sound right?

– 9 – Not having a proper fundraising plan. Fundraising requires research. Find out if your potential investors are even interested in your sector.. have they invested in your competitor? What amount do they typically invest in? Going to someone that is a late stage investor when you are raising a little bit of money is like putting in a minimum order of 10 pizzas when you can only eat one.

– 8 – Not understanding your customer and how to reach them. When presenting or speaking about your customer, do you show a mastery about their issues? Do you understand what makes them tick and why your solution is the one that will likely best serve their needs? Do you also understand how to reach them? Where do they shop? What media do they consume?

– 7 – Unable to demonstrate a real pain for your customer (and how your solution fixes it). It is always tempting to create something that is useful to you, but is the solution you’ve created really a necessity or just a nice-to-have? Demonstrating a real pain, usually through some form of customer validation, is crucial in making a convincing argument for your startup.

– 6 – Assuming that a general market size study applies to your startup. One of the things you can do to quickly show that you don’t have a full grasp of your market is by showing a much larger segment than the one you operate in.  For example, I’ve seen pitches where an iOS app that is for sports tracking, mentions all mobile users worldwide as their market size… when actually, its more like mobile-sports-tracking-enthusiasts, which is a sub-segment of that bigger pie.

– 5 – Not truly understanding who your competitors are. This one is easy. If you think you don’t have competitors, then you probably haven’t researched hard enough. Rarely are there ideas that no one has thought about, but secondly and perhaps more importantly, sometimes there are substitutes which are ‘good enough’ which you need to be aware of and show how your solution overcomes the momentum that those existing solutions already have.

– 4 – Not knowing your cash needs & cash burn. If you’re going fundraising and you don’t know how much money you need, how long it will take you, to achieve what, and how you will spend it… well, then don’t fault investors if they aren’t impressed with your request for investment.

– 3 – Not explaining why your team is the team that will make this happen. Your team is 99% the reason why your company succeeds, and the idea is probably like 1% (I’m guessing on the numbers, but this guess feels right). If you skim through the ‘why’ of why your team is the right one for this investment, then you’ll likely miss an opportunity to impress an investor. I recently wrote a blog post about how to best think through your team slide here. Also, if you want to learn about how an investor evaluates your team, read this one.

– 2 – Having your existing investor shareholders own more equity than the founders. Toxic rounds that precede the round you are raising for can really negatively affect your fundraising plan. Read about why here. In general, try and make sure that you take investments that don’t jeopardize your future ability to raise follow-on funds.

– 1 – Not reaching out to an investor through an introduction. Lastly, the best thing you can do for yourself is get an introduction to investors that you want to meet. Introductions are great ways to have immediate validation. Here are some other ideas on how to reach out to other investors.

– Bonus – Not learning from your mistakes. Learn from your mistakes. You will make many, and that’s OK, so long as you don’t beat yourself up, understand what went wrong, and then iterate on it. In the words of Einstein – “Insanity is doing the same thing over and over and expecting different results.”

Below is the video of this presentation.

Below is the slide deck that I used to present at Google Campus’s Fundraising Day.

Continue Reading

What Tier is your Investor (or what to look for in an investor)?

MP900342067

MP900342067

One question that I often get from founders is what ‘tier’ a prospective investor is. As in, what differentiates their prospective investor over another as ‘better’ or ‘worse’, relatively speaking, and on what basis.

Just to clarify, although there is no formal ‘ranking system’ for the tiers of investors, generally speaking, every investor sort of knows where they ‘rank’ relative to others or at least relative to the top investors. The best funds, generally known as ‘Tier 1 investors’ are the most in demand, and then, the tiering is largely subjective from that point onwards as to whether a fund is Tier 2, or Tier x, so there isn’t a huge benefit to spending too much time trying to actively find the ‘objective’ rank of an investor.

That said, what IS worth exploring is what differentiates the better ‘tier’ investors from the rest. Below are the seven attributes that I believe differentiate ‘the best from the rest’.

As you seek out potential investors, keep an eye out for these variables, the more of these your prospective investor has, the likely better off you will be as a founder.

1) Has a great network – the biggest value-add, in my opinion, that an investor can bring to the table, is their network. The larger their network, the more doors they can open for you. Nothing beats a direct intro to someone you need to meet.

2) Has a great brand-name – this helps with the network, but having an investor with a great brand name, either as an individual or fund, can help not only open doors indirectly (as in not requiring an introduction), but also to provide your startup with instant validation to potential customers, partners, and new investors.

3) Has sufficient levels of capital to support you – Although different investors have different strategies around this (eg. an Angel rarely can follow-on as much as an institutional fund), it is generally a good thing to have an investor who can invest in your company throughout the lifecycle of your company.

4) Has sector expertise – One way that investors can differentiate themselves as a top tier investor from the usual suspects is by having focused experience in your sector. For example, an investor could be a generalist Tier 2 fund (remember that this is subjective), but as an ecommerce investor they may be a Tier 1, great if you are a ecommerce company, but just ok if you’re a fintech company. This is because they will likely have a large network (see point 1 above) in their sector of expertise.

 5) Has deal experience – You will go through a lot of unique and stressful situations during a fund raise. It really helps to have someone who has gone through the process before and can help smoothen things out between all parties involved if needed.

6) Isn’t burdensome – An excellent investor does not burden the founder during the investment process with unnecessary or unusual diligence requirements for the stage your company is in. For example, a company that is very early stage will likely not have much to be ‘diligenced’, if an investor is requiring you to have an accurate version of what will happen in your company 5 years from now and you started your company three months ago, question whether they truly think the information you will give them has any likelihood of being true (and whether you think they’d make a good investor for you).

7) (Lastly, and most importantly) Has a big vision – Good investors on your board will help you by working with you on best practices for company building, but great investors will help you by helping you set the right vision for your company. The better investors help you think big because they think big themselves. This means not only having an attitude of can-do vs can-not, but also having the experience on how to coach you through this type of thinking.

Now, keep several things in mind, however, after reviewing this list:

1) There are many new investment funds and or individual angels that come to the ecosystem and therefore may not have an established brand name, but have great networks and experience. Don’t dismiss them prematurely, however, do ask others that they’ve worked with what it’s like to work with them.

2) Although founders that have done well and gone on to join a fund can be awesome people to have on your board, however, investors don’t have to have been founders themselves to be great investors. Experience as investor, having done many deals and knowing how the best companies operate, can count for a lot, so look for  a blend of all attributes in your investor and not just look for a founder-turned-investor that can empathetically relate to what you’re going through, but provides little beyond aged anecdotes about how they did things.

3) If you’re ever stuck between two potential investors, really really consider that the person that will be working with you on the board will help you define many things about your company over the coming years. Choose wisely and ask yourself who you would rather work with long term, you wouldn’t want too chose someone on a brand name alone, but causes you hair loss, heart burn, and emotional stress on a regular basis.

I hope this helps you in your quest to find your potential investor.

Enhanced by Zemanta
Continue Reading