Thoughts on startups by investors that
fund them & entrepreneurs that run them

Blog Archives

Are balance sheets or profit and loss statements necessary to produce for early stage startups with no revenue?

Investors absolutely need to know the specific financial status of a company before they invest, because they are going to be part owners of the business. How much would you be willing pay someone to take over their bank account if you had no idea how much was in it?

So yes, it is absolutely standard practice for investors to require both existing financials

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As an investor, what are the most important items that a startup must have for you to invest?

Large and growing market Real domain expertise Provable product need Scalable business model Competitive advantage Platform/partnership/bizdev/API strategy External validation (ideally traction and/or passionate customers) Viable business structure and cap table Reasonable valuation Proven team (tech/product/design/marketing/sales/domain/etc.)

But most important of all, it must have an entrepreneur on whom I’m willing to bet. And the attributes I look for in that entrepreneur are:

7 Questions Test Entrepreneur Focus Before Funding

The first question most people seem to ask when contemplating a new startup is where they will get investor money. That’s certainly a valid question, but all the money in the world won’t make your business work if you don’t have a plan to use it, or hate what you are doing. I suggest that there are several important questions

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What percentage of a Series A round is typically invested by the lead investor?

This is changing as the whole world of venture/angel/seed funding is rapidly morphing, but typically a ‘real’ Series A round is small enough for one traditional venture fund to do the whole thing itself. Very occasionally, they might split it with another fund, but that would probably be the exception.

What we are often seeing, however, is large-ish “seed” rounds

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If a startup has an unreasonably high valuation in its F&F round, would Angels and VCs be concerned?

Yes, absolutely. In my experience, that may well be the #1 killer of deals that should otherwise happen.

Consider the math: if the F&F round is $60K for 1%, that means the ‘post investment’ valuation of the company is $6 million. If the company now approaches a professional investor such as a VC, angel group or serious angel, let’s say

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8 Tips on How Much Money to Ask for from Investors

Startups ask me “How much money should I ask for?” The simple answer is the absolute minimum amount you need to make your plan work. Some entrepreneurs try to start with a huge number, hoping they can negotiate and close on a smaller one, while others understate their requirements, in hopes of getting their foot in the door with an

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10 Entrepreneur Milestones That Make Funding Easy

Every investor expects to see some business traction, both before and after a funding event. If you have been working 20 hours a day, and spent your last dollar, but have no results to show, investors will be sympathetic, but will probably tell you that your dream doesn’t have wheels. Traction means forward progress.

I hear a lot of entrepreneurs

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What are the best ways to obtain seed or angel funding in the U.K.?

Interestingly, for this past quarter, according to the Gust statistics we released thus week, the UK accounted for the largest number of entrepreneurs seeking funding of any country outside the US!  The take away is that you’ve got a very vibrant and competitive startup economy, which is a Good Thing…unless you happen to be one of the vibrant competitors seeking

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8 Reasons All Angel Investor Money May Not Be Equal

A few angel investors have slipped or fallen from their lofty perch, so entrepreneurs must take great care to validate the character and reputation of every prospective investor. The entrepreneur’s tendency to be in a huge hurry to obtain the funding can end up being disastrous, and play into the hands of these less scrupulous investors.

Many entrepreneurs believe all

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How do serial entrepreneurs such as Kevin Systrom and Jack Dorsey sustain themselves while working on a project that doesn’t yet generate cash-flow?

Unfortunately there is no magic involved here. In the two specific cases you mentioned, one had made money from his previous startups, and the other had paying jobs at Google and Nextstop.