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

Category Archives: Investing For Beginners

What are the differences between startups/tech companies founded in Silicon Valley and those founded in New York?

While there are differences in the startup communities on the two coasts, and while there are definite differences in the investment communities, I’ve found much less of a difference in the types of companies being started.

What are the top VC firms and angel groups in Seattle/Portland/Vancouver (or Pacific Northwest area)?

The Pacific Northwest has some of the best and most active angel groups in the country (and I say that coming from New York!) Check out:

8 Key Questions To Expect In Investor Due Diligence

If you really want to impress a startup founder as a potential employee, or you want to be a smart investor, you need to know the right questions to ask. These are the questions that get past the hype of a founder “vision to change the world,” and into the realm of real business strengths, weaknesses, and current health.

Some

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Where do I find serious non-tech local investors?

The problem with this scenario is that you are describing an oxymoron, and wondering why you can’t find a hot ice cube, or a tall hole, or a submarine that can land at ATL. You write:

“Where can I find intelligent and serious investors who aren’t looking for a cash cow, but are willing to use their funds to contribute

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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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Investors Do Not Fund Research And Development

I still get business plans, looking for an investor, that say all too clearly that the primary “use of funds” will be to do research and development (R&D) on some promising new technology, like superconductivity or cancer cures. Entrepreneurs forget that investors are looking for commercial products to make money, rather than R&D sunk costs, so investment hopes are sunk

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Which angel investors are interested in crowdfunding startups?

Since equity crowdfunding under the recently passed JOBS Act will not be legal until some point next year, there is currently a great deal of smoke, although not necessarily a lot of fire, around new entrants into the space.  But taking a look at some operating US-based companies that currently come to mind when thinking about the space (Kickstarter, Indiegogo, AngelList, Gust, CircleUp),

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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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I want to start investing in the tech industry (seed stage and/or stock market investing). What resources are good for evaluating a company in this niche and learning more about the industry?

The two possible approaches mentioned in the question are very, very different from each other.

Investing in public technology stocks in the stock market (such as Google, Apple, and many smaller companies) is something that anyone can do, can be started with a very small amount of money, can be experimented with before committing (by establishing a ‘shadow portfolio’), can be easily unwound, and

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What’s the best financial structure for an active Angel investor in the US?

I believe that you’re over-complicating the issue. In the US, taxes are taxes, and the only question about income is whether you have held the asset for over one year, in order to qualify for capital gains treatment