Daniel Casey
Entrepreneur-in-Residence
TechColumbus
2.26.2010

Don’ts

  • Sign my disclosure agreement.
  • I can get this company to $50 million all by myself.
    • Someday you will not be the CEO. Investers will want more experience.
    • I do not have any competition.
      • Competition is good. Validates market.
      • Gives you a chance to show how you are different.
      • Who can crush you.
  • I only need 1% of the people.
    • Who many customers do I have.
    • How will I reach them.
  • With the profits we make I will be pay you off in one year.
    • They want to make a lot of money.
    • Figure what the investors want. Typically do not want pay back.
      • Angel groups want money back.
      • Venture Capitalist want long term and who will buy you in 5 to 10 years.
  • My pre-revenues start-up deserves a valuation of at least 10 million.
    • Too big
    • Be realist in what your start-up value is: 1.5 to 3 million, typically less than 2 million.
    • A lot math in the calculation of start-up value.
    • More objective once company is going.
    • Do not offer a number. You will be too high or too long
  • I need this investment to pay (previous investors, the bank, creditors, Mom).
    • Use on marketing, research, building sales channel, rapidly scale.
    • Not dividends
  • Venture Capital (VC) does not give money if you are not in the market.
  • VC does not invest in life style companies.
  • I invented something they do not understand.
  • VC are more than about the money
    • Introduce you to related business, people
  • Hot Areas
    • Health
    • Some web but not most
  • No Business plan.
  • I believe that with luck I can get this business to 5 million in 5 years.
    • Too small, not worth investing in.
  • I would like to introduce my broker.
    • VC do not like brokers.
    • They think you are too distance from the business
    • Brokers are expensive and under are no rules.
  • No Jargon or buzz words
    • Want to hear true words and your passion.
    • Passion is big.

Do’s

  • What makes you special?
    • What problem it solves not what the product is?
  • Is this a serious business problem it solves?
  • How do you maintain your leadership lead?
    • How to prevent being crushed by big companies?
  • What alliance can you leverage?
  • How big can the business get?
  • What is your teams experience
    • More important than product?
  • What is your exit strategy?
    • Who will buy you?

Questions

  • Pattens
    • Are they related to your business?
    • What stage is it in?
    • How defendable it is?
  • If investors cannot walk to the deal, they will not come.
  • Stock
    • You get common, they get preferred
    • They get more then 50%.
  • NBCA website has documents to download.
  • Timeline minimum of 6 months to a year to get funds.
  • One person did 60 pitches before getting funding.
  • 1/10 of 1% getting VC funding.
  • Guidance from TecColumbus. Start on website.
  • Fund raising is a full time project.
  • If you are not going to sell the company in the 5 to 10 years, VC don’t want.
    • Love the flip entropunuer.
  • Sidecar investors help.
    • Help more with Angle investors than VC.
    • Need to come in at the same time.
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