Posts Tagged ‘funding’
How to Get Your Info Into Investor Hands
Monday, May 7th, 2012Our “Ask ActSeed” team recently received a question from an entrepreneur who wanted to restart his company, find angel investors and be prepared to provide investors with the info they want. Here’s what we told him:
“The information below is an important part of the story that an investor will want to know for sure. It seems there are two parts to your question:
- How to find investors and
- What to present to them when you find them.
First, how to find them:
While there is no single “exchange” to find all prospective investors, there are many venues and approaches to finding them. The best is personal networking – talking to people you know and finding out if they, or someone they know, might be interested in your deal. The other end of the investor-search spectrum is to do Google searches and cold call banks and investment firms to gauge their interest. This is a very low probability approach. In the middle are communities like ActSeed that help bridge an entrepreneur’s lack of personal investor network with connections to investors and investor groups. Some communities are free (e.g. LinkedIn), but investors don’t dwell there as free sites attract half-baked deals and lots of “noise”. Some have membership fees (like ActSeed), are more concentrated, and have a higher quality. None can guarantee a successful deal, but the good ones can help you reach investors you wouldn’t find otherwise.
However, reaching prospective investors is only a part of the equation…
Most professional angel investors, VC and other equity investors see hundreds, if not thousands, of deals each year. Most invest in 2-6 deals each year. This leaves 97%+ of all deals unfunded. The remainder get bootstrapped (e.g. self-funded through self-directed IRAs, savings, etc.), through debt (e.g. bank loan) or likely shut down or go dormant.
The second part is what information you present to the prospective investor.
- If an investor believes the information being presented to them is incomplete, they will stop reviewing.
- If an investor doesn’t “get it” very quickly – i.e. understand the business opportunity before then – they will stop reviewing.
Through ActSeed, entrepreneurs prepare the information that investors want to see using a scored profiling system. ActSeed scores the “completeness of preparation”, not whether the idea is viable. ActSeed’s scored profile enables the investor to have a uniform comparative against other deals that signals risk of successful implementation of the business model. It’s kind of like a FICO score for early stage companies. Here’s a link to a brief white paper about the ActSeed profile and scoring process.
ActSeed’s 1-page “Business Snapshot” template is an excellent framework for an entrepreneur to introduce their business highlights on a single page; if an investor “gets it” on that first page, they will be much more inclined to read further. The scored profile and Business Snapshot are available in ActSeed.com. Once your ActSeed profile is complete, you can search ActSeed’s Investor Group for prospective investors within the ActSeed community. You can also share your ActSeed link with any investor outside of ActSeed.
If you’re interested, you can learn more about the ActSeed Entrepreneur Group and sign up if you want to use these resources by clicking here. You can also download a free copy of ActSeed’s “Business Snapshot” template when you complete your free registration on ActSeed.
There are other communities and resources available to you that will also extend your reach into the investor community. In addition to ActSeed, we advise all of our community members to also use other networks that can be helpful. The new business creation and small business ecosystem is too fragmented and dynamic to fit one application or one community; however, a balance of communities can together drive value to those who build companies.
Ready to Swim in the Shark Tank on ABC?
Tuesday, May 1st, 2012
If you think your startup or product idea can survive an interrogation on national TV, then contact us now.
Yun Lingner is the Co-Executive Producer for a TV series on ABC called Shark Tank, a Mark Burnett Productions show.
If you’re not familiar with this show, entrepreneurs are selected to pitch their businesses to a panel of wealthy investors (e.g. Mark Cuban and Barbara Corcoran) in order to land an investor. We are helping Yun find some innovative businesses, products, business ideas and of course, entrepreneurs with interesting backgrounds or stories for the upcoming season.
If you’re interested in swimming with the sharks on national TV, send us an email to info@actseed.com with “Shark Tank” or “I want to swim with the sharks” in the subject line and we’ll get you connected directly to Yun.
If your deal needs some polish before jumping in the deep end, join ActSeed’s Entrepreneur Group.
Also, you can test your elevator pitch in ActSeed’s “Inside Pitch” discussion group on LinkedIn (it’s free).
Deadline to submit your idea, startup or small business? Just say “you snooze, you lose…”, and hesitate at your own risk.
VC Profile – Moore Venture Partners
Thursday, August 4th, 2011Terry Moore has been building and funding companies for two decades.
As the Managing Partner of Moore Venture Partners, LP, Terry sees up to 500 deals per year. From this list, he may seriously review a dozen of them and make an investment in about four of them.
Moore Venture Partners has established a unique niche in venture investing. Moore doesn’t seed or lead transactions, but the firm does source and qualify deals that fit the interests of the top VCs in Silicon Valley and beyond. Then, they participate in deals with top VC firms. Through this approach, Moore Venture Partners enables its limited partners to participate in investment opportunities to which they might not otherwise have access.
The Fund’s focus is technology and life sciences, particularly in southern California - companies with strong intellectual property (e.g. patents) in the early growth stages, and sometimes even in the expansion stage.
Terry has a solid track record of investing with returns coming from both acquisition opportunities and IPOs. His own operational experience helps him assess deals and their management teams. His extensive relationships with top VC and corporate investors enable his portfolio companies to have the best chance to grow and succeed. His leadership as Chairman of The VC Roundtable further indicates his commitment to bringing best practices and a collaborative spirit to venture investing.
ActSeed is glad to have firms like Moore Venture Partners involved in its Investor Group.
ActSeed provides Terry with visibility into a community of innovative startups – each having a series of ActSeed Scores that provide an indication of the company’s “investment-readiness”. The scores calculated for each startup in ActSeed’s Entrepreneur Group enables Terry to immediately get a sense of whether the startup has established a solid foundation on which to grow and where gaps in the business might exist. Gaps won’t necessarily kill an investment opportunity, but not knowing what issues need attention may become quickly fatal for both entrepreneur and investor. ActSeed’s contribution to the VC process is to bring any issues to the front of the conversation.
Moore Venture Partners is on track to provide great value to both its portfolio of startups and its limited partner investors. Terry Moore leads this effort by leveraging his experience and administering a thorough due diligence. Each year a few startups may become part of the Moore Venture Partners’ investment portfolio and benefit further from Terry’s guidance and extensive network. The hundreds of deals that don’t quite make the cut will need to look elsewhere for their capital needs. ActSeed is glad to help Moore in his quest to find appropriate deals for his fund and provide a resource for the deals he sees that may not be ”investor-ready” and need to find funding elsewhere.
To learn more about Moore Venture Partners, please visit the Moore Venture Partners web site.
To learn more about how ActSeed can help your startup become investor-ready and find VC or individual investors who may be interested in your venture, please
- Download ActSeed’s 5-page white paper,
- Register on ActSeed.com and
- Join ActSeed’s Entrepreneur Group.
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Finding Angel Halos within Higher Education
Thursday, July 14th, 2011How University-Affiliated Angel Groups are Helping Fuel Startups While Supporting Higher Education.
Angel investors typically congregate into formal angel groups based upon geographic proximity and interests in certain industry sectors and/or specific growth stages. While these characteristics generally reflect the commonality within the Baylor Angel Network (BAN), what makes this angel group unique is how they have integrated Baylor University into their operation.
Operating an angel group within a university setting drives benefits to a broader group of beneficiaries, from business students to the business schools they attend.
In addition to the standard angel-entrepreneur activity, Baylor’s Hankamer School of Business receives an angel-designated percentage of the profits from each successful investment in the form of a gift to the University – on average, 25% of the profits generated by the donor from a successful exit. Also, a few students at Baylor are selected to serve as research analysts who contribute to the evaluation of prospective deals. Baylor Angels also mentor the student analysts and share their wisdom with students taking entrepreneurship classes. BAN doesn’t require its angel members to be alumni of Baylor, but they do expect each BAN angel to contribute some of their returns to the University.
ActSeed is grateful to have the Baylor Angel Network involved in the ActSeed Investor Group.
The disciplined, methodical approach that BAN applies to their investment decisions meshes well with ActSeed’s own methodical process for helping investors quickly understand “what’s under the hood”. While BAN does very well in analyzing their deal flow internally, ActSeed Company (Entrepreneur) Scores provide BAN angels with another indication of how well a startup will perform in the due diligence phase. In other words, ActSeed can help entrepreneurs quickly “bubble up” to the surface with angels and reduce the time it takes to go from first contact to funding decision.
Kevin Castello, Executive Director of the Baylor Angel Network, shares his thoughts:
“Excellence is revealed in execution. A lot of emphasis is placed on the vision, the business plan, the team, and other components but without execution they are just words on a page. There are so many challenges for a new entrepreneurial venture and it is critical to have an honest evaluation of your business. I love that ActSeed is committed to help entrepreneurs be prepared for their venture and to provide them tools for that process. BAN looks forward to a continued partnership with the ActSeed community.”
Before approaching the Baylor Angel Network or any angel group, an entrepreneur must first explore whether investors would even be interested in their venture. ActSeed’s Investor profile helps clarify this. For example, an entrepreneur can review the Baylor Angel Network’s ActSeed profile to learn:
- What types of deals generally interest the 40+ angel investors who are members of BAN,
- Where BAN angels are looking to invest (across five southwestern states), and
- How much they intend to invest (amounts usually between $100,000 and $300,000, including participation in larger deals up to $2 million when there’s a lead investor already established).
For entrepreneurs who may be thinking about approaching the Baylor Angel Network, consider approaching them through ActSeed’s Entrepreneur Group where you can do more than pitch them an idea – you can demonstrate your “investor-readiness” through your ActSeed Scores and possibly get moved to the front of the line for consideration.
To learn more about the Baylor Angel Network and how they are integrating angel investing within the University, you can download their introductory document here.
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Kick the Tires: A Continuing Series for a New Generation of Small Business Investors
Monday, May 23rd, 2011ActSeed’s mission of reducing small business failure rates depend upon both well-prepared entrepreneurs and well-informed investors. This new series of articles, called “Kick the Tires”, will help both investors and entrepreneurs align for the best chances to achieve reciprocal success.
["Kicking the Tires" - an idiom - giving something an initial inspection before making a decision to pursue a transaction - origin: early car buyers would kick a vehicle's tires to see if they properly held air]
So far, we have been more visible on the entrepreneur-preparation side of the equation. Recently, we have started to make significant inroads on the other side of the same equation - sharing “best practices” with a new generation of small business investors and attracting seasoned investors with our methodologies that will help them accelerate the review process (“due diligence”) for making investment decisions.
“Kick the Tires” is a new series of articles that highlight the many issues that a small business investor or “startup angel” should address before making an investment decision. We’ll include red flags to watch for. We’ll review “tangibles” and “intangibles” alike. We’ll explore small business investing from almost every angle, including legal, financial, organizational, strategic and cultural.
To date, our primary efforts toward building new reservoirs of investor capital have been through our workshops and webinars (“How to Evaluate Prospective Deals Like a Professional Angel Investor“). These workshops are well-attended, but it feels like we try to cram two months of information into a two hour presentation. Seriously, we do share a lot of information in a short period of time. From there, we develop a relationship and rapport with the attendees to assure they have tools to find and evaluate small business investment opportunities within the ActSeed entrepreneur community and beyond. Kick the Tires is meant to supplement, expand and reinforce the knowledge shared in our workshops.
Who will benefit from reading the articles in this series?
Small business investors - both novice and seasoned. Whether you want to invest $5,000 or $5 million, you still should apply a defined due diligence methodology and process to assure your interests are aligned with your investment choice.
Entrepreneurs. These articles don’t contain fabricated hurdles or secret handshakes, but they do outline the issues that together create a solid business foundation that will give the business the greatest resistance to failure, which is another way to say the greatest chances for success. Investors don’t want to invest in a company destined for failure any more than the entrepreneur wants to build a business exposed to avoidable failure. In other words, what’s good for the investor is also good for the entrepreneur, making this series equally relevant to those building businesses.
Beyond the articles in this series, what can be done to help connect “well-prepared entrepreneurs” with “well-informed investors”?
Join ActSeed. Apply the knowledge that is shared in the articles by joining the ActSeed Entrepreneur Group or the ActSeed Investor Group. The principles and issues we highlight in “Kick the Tires” are the same that we use to connect compatible ‘treps and investors within ActSeed.com using our scored profiles and filtered search tools.
Finally, please send us suggestions or questions about small business investing that you’d like us to cover. We’ll do our best to address these issues here as well. Please send your questions about small business investing to: groupadmin.investor@actseed.com.
Together, let’s get to work and build some wealth!
The Realities of Being an Entrepreneur in One Book
Friday, May 6th, 2011“Most people start businesses simply because they just don’t like working for someone else.”
If this quote resonates with you, or even if you have another motive for becoming an entrepreneur, you should read this book.
Scott Shane packs this book with statistics and information that really helps you understand the realities of building a business. If you are a true entrepreneur, this book should sober your expectations and then bolster your resolve. If you aren’t quite there yet as an entrepreneur, this book will properly discourage you from burning too much of your own time and money (not to mention the time and money of others) until you are truly ready to “do it the right way.”
In this book, Shane shares statistics and data about where funding comes from for new business creation, what impact VC and angels have on new business creation, which industries receive most of their funds and who may likely be the best source of funds for your own business. He shares data about how long it usually takes to “turn the corner” with a new business and the demographics of entrepreneurship, too.
The Illusions of Entrepreneurship pulls data from a multitude of resources, including the Federal Reserve Survey of Small business Finance and the Center for Venture Research in New Hampshire. Essentially, Scott Shane has condensed thousands of pages of research into a single, coherent book.
This book is one of the first ones you should read if you are contemplating the plunge into the world of entrepreneurship.
You can purchase this book from ActSeed’s Amazon store here.
Enjoy!
Compatibility Counts
Tuesday, May 3rd, 2011What is compatibility in the context of small business investing and why is it important?
Private direct investment is very different than buying a publicly traded security. Investors do not have the same regulatory support or liquidity as a publicly traded stock. While we have witnessed a number of publicly traded companies mislead the public with incorrect or incomplete information in the past, at least there is a formal structure with a set of reporting regulations and consequences for failing to adhere to those regs and provide certain information to investors. With startups and small businesses, there is much less information available and very little regulation on what must be shared with investors.
Because of this, there is a greater element of compatibility required between the small business investor and the small business.
Trust and Alignment of Purpose
Understanding this need for compatibility is one of the key topics in the ActSeed Investor Workshop (“How to Evaluate Deals Like a Professional Angel Investor”). Simply stated, we strongly recommend that seed stage investors and startup entrepreneurs are fully aligned in purpose and culture as well as around expected return on investment and “exit strategies”. At the early stages of a business, investors should be viewed as a partner, not as a transaction – a co-pilot and navigation assistance, not merely gas in the tank. The business risk is extremely high in the early stages of a new company and the investor should play an active role in helping the entrepreneur steer clear of pitfalls.
Last year, we created a fun vignette about how ActSeed was like an “eHarmony for startups and investors” – how we help match investor-entrepreneur compatibilities. Recently, we had an inquiry from an entrepreneur who didn’t quite understand our analogy, and interestingly, was persistent in trying to understand how we were an “eHarmony to investors”. So, we drafted a candid reply:
“Simply put, most early/seed stage investors look for strategic and long term compatibility, not “quick hits”. The days of throwing money into something based upon a whim or basic concept are gone.
eHarmony markets their community as one where “people are brought together based on the things that really matter” (the current front page quote on eHarmony.com). ActSeed does the same for investors and entrepreneurs.
To further apply the personal relationship / eHarmony metaphor: investors aren’t interested in “one night stands” and “casual encounters.” Investors are no longer being seduced by what sounds good without verifying what IS good. ActSeed provides a mechanism to help the investor verify and accelerate the due diligence process by 60-90 days.
The common theme from our growing Investor Group members is that they don’t have time to see millions of interesting ideas, but they want to quickly find a few good ones that match their interests AND that provide evidence of preparedness in the core areas of business …PLUS a demonstrated ability to execute a sound plan.”
We know ActSeed isn’t for every entrepreneur, but we pledge to our growing group of Investors that the companies and entrepreneurs they will find within ActSeed’s Entrepreneur Group are ready to “extend trust” through an early presentation of the due diligence issues that will eventually need to be addressed anyway. The sooner this information is “on the table”, the faster a deal can be done or the parties can move on. If you can use the ActSeed process to cut 60-90 days out of the due diligence process, why not?
Within ActSeed, in order for a successful investment to occur:
- ActSeed presents the questions to be answered
- The Entrepreneur must provide the answers
- The Investor must trust the answers
Are you an ActSeed Investor?
If you are someone who wants to invest an amount between $5,000 and $5 million in early stage, seed stage, startup or small businesses, please join ActSeed’s Investor Group. It’s free to join, takes 15 minutes to set up, and allows you to interact on a username basis and allows you to reveal your real identity when and if you choose (to avoid the possibility of “overly ambitious” entrepreneurs).
Learn more about ActSeed’s Investor Group through the resources below:
Click here to download a 1-page PDF about ActSeed’s Investor Group
Watch a two-minute video about ActSeed’s Investor Group:
Join ActSeed (no cost).
Then join ActSeed’s Investor Group.
Let us know how we can help you get set up.
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Make the First Pitch Count
Friday, April 22nd, 2011Thoughts for your first pitch:
Relax and enjoy the experience.
Let your passion come through, but keep it simple and concise, and don’t get defensive if you “cross nerves” with your audience.
Make sure you can quickly and clearly explain: what customer “pain” you’re solving, why your solution will sell, how you make money (and when), and how your investor can expect to realize their return on investment.
It’s ok to not have answers for everything. If you don’t have an answer, offer that you will get back to them with the answer. You might even acknowledge that their question is a good one and ask them if they have any insights to share toward converging on an answer.
Things we suggest not saying:
- “We have no competition.”
- “Our revenue projections are conservative.”
1. Investors may only listen when you tell them about a good idea.
however…
2. Investors may “open their checkbook” if you (A) have a good idea and (B) can demonstrate that you have a plan to implement that good idea and turn it into a profitable one.
We champion all of this and more within our ActSeed.com community.
This note was originally a reply to a young entrepreneur on LinkedIn who was about to make his first investor pitch and was looking for advice about pitching.
In addition to our quick response to “making the first pitch count”, we also recommend buying the book, “Pitching Hacks“.
Now, go out there and make every pitch count!
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We Just Found $1 Million and Want to Share It with You
Thursday, March 24th, 2011Earlier this month, we led our first formal seminar entitled “How to Evaluate Prospective Deals Like a Professional Angel Investor” and helped about 40 attendees get started in the world of small business investing.
For two hours, we worked with this group to share the ins and outs of finding, assessing and engaging startups and entrepreneurs. Through an informal poll, we estimate this group represented about $1 million of investor capital. Some were interested in investing $5,000 to $25,000. Others were interested in $50,000 to $100,000.
Some were young and had full time jobs, but craved the opportunity and upside of investing in a startup. Some wanted to use some funds from a self-directed IRA and one person had recently sold his long-held business and was driven to explore investing to keep his mind and business acumen stimulated.
What all attendees had in common was a desire to understand some of the nuances of small business investing – what to look for, what to expect and what to avoid.
What our attendees learned:
- Understanding the early stage investor landscape, the different types of early stage investors and how investing in a small business is different than buying and selling publicly traded stock.
- The importance of identifying deals that are in areas where direct experience exists.
- The Tangibles: A “checklist” approach of the issues a prospective investor should address with the entrepreneur before proceeding.
- The Intangibles: Issues beyond intellect and into instinct, where a shared sense of trust and aligned purpose are important.
- Actual testimonials from angels who have invested in and have nurtured multiple early stage businesses.
- Forms and compliance: Documents each prospective investor should know about when pursuing a deal, as well as the role and importance of legal counsel in “doing the deal.”
- Action Items and Next Steps: sharing tools and tactical activities that transform small business investing into a systematic process so investors can make informed decisions.
What we learned:
The interest in small business investing is enormous. Through this inaugural conference, we have received local media attention and will soon have some national exposure. We have been invited to host this workshop in three other cities and are exploring two potential national webinars as well. In short, we learned that we have an important role to help coach a new generation of investors.
The diversity of those interested in learning how to approach startup investing is broad. Men, women, all age ranges and ethnicities. There seem to be quite a few people who want to be part of the startup revolution, but don’t have the ability to strike out on their own, or just don’t have their own ”big idea” they want to commercialize. But they want to be part of the new business ecosystem and they have some of the estimated trillions of dollars that are “sitting on the sideline” ready to support an entrepreneur with well-prepared business model.
Finally, we learned that responsible investors want to be as well-prepared as the entrepreneurs they are considering investing in. We learned that ActSeed’s Investor Group is a great tool for new investors to evaluate startups looking for funding.
Conclusion
In summary, what’s good for the entrepreneur must be good for the investor, and vice versa too. It cannot be out of balance. Intangibles like trust, synergy, purpose and company culture are important. Investment should only occur when there’s a focus on “business basics” with transparency and reciprocal communication between investor and entrepreneur; this is not the same as buying a share of Microsoft or GE. As a small business investor, you must be engaged as an ongoing partner in helping your business investments succeed.
ActSeed carries a clear message to all participants in early stage business creation and growth: “Preparation for success helps avoid behaviors that lead to failure.”
If you are interested in hosting one of our Small Business Investor Workshops locally or via webinar or if you are interested in becoming a small business investor, please contacts us at info@actseed.com.
If you are an aspiring seed stage or angel investor and want to get started now, you can join ActSeed’s Investor Group (there is no cost to join) and start applying the principals we share in our workshop immediately. Learn more about the ActSeed Investor Group here.
We are already working diligently to find and guide more investor millions that we can connect to well-prepared entrepreneurs.
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RevenueLoan: Filling an Important Gap in Small Business Funding
Thursday, March 17th, 2011You need an infusion of capital to grow your business.
The bank says you have insufficient collateral or they don’t lend to businesses in your industry.
Venture capitalists and angel investors aren’t usually interested unless they think you are going to unseat Facebook or cure cancer (home run plays in healthcare and IT) in the next 18 months.
So where can you get the funding you need to grow your business? Who is going to step boldly into this funding gap that the majority of American small businesses fall into?
RevenueLoan!
Utilizing the Royalty-Based Finance (also known as ”Revenue-Based Finance”) model of lending, RevenueLoan provides growth funding to businesses who are not being served by conventional lenders.
No collateral? No Problem!
A royalty-based loan does not require any collateral.
Not interested in giving up 10%, 20% or even 50% of your company for funding? You may have an alternative!
A royalty-based financing does not require you to sell part of your company to the investor. You remain in complete control of your business. You simply agree to pay a small percentage of your monthly revenues – generally less than 5% - until an agreed-upon multiple of the original loan amount is reached.
Yes, this does make royalty-based financing more expensive than a bank loan (if you even qualify for a bank loan), but a royalty-based deal also makes your monthly payment vary in harmony with your revenues. Try telling your bank that you missed your revenue target this month and don’t want to pay the usual amount, and see what they have to say! With a RevenueLoan, flexible monthly payments that don’t deplete your operating capital are business-as-usual.
Since this loan structure is based upon your revenues, this is not a good fit for most startup businesses that haven’t started generating consistent revenues. …but if you have an established revenue stream and just need a cash infusion to bump your business up to the next level, RevenueLoan may just be the lone YES in a forest of NO.
ActSeed is glad to welcome RevenueLoan as a valuable resource to the ActSeed community for small businesses and the entrepreneurs who are building them into durable, sustainable, competitive participants in our economy.
Learn more at www.RevenueLoan.com.
