What is a startup really? When meeting with early stage entrepreneurs for the first time, after reviewing a demo or hearing their pitch, I often ask them to articulate what they’re most focused on building. In most cases, the answers are (1) an outstanding product or technology; (2) a successful growth business built around that product; and (3) a top-notch team to build and execute the business. Read more
It’s a common question: Why bother with financial projections? After all, they are never right, almost always inflated, and generally a waste of time. Right? Do investors even read them? And if so, why? Read more
Crowd funding enables entrepreneurs to raise money in relatively small amounts from large numbers of interested investors. In the sum, substantial amounts of money (as much as a million dollars) can be raised for each startup company. Recently, entrepreneurs in many countries have been soliciting investment through “crowd funding” websites designed specifically for fundraising purposes. But, in the US, only wealthy accredited investors* have been allowed by the Securities and Exchange Commission (SEC) to invest in entrepreneurs and their startup companies (without extensive disclosure of the business plan and risks inherent to such new ventures). Those US residents who do not meet accredited standards have been precluded from investing in startup companies. The assumption made by the regulators is that accredited investors have the business experience required to choose winners and can afford to lose the money if they are wrong. Consequently, US regulators have discouraged the selling of equity (shares) through crowd funding websites, so online companies, such as Kickstarter.com, offer the opportunity to donate funds to interesting US startup ventures in exchange for the right to become early product users or simply listed on the new ventures’ websites. Read more
Every investor is looking for the “dream team” of executives to put his money on. Often I find that experienced investors flip to the management page of a business plan, even before they read the product description. That’s how important the people are. What are investors looking for in the CEO and the rest of the top executives? Read more
Talented entrepreneurs are nothing if not resilient in the face of change: Market forces, competitive threats, technological shifts, you name it. In recent years, government regulation has emerged as another such force to be reckoned with in the technology industry. Startups and founders need to come to terms with the stark reality that the rules of the game may be changed mid-play. Read more
Perhaps the most misunderstood topic in the world of startup investing is the question of who the competition is and isn’t. And angels get this wrong just as often as entrepreneurs do.
Of course, we’re all familiar with the inevitable pitch slide on the topic, which features some sort of grid or circle image with – how fortunate! – a blank space in the zone in which this particular company characterizes itself. Great, one less thing to worry about. Read more