What are the advantages of stationing your startup in New York City opposed to Silicon Valley / SF?

  • The world’s fastest growing tech startup ecosystem
  • A much more tightly knit startup community, compared to the larger but more diffuse West Coast community
  • Access to many, many more world market centers (advertising, finance, fashion, media, food, etc.)
  • A city that from the Mayor on down is devoted to helping the tech startup community expand exponentially
  • The world’s largest Tech Meetup (not to mention Meetup.com itself)
  • Significantly easier access to European and South American startup centers
  • Many more world-class universities
  • Believe it or not, more organized angel groups (although not individual angels)
  • Seasons

and most importantly…

The uniquely available joy and delight of living in the most amazing, energetic, global epicenter in the world. A 24-hour melting pot of culture, theater, music, night life, sports, business, leisure activities and more, all within walking distance (or just a couple of stops away on the subway.) What’s not to love??

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

How long does it take for investors to approve the idea and to grant the necessary investment?

The question is based on a misunderstanding of how venture capital investment works.

First of all, VC funds do not invest in ideas. What VCs invest in are operating  companies that are ready (or almost ready) to scale. There are many wonderful ideas, all of which are not fundable. Only companies get funded.

Next, VCs don’t have an unlimited amount of money that is given to companies as long as they deserve it. As such, its not like applying for a loan at a bank. Instead, they have a limited amount of money entrusted to them by limited partners, and they invest in a very, very few companies each year.

In fact the odds are 400:1 against a company getting funded, as that’s how many companies a VC looks at before deciding on which one to invest in.

Now, with that as background, it will typically take one to three months to negotiate and diligence a venture investment, if the company manages to get one at all.

Dread Startup Problems Or Learn To Enjoy Challenges

Stressed entrepreneur photo via Wikipedia

Stressed entrepreneur photo via Wikipedia

If you can’t solve problems and enjoy it, you won’t make it as an entrepreneur. By definition, an entrepreneur is the first to undertake a given business, and firsts never happen without problems and people frustrations. The toughest problems are people problems, like personnel issues, but there are tough operational problems as well, such as vendor delays and quality surprises.

The real entrepreneurs I know are good at overcoming both people problems and business obstacles, and get satisfaction from the challenge. Some people think this is a talent that you must be born with, but experts disagree. You can definitely train yourself to be a problem solver, if you haven’t already. It’s a key skill for success in every business role, from accountant to customer support. Here are some basics rules: Read more

Martin Zwilling , Founder and CEO, Startup Professionals
September 7th, 2014

Of the private companies trading on secondary markets, how much (percentage) of those companies’ stock is available through the secondary market?

On average…none.

The secondary market for private company stock is brand new, and so nascent that it is virtually nonexistent.

For a very brief time, when Facebook, LinkedIn, Groupon and Zynga were still private, there was a quick flurry of private secondary sales through platforms like SecondMarket and SharesPost. But there was much, much, much more smoke than fire, and I would be extremely surprised if even 1% of those four companies changed hands in the secondary market.

Down the road I believe that we will begin to see a viable private secondary market emerge, but that is unquestionably years away.

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

 

What tools can I use to manage relationships with investors?

Gust.com is the most widely used tool platform for both sides, with hundreds of thousands of companies and tens of thousands of investors using it to track and manage their relations with the other. It’s the official collaboration tool of the Angel Capital Association (and the equivalent national angel investor federations in 20 other countries.) It’s also used by over 300 venture capital funds. For a longer discussion of its utility for entrepreneurs from pitch to exit, see my answer to: While raising money, what tool are you currently using to manage your relationship with investors?

…and for a discussion of the investor-side tools, see my answer to: What are some ways you keep track of startups you are evaluating/diligencing/investing in?

(Needless to say, the author of this post is completely biased, as I am the Founder & CEO of Gust :-) )

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

Every Entrepreneur Needs Help In Getting Things Done

To Do List Chalkboard by Mufidah Kassalias, on Flickr

To Do List Chalkboard by Mufidah Kassalias, on Flickr

The universal challenge of every startup founder is to get everything done that needs to get done, and still have a life. Even outside of business, everyone wants to accomplish more, while working less. I’ve been a student of these techniques for some time, but some time ago I saw a great summary that seems to pull all the key principles together.

Stever Robbins, known on the Internet as the Get-It-Done Guy, outlines his strategies in his classic book “9 Steps to Work Less and Do More.” These steps are not aimed specifically at entrepreneurs, but I see how they can be applied there as follows: Read more

Martin Zwilling , Founder and CEO, Startup Professionals
September 1st, 2014

Can a private company take investment money from anyone?

Unfortunately, a private company in the US may not take investment money from “anyone”. The only people who are legally eligible to purchase an equity interest in a private company without a great deal of special paperwork are, as you noted,Accredited Investors. These are defined as a person with net assets of over $1 million (not including the value of his or her primary residence), or an income of $200,000 (not $250,000) annually for the past two years and a reasonable expectation of that for the next year. (In the case of a married couple, the amount is $300,000 together.) This is an absolute rule. There is no except for “friends”, “family”, “another guy” or anything else. It’s binary: you either are, or are not, an Accredited Investor.

Note, however, the weasel words above: “without a great deal of special paperwork”. That means a company can take an investment from people who are not Accredited Investors, however it adds so many requirements and potential issues to the arrangement, that most corporate lawyers will strongly urge you to not do it if at all possible. Among the considerations you need to take into account if you go this route are: (1) the rules for this differ from state to state, and every state needs to be handled separately; (2) there is a very limited number of such investors in total from whom you can accept an investment (the number varies by state); (3) you are required to prepare and file a Private Placement Memorandum, which is almost the same thing you would file for a public offering, extensively listing absolutely everything about the business, including pages and pages of warnings about all the things that could go wrong, and why it is a risky investment; (4) professional investors such as angels and venture capitalists are often allergic to having any non-Accredited Investors with an ownership interest; and (5) several other things.

The section of the JOBS Act of 2012 that modifies this part of the law is known asTitle III. The problems are that (a) it is not close to becoming available yet for companies because the SEC has not yet written rules for it (and shows no inclination to do so any time soon), and (b) when the rules are eventually written, they will be very, very specific about exactly what both the company and the investor need to do.

So if your goal is to take in money from “just guys”, you will likely need to wait until the Title III regulations are adopted, likely in 2013.

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *