To start with, a pre-revenue mobile company cannot expect to raise anything from “the VCs”. Venture capital funds invest in only one out of every 400 companies seeking funding, so the odds of your particular startup getting funded are astronomically against you.
Next, venture capital funds invest primarily in later stage companies that have already shown significant indications of success (known in the industry as “traction”.) Of the roughy $20 billion invested every year by US venture capital funds, only $300 million (1.5%) goes into startups. For a true startup to be able to raise venture funding, you would need to be perceived as a better bet than virtually every company graduating from yCombinator, TechStars, DreamIT, etc. Conceivable, but unlikely. Read more
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The first question most people seem to ask when contemplating a new startup is where they will get investor money. That’s certainly a valid question, but all the money in the world won’t make your business work if you don’t have a plan to use it, or hate what you are doing. I suggest that there are several important questions before assuming that funding is the gate to your success.
In reality, the best way to assure the success of your startup is to do something you love, as opposed to something that you think will make you a lot of money. Of course, all these things and many more are critical, so it’s important that you keep your priorities straight. Here are some key questions to ask yourself, before asking others for money: Read more
The direct answer to your question is NO, VC and PE funds do not provide debt financing for any companies. Their entire business model is based on investing in companies that can potentially offer very high returns. For venture capital, this is typically ten times the invested capital, and those returns can only be achieved through equity appreciation, not debt service. Read more
There is not a definitive answer to this, because a good lawyer can write terms into either one to make one or the other preferable to one or the other party.
That said, the primary entrepreneur-friendly reason for doing a Convertible Note(and the reason that no serious investor under regular circumstances will therefore do an uncapped note) is: Read more
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There is so much written these days about how to attract investors that most entrepreneurs “assume” they need funding, and don’t even consider a plan for “bootstrapping,” or self-financing their startup. Yet, according to many sources, over 90 percent of all businesses are started and grown with no equity financing, and many others would have been better off without it.
According to the book, “Small Business, Big Vision,” by self-made entrepreneurs Adam and Matthew Toren, it’s really a question of need versus want. We all want to have our vision realized sooner rather than later, but it can be a big mistake to bring in investors rather than patiently building your business at a slow, steady pace (organic growth). Read more
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. Read more
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: Read more