The panel had a nice balance of entrepreneurs who have taken funding, angels, and VCs. The panel’s official description was the following:
In order to successfully secure funding, entrepreneurs need to be prepared to answer tough questions from potential investors. What types of things do investors look for when making funding decisions? What is the best way to approach investors? Which investors are the right ones to approach? What are potential warning signs to investors and how can weaknesses in the business plan or model be mitigated? This panel of successful entrepreneurs, angels, and venture capitalists gives practical tips to entrepreneurs in search for funding for their ideas.
I didn’t hear a whole lot of new ideas in this panel. It was interesting, but mainly a re-hash of the same themes I’ve heard from the money people. Here are the notes:
– know what it is youâ??re trying to get, what do you really want; what is ideal outcome of this meeting, what is ok/nice? (Harlan Beverly, CEO of Bigfoot Networks)
– people, technology, market â?? this is what VC look at (Sachi Gahan, Principal at CenterPoint Ventures)
– more interested in bottom up marketing calculations â?? shows analytical ability and intelligence of entrepreneur (Gahan)
– the passion behind management team is critical
– experience and proven entrepreneurship has to be there for more traditional entrepreneurs; youâ??re either the guy with experience or you’re the same as everyone else
– this is less true with angels
– do they like, trust, and admire the person (Peter Huff)
– need to be open to change (Huff)
– very concerned with who the customers are going to be (Joshua Baer, Founder & CEO of Skylist)
– a mistake can be to pretend who youâ??re not (the technologist pretends to be the business person)
– convertible debt is a good option â?? value is determined later
– deal breakers:
- doesnâ??t fit into the firm’s focus
- customers â?? have to show these customers, how your going to sell them
- personal integrity and honesty of principles â?? they always ask for reference lists (Gahan)
- wants to see 100% focus, no other outside activities (Baer)
– more money isnâ??t always better; more small deals can be better (Ashwani Dhar, Managing Partner, Venio Capital Partners)
3 Comments
“I didnâ??t hear a whole lot of new ideas in this panel. It was interesting, but mainly a re-hash of the same themes Iâ??ve heard from the money people.”
Thank you for speaking honestly. Most people would have felt a need to lie and talk about how truly enlightening it was. I have sat through enough of these since the 1980s to be able to say that 99.99% just rehash what has been said a million times before. These panels are like the TOP TEN Lists that are so wildly popular amongst business sites and blogs. After you have read five or so you begin to realize that it’s basically the same list just worded and ordered a bit differently.
The most interesting point made was by Harlan, whose company recently received funding. His comment that there are two groupings – the experienced entrepreneurs who have relationships with VCs and everyone else – was sobering.
One thing I wish were discussed (which I didn’t think of at the time) was the issue of location and how that plays into funding companies. I constantly hear that companies need to be relatively local to the investing firms, but at the same time I see investments by these same firms nationwide. It would have been interesting to hear more on this aspect and whether companies should spend any time pursuing investments outside their regional areas. I wish I would have thought of this earlier and asked the panel the question.
I once heard a talk about raising goemnrvent grants for social ventures. The speaker was talking about how difficult it is to raise funds for a venture falls between non-profit and for-profit, as his venture could produce modest returns, but primarily was for social purposes. Because he was planning to have some return on investment, he wasn’t able to get certain goemnrvent grants. I would be interested to hear about options for raising capital for ventures that are not completely non-profit, but don’t expect IRRs of 30-50%. Ventures that return 0-10% or even some loss, but serve a social cause seem like a great investment for a goemnrvent that is already writing off losses. Thank you.