Most financial institutions don’t work with early stage startups, which is why founders are turning to angel investors and venture capitalists for funding. Today, fewer deals and larger raises make early stage financing more elusive than ever.
Over the course of 30 years as a General Partner at Highland Capital Partners, I’ve had the privilege of attending more than 5,000 introductory meetings with startups. Based on that experience, here are five tips to help founding teams prepare for their first big meeting with venture capital firms.
Silicon Valley and the world of startups in general is supposed to be a safe space for unconventional thinking and weird ideas. But spend much time reading about startups and talking to those involved in them and you quickly realize that, like every other segment of the population, VCs, entrepreneurs, and techies have their orthodoxies.
You had an idea and you turned that idea into a new business. Congratulations! But as you work to get your dream off the ground or grow in new areas, you find yourself in need of valuable capital.This is where a business loan comes in. And if you need funding, you’re not alone. According to the SBA, new companies receive about 75 percent of their funds through bank loans, lines of credit and credit cards,But applying for a business loan can be a daunting process that could scare away even the savviest business owner. Before you apply for your first business loan, take some time to learn the ins and outs and prepare yourself for the process ahead.
Crowdfunding is a fantastic way to get an idea out there and test the crowd. But, it’s also a stunt. A stunt where you overpromise and oversell on something that hasn’t even been born yet.
The term sheet is one of the most critical documents an entrepreneur can ever design or sign. By this stage you’ve put in a ton of sweat equity, honed a product, crafted a successful pitch deck and aced investor meetings. The rest of your life, the dreams you have for your startup baby, and how much you are going to enjoy growing this company is going to rely on these terms and what comes next.
Around the world, the top reason for closing a business is lack of profits, according to the Global Entrepreneurship Monitor. And turning a profit starts with generating enough revenue—the kind that keeps on flowing and consistently covers your overhead. For many one-person service businesses, attracting this revenue is elusive. It’s not necessarily because they have a bad product or service. People who are top experts in their field or great at their craft aren’t necessarily comfortable marketing themselves or selling their services.
It is my view and our view at USV that the crypto market is in what Carlota Perez calls the installation phase. The “big bang” for this technology cycle was the publishing of Satoshi’s whitepaper, almost ten years ago.
While VCs love to find and fund innovation, they’re terrible at producing it. The source of your capital matters as much as your ability to access it. People with bad loans will affirm this — people with VC funding will swear by it. In the world of the startup, the rules of the VC and the money they offer are accepted in the same breath, often to the detriment of the entrepreneur.
Don’t tell your frugal grandpa, but these days, you can’t do much with $2 million — not in the enterprise cloud realm, anyway. These companies are attempting to build very important products for the enterprise. They are trying to solve weighty problems for business, and getting to their first product offering requires the help of experienced, high-quality engineers who (news flash) do not work for free. There are also early sales and marketing challenges that these startups need to get right.