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Early Stage Startup Advice and Raising a Seed Round with Crowdfunding June 20, 2012

Posted by Brian Link in entrepreneurialism, startups.
Tags: , , , , ,
2 comments

Many of the entrepreneurs I meet ask about how to get funded. It’s the inevitable first hurdle every entrepreneur must cross. And it’s often the first place they fail and return to their cubicle jobs… for good Imagereason, it’s pretty hard. Here’s a few basics I assume everyone knows already:

  • Build a compelling product with a compelling business model. (Know your market, build the MVP first, price it appropriately or use an appropriate business model. Revenue beats users, IMO. But read this too.)
  • Show some kind of traction. Attract a team. Win your first paying customers. Get enough users or downloads of your app. Whatever is relevant. (And more is required typically the higher amount of money you’re trying to raise)
  • Build your own relationships with investors. Find all your local people. Get on AngelList and follow investors. Research investors that are in your space. Follow them on Twitter. Read everything you can. Leverage LinkedIn to build connections. Meet them and ask for advice first, not money. Get introductions through strong connections. Investors invest in friends and friends of friends first (they’re human too).
  • Build a killer pitch deck. What problem do you solve? What’s the solution? Make sure it’s a pain killer not a vitamin. Keep it simple. If it can’t be said in a sentence or two, your pitch is too complicated. Tell everyone about your pitch. Take advice from your wife, Mom, advisors, and guy at the bar until it’s perfectly clear and says something compelling. Consider putting a professional 2 minute video on your site.
  • Seek out advice proactively. Have coffee multiple times a week with helpful people. Make new connections. Be just as giving in helping others. Engage in local meetup groups. Startup weekend. Conferences and events. But don’t overwhelm yourself networking, it should be a constant but limited amount of your time.
  • Share your idea. When talking to advisors, peers, investors, friends, etc. please don’t hesitate to discuss your idea. Too many entrepreneurs fail because they don’t get critical feedback early enough. If you’re asking people to sign NDAs, you’re doing it wrong. Consider patents if you need to.
  • Have an expert. No matter what industry you’re in or how much you think you know, it’s always better to have someone on your team who has specific, credible experience in your space. If it’s not a core team member, they should at least be a dedicated advisor or board member.
  • Give away your equity. At very early stages where you’re most likely to fail, it’s important to build the right team. If you don’t have a technical co-founder with skin in the game, you will fail. If equity will entice someone to work on your project as hard as you are, for heaven sake, give it away. If you haven’t landed your first seed round of funding and you’re afraid to give away 1% or even 10% for some critical resource/advisor/service provider/technology partner, you’re doing it wrong. Be smart, and seek advice of those who have done this before, but definitely don’t be stingy. 100% of nothing is still nothing.

Bootstrapping is best possible solution, if you can afford to fund your own startup. Plenty of great success stories start here, but it’s a lot slower and harder to build a startup while working a full-time job. Friends and family is where most entrepreneurs go next. And if you run a Lean Startup as you should, raising $100K or less can go a very long way to getting a new startup off the ground.

You likely don’t have a dozen rich friends you can borrow 10 to 20 grand from each, and will therefore be looking for funding. You can try to find those angels: in your backyard, in a local ACA group, or on angel.co. Or you can even try to find Venture Capital. But unless you’re a rock star, are looking to raise an A/B/C round or have a personal relationship, that’s extremely unlikely.

What’s left is crowd funding. There are many new crowd funding options emerging for entrepreneurs, especially as the JOBS Act becomes a reality. I’m not sure how well each of these will work today, but I suspect going forward they become one of the more popular options for early stage startups looking to raise initial rounds of cash. You might first look at the National Crowdfunding Association to learn some basics: http://nlcfa.org/crowdfund-101.html

Startup Fundraising Options in America

  • 40billion.com – Raise money. Build dreams. Since 2008, early crowd funding platform.
  • CrowdTilt.com – Group funding, designed to raise funds for a group of people to do stuff together.
  • EarlyShares.com – Equity based crowd funding platform.
  • EquityNet.com – Business plan software and Angel Network.
  • Fundable.com – Designed for startups. Built by people I know in Columbus, Ohio.
  • FundaGeek.com – Crowdfunding for technical innovation
  • Fundrazr.com – Reach more people, raise more money.
  • GoFundMe.com – General fundraising platform for individuals.
  • GrowVC.com – Global startup fundraising plus nurturing ecosystem, raising up to $1M
  • Indiegogo.com – Fundraising for more than just films.
  • Invested.in – Helps anyone raise money for anything
  • Kickstarter.com – Perhaps not originally intended to fund startups, but has been used as such.
  • MicroVentures.com – Connecting Angel investors and startups.
  • OnSetStart.com – They have a free crowd funding bible available too if you help promote it
  • PeerBackers.com – Funding entrepreneurs to raise funding from peers
  • RocketHub.com – Launch, Fund and Fly!
  • SoMoLend.com – Lend. Borrow. Grow. People investing in people.
  • Start.ac – Crowdfunding platform with mentors. US based.
  • TechMoola.com – Project fundraising in the technology space

Nonprofit and Charitable Fundraising Options

International Fundraising Options

There’s plenty of resources out there. A few worth reading on the topic:

Photo credit: http://www.flickr.com/photos/68751915@N05/

Bootstrapping Startups For the Win February 5, 2010

Posted by Brian Link in bootstrapping, entrepreneurialism, Internet culture.
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2 comments

Here in Columbus there have been a few Internet startups, and each entrepreneur if you asked them would tell you that getting started is the hardest part. Many people think they have a great idea, maybe even have written it down and dreamed of turning it into something big. But taking those first few steps of talking to other people, committing your own money, finding a team to help build it and figuring out how to tell the world about it is where you need great strategy (and some luck).

One strategy, if you’re lucky enough, is to borrow a million bucks from your rich uncle. You might also find an angel investor or venture capitalist and beat the one in a million odds and get funded before you have a product or revenue. The much more likely scenario and the smartest strategy is much more difficult, if you can pull it off. It’s called bootstrapping.

The term comes from a saying that started in the 1800s: “to pull yourself up by your bootstraps” which implies an impossible task. As a metaphor, it means to better oneself by one’s own unaided efforts. And today it often refers to starting a business that is self-sustaining and created with little or no external help.

Bootstrapping is hard. You need to stick your neck out; quit your job; have some money to spend; have a great network to lean on; and have a lot of confidence and guts. It’s certainly not for everyone. But for the brave who have a great idea, the reward can be huge. The best practices for bootstrapping can fill volumes of books, but here’s a quick summary of some ideas and strategies:

1. Equity. By bootstrapping, you can control your own stake and your partners’ equity percentages better. Equity is your most powerful tool to attract big talent. But be careful, there’s great need for balance here. Don’t dole out too much too soon and conversely don’t hesitate to share your equity for the right reasons. Many entrepreneurs fall into the stingy founder’s trap – they refuse to give up equity and because of that, they never get the help they need to launch the company.  In that scenario, they have 100% of a company that’s worth nothing.  Instead, offer equity to those who can dramatically move your business forward, but get advice about what percent makes sense at your current stage of growth. Equity, they say, is the most expensive compensation you can dole out (1% of your company when it becomes a $100MM company will be worth a million dollars!).

2. Partners. Choose your partners and co-founders wisely. They should complement your skills and pass both the beer and elevator tests. (Is this person someone you’d want to hang out and have beers with?  If you were stuck in an elevator with this person for 24 hours, would you murder them?) You’ll be spending more time with your co-founders than you might with your family, so best to have a great relationship and high level of trust and respect.

3. Business Plans. Don’t dwell so much on the format and length of your plan, but rather on the concepts of the business, the product or service and your competitive advantage. You should know exactly what your customer looks like, what alternatives they have, what the value is of what you’re offering and where you’re going to find those customers. And if you don’t have all those answers, get yourself some partners or team members who can. An executive summary of 1-2 pages is best. It should explain the big picture as concisely as possible. Don’t drag anyone through the details of your product until you’ve completely nailed it at a high level. Also prepare a Kawasaki 10/20/30 presentation and the two sentence and three paragraph versions. You’ll need those for marketing and email conversations to get people interested in having conversations with you.

4. Investors. You’re going to need investors at some point. Hopefully later instead of sooner. But as CEO of your company, your role is chief fundraiser, so start building great relationships. Find a trusted few to be part of your inner circle to give you honest and direct feedback. It’s never too early to plant seeds and start conversations. But be sure your message is polished enough before you request the face to face meeting. It’s not as hard as you think to get meetings with investors. But it’s very hard to build a compelling enough story to make them part with their money. Practice your pitch a dozen times on friends and friendly investors before you start talking to your big target investors. Also, do not assume that the big VC is your only option. Angel investors and chunks of 10-20K are extremely viable. It’s a lot easier to find a dozen people or more with 20K than it is to ask for large fractions of a million dollars from any investor.

At weBuild (http://webuildstartups.com), the Internet company accelerator where I’m a Principal, we are seeing more ideas and hearing about great things getting started in Columbus. One such idea came to us from an entrepreneur named Dave Cherry, previously of Limitedbrands. His idea was simple: help sporting teams and events sell more tickets. How? By offering deep discounts for seats that would normally go unsold. We brainstormed with his idea and helped Dave narrow his focus into something commercializable. TiXiT is now one of our portfolio companies and is launching today at http://www.tixitbox.com

I wish you the best of luck getting your own startup going. weBuild would like to hear about your best ideas. Submit them here at http://webuildstartups.com/apply.

On Being Efficient in the Startup Internet Culture September 22, 2009

Posted by Brian Link in entrepreneurialism, Internet culture, socialmedia.
Tags: , ,
5 comments

Coffee and a LaptopI’ve recently cut back the number of hours I’m working during an average day. Time with my family is very important to me. But it doesn’t change the fact that I’ve got a huge appetite for being involved with the high tech Internet startup culture. Being involved with startups often means you’re doing more than the average person in corporate America. That’s not meant to be a competitive statement – just a fact – startup entrepreneurs need to wear multiple hats. The CEO is often the product guy, the finance guy, the technical guy and HR rolled into one. It begs the question of how to keep up and stay efficient with all the context switching you need to do. This isn’t a new problem; it’s just exacerbated in the startup culture.

If you’re in San Francisco, you can witness said culture in any Royal Grounds, Peet’s or Starbucks from Fillmore to Sausalito to Palo Alto and everywhere inbetween. But here in Columbus, Ohio – I carry that culture with me everywhere I go. Sometimes like a badge of honor but usually like a cheerleader, trying to get the crowd here on their feet. (Somedays I feel like I’m begging them to participate, but that’s an entirely different blog post.) It’s too bad the Internet and social media aren’t closer related to OSU Buckeye football, I’d have a better chance of getting the crowd roaring here. But I digress.

My plate is extremely full: My fulltime job is the CEO of Toobla.com (which *will* be something I blog about soon because I seriously need to grow users fast). But I’m also a public speaker with thoughtLEADERS, LLC and a partner in weBuild, a web accelerator for mobile and Internet companies. I’m also on the board or an advisor or part-owner in 5 other companies: MobileXpeditions, Tixit, Innogage, 2CheckOut and eSoluTech.

I don’t recommend taking this much on. But if you do, or if you find some parallels between your life and mine, you might find the following tidbits of advice and tool recommendations helpful.

  • First of all, you need to pick your primary area of focus. For me, it’s my full time paying job: Toobla. When any conflicts come up, Toobla wins.
  • Next, and this may sound very idealistic, you need to know what your goals are. If you’re going to dabble, decide why. Maybe you just want to learn Ruby or Python and are going to tinker on weekends. Maybe you want some excitement to complement your cubicle job. Whatever it is, be aware of it and let your goals guide you. Without goals, you can meander and just end up with a clutter of things to do that aren’t helping you.
  • Make sure you work on your own personal brand in parallel with whatever you do. Social media is not a job, in spite of how many people are trying to be social media consultants out there. It’s so easy to learn and master, everyone should at least try it on their own. Read the blogs of the people on my Luminaries tab and try things out yourself. Be active to some degree daily on Twitter and Facebook and weekly on LinkedIn and you’ll make great progress very quickly and figure it out as you go.
  • Centralize your contacts if you haven’t already. One single repository. Whether it’s Outlook, Gmail or the Mac Address Book, do it. Add every new connection to your address book of choice. And sync them to some online source (I recommend Gmail) every week or two (if not real-time) so you can keep your online world synchronized with your desktop and/or email client. Gmail does a great job as the source for importing into Twitter, Facebook and LinkedIn so you can be sure to establish connections there with people you’ve added recently to email.
  • Follow people on Twitter that you aspire to be like. Find them on WeFollow or look closely at the people you do know and see who they follow.
  • Use TweetDeck, Tweetie or Seesmic or some tool that helps you get comfortable with keeping up with your closest friends and business sources and influencers. I use TweetDeck because I like how it lets me create groups of friends; there’s only so many people I really want to read every tweet from. Everyone else is my virtual cocktail party: I pop in and out, learn something, bookmark something, comment on something, retweet something or just occupy time at stoplights browsing 🙂 Find a client you like for your main computer as well as your mobile – there’s a ton of great apps for iPhone and Blackberry.
  • Let me focus on Twitter a sec. If you do it right, it finds its way into your normal routine and doesn’t take over your day. If you concentrate and stay focused on what you’re doing, you’ll get good at finding 15 seconds every 15 minutes. Twitter is the filler for me – I visit my cocktail party every time I get a chance. Walking, driving (carefully), while getting ready in the morning, waiting in line somewhere, and probably 20-50 times throughout the day. But in such small chunks, I try hard to not let it be the distraction – but rather where I go when I am distracted.
  • In order to stay focused during 9 to 5 on Toobla, I schedule my other meetings outside that window, often meeting with startups once or twice a week at 7 or 8AM and sometimes over lunch. To make it easier to schedule meetings with multiple people from multiple companies, we use TimeBridge to find good timeslots. We used to meet on early morning weekends but that’s gotten more challenging to do. Maybe we will again once the weather gets nasty. And all my calendars are integrated and up to date with iCal on my Mac and wirelessly through MobileMe to my iPhone (Google Calendar works well to consolidate calendars too)
  • Google Apps.  Add instant enterprise email capabilities with Google Apps, on your own domain. Google Docs, Google Calendar and Google Analytics are critical to many of the businesses I’m involved with.  Amazing free stuff.  I have 4 gmail accounts consolidated by gmail into one mailbox on my iPhone and laptop.  Use IMAP wherever possible instead of POP so items are perfectly synched no matter whether you read them on your iPhone or laptop.
  • DropBox. Share files seamlessly with distributed groups. Auto-synchronizes your files in the background with whomever you’ve invited. Much better than clogging your inbox with lots of big files.
  • PBworks. Collaborate with disparate groups with a wiki. Everyone contributes, everyone wins. I’ve created more dozens of wiki’s for various projects and brainstorming efforts.
  • 37 Signals. Basecamp is a great tool for managing projects and tasks with people across company boundaries.
  • Things. On Mac, this is my favorite ‘Getting Things Done’ task manager. There are many GTD clients – find one and break up your task list by project, or by company and prioritize ruthlessly what’s absolutely critical. Now, if only I could keep up with all the little things…

One of these days I’ll finish my eBook on “Utilizing Best Practices in Social Media for Small Businesses”. If you’re interested, send me an email – it might encourage me to finish sooner 🙂

What do you do that helps you stay focused and productive while working on multiple projects or companies?

Brian