In this episode, Hall welcomes Sergio Paluch of Beta Boom. Beta Boom is a pre-seed fund focusing on startups in emerging tech hubs around the world. They believe that tech innovation has no boundaries and that founders from underserved groups present one of the biggest opportunities of this era for both investors and society. Beta Boom invests in and supports all founders in emerging tech hubs, and focus on reaching female founders, minority founders, younger founders, older founders, and anyone else that does not fit the old pattern.

Before founding Beta Boom, Sergio was the founder and CEO of Boom Factor, a Silicon Valley innovation consultancy where he led numerous product design and development projects for over 50 clients ranging from YC-backed startups to Fortune 500 companies like Bank of America.

In this episode, Hall and Sergio speak about the current state of investing in startups and how it’s evolving. According to Sergio in just the two years Beta Boom has been operating, he’s seen a lot of new, early-stage funds, incubators and accelerators that are opening and targeting underrepresented founders. He thinks that domain expertise, passion, and perseverance are stronger indicators of founder success, than pedigree or qualities that come from privilege, and in addition to that, founders from diverse backgrounds can better address opportunities in huge, and often overlooked markets.

I had a startup the other day approach me about investing. In the discussion it came up that one of the founders recently left and took half the equity with him.

It appears there was no vesting on the founders equity. Vesting means one has to earn the equity by continuing to work in the business over a period of time.

Founders think they don’t have to vest their equity since they founded the company, but it’s important that founders do so.

The primary reason is to make sure the founder stays active in the company for a reasonable period of time.

Other founders and employees will be working for equity so it’s not fair for a founder to stop working and take all their equity with them.

Investors funding a startup often require unvesting founders share and have them earn it back. If a founder leaves then the unvested shares go to those who continue to work in the business.

Even if there’s no investment driving the decision, founders should put an agreement in place that determines what happens if one of the founders leave.

With an agreement in place, a founder can leave at any point and his or her unvested shares will go back into the company.

This protects the founders and the investors.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Yigit Ihlamur of Vela Partners. Vela Partners is an investment firm, composed of five partners supported by technology, commercial and legal advisors. Their main focus is software companies, with investments spanning from angel to VC stages.

Before Vela, Yigit Ihlamur worked in Google’s Cloud division, at the company’s headquarters in Mountain View, on product strategy, management, and startup partnerships. Yigit’s tenure at Google also included several years spent in the company’s European headquarters in Dublin, where he was initiated into European business and technology working on technical operations for G Suite.

In this episode, Yigit shares his advice to first-time investors in startups, in particular in the machine learning and data sector. According to Yigit, see as many companies as you can. It’s easy to get excited about a good story and dream of what can happen. Visit with at least twenty to thirty companies before deciding so you can benchmark those companies.

Who should have access to the cap table in a startup?

The Cap Table which shows the ownership of each investor and those from the company is reserved for investors, board members, the CFO, and the corporate attorneys.

For employees, you want to create a culture of openness.

Employees and other shareholders get visibility into their ownership but in general they cannot see the ownership of others.

You want to discourage employees buying/selling shares with each other or investors as they should receive liquidity with everyone else.

On another note, what is a down round?

A down round is when a startup accepts an equity investment at a valuation lower than the previous established valuation.

This comes from raising too much capital at too high of a valuation previously.

Those who have a burn rate that is too high or have pivoted to a new business model may be subject to down rounds.

This hurts previous investors, founders, and employees whose options are now worth less.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Greg Baker of Alumni Ventures Group. Alumni Ventures Group (AVG) is a different type of venture capital firm. Designed for individual investors, AVG makes this key asset class available to millions of individuals who previously haven’t had access to a high-quality, diversified venture portfolio.

Greg started his career with an MBA as a mechanical engineer and then moved into corporate strategy, corporate development and a startup before eventually moving into venture capital.

In this episode, Greg shares his thoughts on what excites him most right now. He points to the acceleration of developments in healthcare, biotech, and everything in between. He also shares his advice to first-time investors. Greg says flexibility matters most since, in the end, many startups don't end up where they planned. For startups, he advises entrepreneurs to "get your product out there and find out what the customers really are looking for." In other words, it's vital to know and learn from your customers. Greg talks about the evolution of growth funding, as well as some of the biggest challenges startups typically encounter. Finally, Greg highlights the biotech sector as an area with good opportunities.

One common misconception about fundraising is that you must know an investor before you can approach for funding. 

It’s best to have some validation from your own group before approaching those outside of your core. Start with your current network and work out from there.  

Identify the right type of investor for your deal based on risk and return.  Angels wants three to five times their investment. Venture Capital wants 10x their investment. Family Offices want five times their investment but are often more patient for the return.

Choose the right investor for your raise and then find those investors and initiate a conversation. Later follow up and build a relationship.

Another misconception is that once an investor has said ‘yes’, then it’s a ‘done deal.’

In most cases this is not so. The ‘yes’ marks the start of the diligence phase which in most cases lasts 4 to 8 weeks.
 
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Geraldo Melzer of A.B.Seed Ventures. A.B.Seed Ventures focuses on investing in startups that seek seed investment, with a SaaS B2B business model. Their proposal goes beyond capital and network. They support entrepreneurs with the best SaaS marketing and sales practices in areas such as inbound marketing, inside sales, channels and customer success.

In this episode, Hall and Geraldo talk about the quickly growing Brazilian market. According to Geraldo, in 2010 the investment was about 10 million dollars and in 2019 was up to 2.5 billion in venture capital. Latin America, specifically Brazil, is waking up for VC investment and the market is maturing.

Geraldo also shares his advice to investors before writing their first check. If you have uncertainty around the environment, the sector, the segment, and the business model that the company is working on, your capacity to evaluate, analyze, and help will be minimal. So Geraldo suggests investing in something that you can study. This will help you form educated opinions and mitigate the risk.

In looking at cap tables, there are several red flags to watch out for.
Look for shares that are actually issued and not just verbally promised.
Is the cap table up to date with cancellations and repurchases? Many startups consider their cap table to be a work in progress so don’t be surprised if it contains “what ifs” and other “redos.”
The cap table is typically available in three versions:
First: The capitalization as it currently exists,
Second: The capitalization of the business as a fully-diluted version including any options, warrants, contracts, convertible debt, that could become shares,
Third: A proposed version including new employees, pending lawsuit settlements, or planned raises.
Check to see if there’s an attorney behind the scenes who is following up on the details as the management team is generally distracted by sales, development, and other issues.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today!

In this episode, Hall welcomes Atin Batra of Twenty Seven Ventures, a VC firm focusing on education and the future of work technology. Atin is a serial entrepreneur and began his investing career with a corporate accelerator before starting his firm. Atin explains how he came to focus on the Education Technology and Future of Work sectors.

Atin provides valuable advice for both investors and startups looking to get into these sectors. He emphasizes the importance of understanding market dynamics and the nuances of the various business models. Atin also talks about the evolution of the Future of Work sector amid the changing habits and needs of the workforce. Atin discusses some of the challenges specific to the EdTech sector, as well as a few of the technologies he finds particularly promising.

I was approached by a listener the other day who was contemplating investing in a friend's business.

He was the first money in and was trying to figure out how much equity his investment bought.

There’s an equation for determining equity ownership.

There are three terms in the equation. Pre-money valuation -  how much the company is worth before investing. The investment amount, and post money valuation which is how much the company is worth after the investment.

Pre-money plus investment = post-money

For example, if you had a business with a pre-money valuation of $4M and the investment going is $1M, then the post money valuation is $5M.

The equity ownership by the investor is investment divided by post-money.

In this example $1M divided by $5M is 20%.

Let’s say in another case, the pre-money valuation is $19M, the investment is $1M, so the post-money valuation would be $20M.

The investor would get $1M divided by $20M or 5% in this scenario.

In every valuation discussion, the startup is negotiating the pre-money valuation up and the investor is negotiating it down.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall is joined by Brian Phillips of The Pearl Fund, an early-stage VC fund specializing in Opportunity Zone (OZ) investments. Brian's background in computer science led to numerous jobs with tech startups. Through these experiences, he developed an interest in entrepreneurship non-profits. Ultimately, he ended up starting a fund to take advantage of the Opportunity Zone laws that promote funding of business in low-income census tracks.

Brian explains the ins and outs of Opportunity Zone investing, how to do it, and why it can be so advantageous for the investor. He also explains why meeting the Opportunity Zone requirement can give startups a leg up when it comes to securing funding. While OZ investing is currently dominated by real estate, The Pearl Fund is part of a small but growing trend of funds focusing on startups. Additionally, Brian details many of the requirements that startups and investors must meet to be OZ qualified. Finally, he highlights some of the sectors that fit best with the OZ asset class.

Many investors look for traction in a startup to gauge their progress.

Traction stated as a single number on a pitch deck can be hard to judge as sufficient for an investment.

Many investors tell the startup “nice traction, but we’d like to see more.”

Instead of traction look for momentum.

Momentum demonstrates things are continuing to progress and move forward. Sales, team, product, fundraise are the core four to look at.

Investors look at these four because they represent the results of the startup’s work and not that of the market’s progression.

Momentum must be shown over time in numerous updates by email, phone, or in person.

It takes four touches before an investor gets a sense that there is momentum and it will continue.

Startups should always have some engagement with customers ongoing- such as alpha testing, beta customers, MVP customers, etc so as to have something to talk about with investors.

For startups pursuing the enterprise sale show your momentum through the sales funnel with your large customers. It typically follows the model of interest, qualification, trial negotiations, pilot test, full product launch, ongoing support.

Show how prospects are moving through the funnel and customers are upgrading and expanding seats.

It’s the continuing forward progression that counts.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Laura Baldwin, Managing Director of Golden Seeds. Golden Seeds is an investment firm dedicated to pursuing market returns through the empowerment of women entrepreneurs and the people who invest in them. The group was founded in 2005 and is headquartered in New York City, with active chapters in Atlanta, Boston, Dallas, Houston, and Silicon Valley – and active members throughout the country.

Golden Seeds’ Angel Network has grown to become one of the largest in the country with over 275 members nationwide. Laura has more than 20 years’ experience in finance, treasury, corporate development, and investor relations roles, with progressive growth in responsibilities.

Laura talks about the increase in women entrepreneurs, in sectors such as FinTech, Cybersecurity, and others. For investors, Laura emphasizes the importance of communication between investors and the entrepreneur. Beyond personal connection and trust, she says it is also critical for entrepreneurs to have a clear value proposition. Laura advises entrepreneurs to make sure that they and the investor are "on the same page [and] want the same things." She explains what Golden Seeds looks for in a startup, and highlights some of the more promising startups they've worked with. According to Laura, capital access remains the biggest challenge for women-led startups. Finally, she points to FinTech as one of the biggest sectors of opportunity now.

Many enterprise software programs come from service businesses solving a problem for their clients. In searching for a solution on the market, they find none, so they build their own. Later, other clients come ready to buy it.

I call this contractor funding, and it’s one of the most overlooked forms of funding in the startup space.

In this method, you sell a customized version of what you want to build to an anchor customer for a substantial one-time fee, say $250K. Then, you use the funds to build out the platform you envision, to which the customer gets a non-exclusive license.

The advantage here is you have a customer telling you exactly what they need and what they will pay for. They improve the product by testing it and telling you what changes to make. They become a happy customer which you can use to attract prospective customers.

After three more of these engagements, you will have $1M of investment in your platform with zero dilution.

For your raise, consider using contractor funding.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Jyri Engestrom of Yes VC, a small seed-stage fund focusing on community-driven startups. Jyri started out as an entrepreneur and uses his experiences with successful startup exits to inform his investing philosophy.

Jyri advises investors to look for startups that are part of a larger social movement. Startups that can turn a small community into a global movement are the ones to look for. As Jyri puts it, an idea gets traction when people "realize that it's something that is better for the world and it also works as a business". Jyri talks about his partner, Caterina Fake, and her experience as an early investor with Etsy. Jyri also talks about the partnership dynamic between cofounders, and how important it is to have effective mediation strategies in place in the event of a disagreement at a critical juncture.

Jyri explains Yes VC's strategy of smaller, early-stage investments in companies that show potential for organic growth without requiring huge injections of capital. He highlights a few of the startups they've invested in, and why. Finally, Jyri talks about the importance of attribution in marketing, as well as some of the sectors he finds especially promising.

It’s best to play nice with others in the startup community. While it may seem diverse and diffused, I’ve found word travels fast.

The startup world is transparent and highly viral.

So much of what happens regarding deal-flow and investing  is based on reputation and trust.  It takes a long time to build but can be destroyed in seconds. 

While some play the rough game, it’s not the norm. Those who do are just protecting their time as requests for help are practically endless. 

Always treat everyone with respect and give as much as you take.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes GreenBar founder Larry Cynkin. Larry ​is a serial entrepreneur who has been CTO or VP Engineering at five startups, with experience in industries ranging from health care to personalized e-commerce to ed-tech.

Larry started his career as a software developer, with a degree in Computer Science from Brown University. He eventually moved into software management and has always had an affection for startup companies. After working with several startups he eventually moved into being CTO.

In this episode, you’ll hear more about his path in helping startups and investors. According to Larry, he helps non-technical or not-so-technical executives and founders run, manage or plan for software development and software product development. From an investor perspective, he helps mitigate the risks of software execution.

Before the fundraise, startups should spend time with the investor first. It’s less about the amount of face time and more about the number of interactions over the phone, email, in person, and otherwise.

It’s best to connect with investors before you start your fundraise so you have a basic relationship established.  

You can use the approach “I’m not raising funding now, but I will be in six months” to open the dialog. Then, spend the next few months getting to know them and updating them on you and your deal.

Investors are interested in knowing about not just the product you are building, but also the team you will assemble.
With most VCs, their diligence process focuses heavily on the team. So, you want to use your time showcasing what great things they can do. 

The more that investors see you making good decisions in this phase, the faster your fundraise will go in the next one.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall is joined by Sid Mookerji of Silicon Road, an early-stage fund, accelerator, and advisory group focused on retail and eCommerce. After founding a custom application development firm for eCommerce and retail, Sid saw the opportunity for a good exit and entered the world of venture capital.

Sid talks about what excites him in retail today and provides advice for investors looking to get into eCommerce and retail. For startups, Sid advises focusing on customer and market fit. Sid also discusses how the changing landscape of retail has exposed needs and led to innovations in both eCommerce and brick-and-mortar retailers.

In addition, Sid highlights a few of the startups Silicon Road has invested in, and why. He points to change management as one of the biggest hurdles for larger retailers, and he explains how startup innovation can help. Finally, Hall and Sid discuss two areas of technology currently disrupting the space: Last-Mile Delivery and Augmented Reality.

It’s About Execution

Some startups think their business will succeed based on the idea, the technology, the market or something else. They think their technology will win the day, or that their idea is so great, or the market is growing so fast that they will succeed based on that alone.

For the investor, all of these are important, but in the end it’s execution that matters most. Execution turns the technology, idea, or market into a winning business.

In your pitch, demonstrate your past execution successes and talk about how you will execute on the idea. Show how you will execute on your technology and how you will execute to penetrate the market.

Investors determine investments based on the startup's proven ability to execute.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall is joined by Pierre Rogers of PuroTrader, an online cigar-trading platform. Purotrader was created by two aficionados to bring more transparency and access to the global cigar market. The site aims to educate connoisseurs, stimulate conversation and more importantly monitor market trends within the industry.

In this episode, Pierre shares exciting developments in non-traditional business models. He offers advice to investors interested in the libation space (fine beverages, cigars, etc.), pointing out the importance of leveraging industry relationships. For startups in the space, Pierre emphasizes how finding your niche is critical. He highlights some of the challenges in the space and explains how PuroTrader has approached the market using data analytics. Finally, Pierre talks about some of the future applications of the platform, and how he sees the space evolving.

Most startup pitches focus on their future.

It’s bright. The numbers are growing fast and will be big. The sky’s the limit.

Just how much do investors put behind those startup forecasts.

The answer: It depends on the historical numbers the forecast is based on.

If there’s a consistent track record of historical growth, then the forecast has credibility.

If there’s no historical record, then the forecast does not.

Always show your historical numbers to establish a baseline and show how you can move from the historical to achieve the forecast and the systems that will take you there.

Most startups hang their forecast on market potential alone. You need to also show how you can execute to obtain it.

This could be a new team member, another product, or a new market segment.

Help the investor connect the dots and don’t expect anyone to take a flying leap without a good reason.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Dr. Orrin Ailloni-Charas of RedCrow, a healthcare-focused, early-stage startup investing network. Orrin's background in medicine led to consulting roles with various healthcare startups. He received his MBA from Columbia, and now has a career straddling both the business world and medial and clinical world.

Orrin explains how RedCrow incorporates crown-based evaluation and analysis to fully validate startups. Orrin talks about the environment of innovation in healthcare. He explains some of the advantages and challenges of investing in healthcare, and the importance of understanding the startup's competitive, regulatory, and capital risks. For healthcare startups, Orrin emphasizes the importance of good IP with strong protections. He also talks about the advantages of good partners, and how capital risk is a particular risk in the healthcare industry.

I’m often asked when you should raise funding.

There are funding requirements to consider. Calculate your cash burn and estimate the need for new cash.

There are also preparation and timing issues.

Start your preparation six months in front of the launch

Launch your fundraise six months before you need the funding.

Use the six month preparation time to introduce the deal to the investors and educate them on your current status.

There are seasonal issues to consider. I wouldn’t start in early June but rather wait till late August to kick off a campaign.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Tracy DeForge of The Players' Impact, a group that connects professional athletes with the world of startups and investing. Tracy has worked in the sports industry for her entire career. At The Players' Impact, she is focused not just on involving athletes as brand ambassadors, but also in bringing startups to market.

Tracy advises entrepreneurs to keep in touch with both their market, as well as potential future investors. Tracy and Hall also talk about the blurring of the lines between the traditional funding stages, and what that means for startups. In addition, Tracy talks about how The Players' Impact works as a group of investors making early-stage investments, rather than a fund. Finally, Tracy talks about the number one challenge for startups - finding the right funding partners - and highlights some of the most promising sectors.

There are truisms in the startup world you can always count on. A few that come to mind are:

• All software has bugs.
• All startups take longer than expected (to generate revenue, finish the product, fill in your favorite one here).

And my newest one is:

The only startup without glitches is the one that is already dead.

If the business is up and running and especially if it’s growing there will be glitches. Some call them hiccups.

You should expect things will not always go as planned and be prepared to deal with it. If things are running without a glitch then most likely you’ve stopped doing new things that will grow your business.

Glitches are an indicator that you are stretching your business in new ways. And that’s a good thing.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Karthee Madasamy of MFV Partners. MFV Partners' approach is to back visionary entrepreneurs developing deep technologies and solutions that disrupt traditional verticals and ecosystems across automotive, manufacturing, retail, agriculture and knowledge services. Karthee has been a VC investor for 15 years, following a career as an entrepreneur with an electrical engineering background.

Karthee talks about how technology is disrupting some of the established traditional industries like automotive and agriculture and provides great advice for investors interested in the deep tech space. He discusses the pitfalls of commercialization, and how important it is to think through before you dive in. Karthee emphasizes that startups and investors need to understand how solving a problem in science or engineering will ultimately lead to a product and customer.

In addition, Karthee talks about the evolution of investing in the deep tech space, and how it is often focused on the later stages. He also talks about some of the companies that MFV has worked with, as well as some of the challenges particular to the deep tech space. Finally, Hall and Karthee discuss the state of capital availability in a general sense, and what that might mean for future innovation.

While unforeseen events can overtake a startup, many CEOs simply don’t plan ahead when it comes to fundraising. For every $1M you want to raise, it will take you one calendar year to raise it.

Most of the time, an entrepreneur who approaches me is raising funding today and is looking for a check now. In some cases, they need their funding within the next thirty to sixty days or something bad is going to happen.

Most startups end up educating their investors during the fundraise. But there is another approach one can take.

I once had an entrepreneur come to me saying, “I’m not raising funding now, but in six months I will be. May I keep you informed of our progress?”

Of course, I said yes, because I wanted to see how it turned out.

Over the next six months, the CEO sent me monthly updates about his progress. When he launched his fundraise formally, he was able to close it in just a few months. He used those six months to educate the prospective investors about his deal.

This is a great technique for introducing your deal to a prospective investor. More investors sign up to track along since there’s no pressure to engage in the fundraise.

It takes four touches or more to introduce your deal and educate the investor about it. It’s a good idea to start that process sooner rather than later in your fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Amy Salzhauer of Good Growth Capital. Good Growth Capital is a venture capital platform focused on early-stage technology companies. Good Growth Capital's General Fund focuses on the east coast, filling the gap with early-stage technology investing, with partners located in Charleston SC, Boston and NY. The fund leverages proximity to closely support founders and connect portfolio companies.

In this episode, Amy shares her background before investing. Initially, she began working with scientists to get data for her doctoral dissertation at MIT. She was interested in why certain technologies successfully leave or don't leave the lab, even if they might have either a positive economic impact or a positive social impact. This then led to a Master's at Cambridge University in Plant Sciences with a focus on Molecular Biology, followed by an MBA at the Sloan School of Management at MIT. Writing her dissertation, she thought about how she enjoyed the work, and ended up starting multiple companies and becoming CEO of Ignition Ventures.

I recently saw a pitch deck from a seed stage startup which had a small amount of revenue. The deck claimed a valuation of $50M because a similar company exited at that valuation. I asked about his valuation, and he said he claimed $50M because “that’s what my company will be worth.”    

I reminded him that the example company who exited with a $50M valuation had $15M in revenue at the time of exit. He said, “I’ll have that too.”

I often see entrepreneurs calculating valuations for today's fundraise using tomorrow’s revenue.

Today’s revenue determines today’s valuation. Your business tomorrow determines your valuation tomorrow.

Investors match investments with the current state of the business. As you increase sales, team, product, and IP, your valuation goes up.

The takeaway here is raise only as much as you need to get to the next level. Otherwise, you’ll be raising more funding on a lower valuation, which means you’re giving up more equity than necessary.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Joe Jesuele of HomeJab, a nationwide real estate media production company. HomeJab applies innovative technology and user-friendly customer experience to make on-demand, professional-quality media services available to the real estate market. HomeJab’s professional videos, HDR photography, aerials, and immersive 3D virtual tour services are the most comprehensive offering of immersive digital media in the marketplace. Using HomeJab, Customers can schedule shoots with a professional photographer or filmmaker within the day. After shooting, HomeJab delivers edited products online within 24 hours, making it one of the fastest and most efficient media services available.

Joe has a long-standing background in the real estate industry, working as a broker, lender, and builder. While building houses, Joe saw an opportunity and founded HomeJab. Wanting to give himself the best chance of selling properties in a tough market, Joe produced 3D models, walk-through videos, and drone videos. This resulted in property sales in less than 30 days. He realized the good visual content that he was creating led to success. With no one else was doing this in the market, HomeJab was born.

In this episode, Hall welcomes Gil Hernandez of GXH Capital. GXH Capital is a minority-owned venture capital firm to alter the diversity landscape in tech. They invest in startups with missions that will help the world. Their goal is to invest in diverse founders and founders that are committed to helping the underrepresented.

Hall and Gil speak about his background and what led him to GXH. Gil has an extensive background in finance, and accounting and has worked at both Apple and PwC. This has given him experience working in large corporations and working with start-ups. Gil also shares his advice to investors before writing their first check. According to Gil, the key is diversity. Look beyond your immediate circle because if you only invest in companies with warm intros and first connections you’ll miss out on amazing opportunities.

Many entrepreneurs approach me for funding. I find the biggest misconception is that you must first raise funding before you can launch and grow your business. In reality, the ones who raise funding have a growth story and can communicate it effectively to investors.

Investors funding startups look for market validation and product validation - the product works and people will pay for it. There are some investors who fund deals based solely on the team, the space, or the technology, but these are rare examples.

Most look for what I call the “Growth Story”. They look for an operational revenue model in the business with increasing numbers on sales, team, product and fundraise.

In talking with startup entrepreneurs, I find they avoid discussing their current revenues because they think the investor wants to hear big numbers. I tell them that investors don’t expect startups to have big numbers. Instead, the investor looks for repeatable and predictable numbers.

If your company is pre-revenue, then you can show how the business model is successful based on the unit economics level. At the core, this shows that you can generate leads, qualify, and close them for revenue that exceeds the cost of acquiring and fulfilling the customer. Over time, you can improve these numbers.

Scott Adams once wrote “Losers have goals. Winners have systems.”

A startup pitch deck filled with forecasts alone is just a set of goals. A pitch deck showing how the business model currently works is a system.

It’s best to show up with a pitch deck showing how your system is working today.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Wenyi Cai of Polymath Ventures. Polymath is a company builder focused on emerging markets, with offices in Mexico City and Bogota. They are specifically interested in sectors experiencing global disruption enabled by technology in an emerging market setting. Wenyi's background gave him experience with emerging markets, and he applies this familiarity to Polymath's approach to startups and investing.

Wenyi discusses the exciting state of venture capital in Latin America, as well as her advice to those wanting to invest in emerging markets. Wenyi also talks about some of the differences and similarities between established and emerging markets. Wenyi points out that, for many industries in emerging markets, there can be numerous problems throughout the value chain. She urges startups in emerging markets to stay focused on their core competencies, and not try to tackle a whole value chain at once. In addition, Wenyi explains venture-studio model, and how it works. Finally, she highlights fin-tech and ecommerce as areas of growth potential in emerging markets.

Today, we’ll talk about Impact Investing.

There’s an old saying about angel investors: “They want to make a little money, have a little fun, and do a little good.”

The ‘do a little good’ talks about how investors want to make a contribution to the community with their investment.

Some do it through Impact Investing, which means the startup provides a community service beyond generating revenue and providing jobs. Impact investing is one way to narrow the field of startups to consider for investing.

Each investor has their own set of things they care about, so if you are an impact startup beware -- the definition of impact is in the eye of the beholder. Or, as they say, ‘To each his own’.

If you want to invest in impact startups, look for their impact metrics and not just their financial metrics. Financial metrics include cost of customer acquisition and lifetime value of customers, among others. Impact metrics, on the other hand, focus on the community benefit, such as how many students graduated, or a reduction in carbon footprint, or the number of rhinos saved from destruction.

A good impact startup will have some evidence of the benefits they are generating for the community.

Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

Today, we’ll talk about whether you should be raising a Seed+ round.

In startup funding, you raise funding in stages. There’s the seed stage, when you have developed the product to some level and potentially have some users. Startups typically raise $500K to $750K for this round. You don’t want to raise more at this stage if you can help it, as you’ll be giving away too much equity due to your low valuation.

The next raise is the Series A raise, where you typically have an annual revenue run rate of $500K or more. At this point, you can raise $1.5M to $2M - or perhaps more if your growth rate justifies it.

If you find your startup has raised a Seed round but is not quite ready for a Series A, then you may want to consider a Seed+ round. A Seed+ round is essentially another raise at the Seed level, usually with the same terms.

The key to remember here is that each round of fundraising brings dilution, and too much fundraising will become a problem later.

Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Bá Minuzzi of San Francisco-based UMANA. After starting as an entrepreneur at an early age in Brazil, Bá became interested in capital and joined an investment firm, before starting her own investment boutique focused on real estate. She later moved to the U.S., diversifying her portfolio and expanding into the wealth management space. She recently launched UMANA, which is built as a multi-family office of self-made high net worth individuals. UMANA skews towards tech sectors, with an emphasis on impact investing as well.

Bá emphasizes how important it is for founders to get a deep understanding their industry and market. As she points out, this is the best way to understand how your brand and company will get the traction. Bá talks about the confluence of the entertainment and investment worlds, and how celebrity endorsement is a game-changer when building traction. In addition, she illuminates her role as a "matchmaker" between high net worth individuals and promising startups, and what that process involves. For startups, she emphasizes how fundraising isn't always easy, and that you shouldn't take past success for granted. As Bá points out, staying in touch with investors and having a strategy for follow-on fundraising before the money starts to run out is critical for the long-term success of a startup.

To launch your startup, identify a large market then target a small segment of that market to attack first. Choose your first segment based on ease of access and a close fit to your initial product. In other words, focus on your most ideal customer, and then grow your business from there.

Most startups want to take on the world but their efforts are easily diffused. It can be difficult to be all things to all people in the early days of your startup.

You’re looking for wins, testimonials, and proof that customers will buy your product. Start with the ones who are the best fit and then expand the circle from there.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Martin Mulvihill of Safer Made, a VC firm specializing in early-stage companies that bring safer products and technologies to market and protect our health and the natural world. With a background in chemistry, Martin has brought his passion for sustainable, environment-friendly chemistry to investing.

For prospective investors in the health and wellness sector, Martin advises getting to know the leaders in the space. Martin also emphasizes the need to understand, at a high level, each of the product components. This might include branding, food packaging, formulated goods, and more. For founders, Martin talks about how they must have a clear idea about things like inventory management, channel approach, and supply chain. When looking at potential investments, Safer Made focuses on companies with a competitive advantage in terms of their product, and a consumer-targeted approach. Martin elaborates on their investment thesis and highlights how the challenges can vary widely depending on the specific product being made. Martin also highlights the packaging sector as a particularly robust area with room for growth.

As soon as your startup establishes a stock incentive plan and issues stock options to employees or other stakeholders, it’s time to work on a 409A valuation.

This is a valuation of your startup for assigning a cost basis to the stock options.

The U.S. tax code in section 409A requires private companies to show that their common stock options are issued at fair market value.

This is similar to the property tax on your house in which the government assigns a valuation to your house for tax purposes.

The 409A valuation does not mean your firm is actually worth that valuation. It’s only used to calculate your taxes.

The market value goes up and down based on the state of the market and what value you have built into the business which increases every day for some companies.

Employees, founders, and other investors are taxed on the value of the stock options they own and to avoid potential tax penalties, the startup must get a formal valuation opinion at least once every 12 months.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

Changing the product, the price or the promotion? Today, we’ll talk about What to do when the investor says no.

In raising funding you’ll hear “no” quite often. There are many reasons why investors do not invest. Sometimes, they are busy with other deals. Other times, they are looking for a deal in another sector or stage.

If they are saying no because they are interested in investing and want to invest in your sector and stage, but not your deal, then what should you do?

There’s an old saying in sales, “No good salesperson takes no for an answer.” Naive salespeople take this the wrong way and basically put their foot in the door till the customer buys something. A better salesperson pursues the opportunity by changing the pitch, the product or the price.

If investors are saying no and it’s not for reasons of timing or a good fit, then you could change the price, which in this case is the terms of the deal. Offer a better valuation, additional warrants, or other incentives.

You can also change the product by improving the business with increased sales, a higher-level team, or a better product.

You could also change the promotion by repositioning the deal from one type of business to another. For example, you could reposition a deal from the EdTech sector to the impact sector.

In summary, don’t take no for an answer but don’t just put your foot in the door and harangue the investor. Give them a better deal to invest in.

Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

It’s important for a startup to have regular communication with investors during the fundraise. It keeps the investor up to date on your progress and helps build the relationship.

For updates, find  a cadence that fits your business. For fundraising, every two weeks is a good pace. After funding move to monthly or quarterly updates.

In your communication in person, over the phone or in email talk about sales first. If you’re pre-revenue talk about activity with  beta customers and prospective. Always have some engagement ongoing with the customer - no engagement means no traction.  No traction means no funding. If you don’t have customers then start engaging with customers in some manner.

Call out team members who did something great. Show what team members are doing to increase your customer engagement. This provides another angle for showing the progress you are making.

Talk about how the product is moving forward. Highlight customer usage and the customer ROI which is what the customer is getting from the use of the product. Use anecdotes till you have numbers but get to numbers fast.  For example, take one customer and calculate their ROI from their usage of the product.

Show all three levels of the fundraise and include interest, committed, and invested numbers. If the investor indicates they are considering a $50K investment, that’s interest.  If the investor commits to investing, that’s committed. If the investor funds are in your bank account, that’s invested.  

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

I receive requests for introductions from many sources. Startups want to meet investors. Advisors want to meet growth companies. The list goes on.

Over the years, I’ve learned to raise the bar. I could take whatever attachment they have and make the introduction. Instead, I raise the bar by requiring the requestor to make it better. I ask for a proper email address that represents their business instead a hotmail address. I ask the requestor to write a short paragraph about the purpose of the introduction. If they don’t have a focus, then I ask them to find one before sending it.

I’m happy to make an introduction. I want it to be successful. I’m surprised by how many drop out after I ask for a short note explaining the reason for the introduction that I can use in the followup.

If you want an introduction, then provide a few sentences describing the purpose of the introduction and why you are asking for it.

If you ask for an introduction, offer something in return or pay it forward.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

I was recently talking with a startup who had a photo service.

He spent $3K to test out his business model. He found he could sign up one photographer for every dollar spent and how much revenue he could generate with each one.

As he spoke, I found myself engaging with his pitch when he had numbers. He talked about how he spent his $3K to demonstrate the cost of customer acquisition and the average lifetime use.

Later in the discussion, I found my eyes glazing over when he started talking about how “everyone loves this service.” “It works great.” and other statements that spoke generally about the product but not specifically about the business.

With investors, anecdotes tell, but numbers sell.

Use numbers when you talk about your business. Demonstrate your expertise and the results of your research with specific facts.

Show the unit economic numbers around your business model and make the case that you have a business that works.

Make sure you don’t show up with general anecdotes as you may see the investors interest wane.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

Every startup has one key metric to grow their business to the next level.

The one key metric for mobile app businesses is user engagement with the app.

This measures how much time or how often the user engages with the app.

The user needs to engage on a regular basis and over time increase the usage.

Some focus on total number of users but if most of those users don’t use the app more than a few times, then there’s no way to grow the business and later monetize.

Others focus on downloads but this too fails to measure activity that leads to growth and monetization.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

Your One Key Metric: SaaS businesses

Every startup has one key metric to grow their business to the next level.

For a software as a service business it is the CAC: LTV ratio

CAC standards for Cost of Customer Acquisition and represents the cost of signing up the customer including marketing, sales, and any other related expenses.

Lifetime value and stands for the total amount of revenue from the customer. This is typically calculated by looking at the churn rate which is how many customers are dropping out each month.

The metric compares CAC to LTV.

A base ratio of 1:3 indicates a business model that is successful. In this example for every $1 spent on acquiring the customer the customer is spending $3 on the service.

For venture funded companies the ratio needs to be 1:5 or better

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

Every startup has one key metric to grow their business to the next level. 

The one key metric for network effect businesses is organic vs. paid users.

The share of organic users relative to paid users should increase over time because as the network expands, more users want to join. Users can come from those who are friends and contacts of other users.

For two-sided marketplaces, users can come from both the supply side as well as the demand side.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

Every startup has one key metric to grow their business to the next level. 

In applications requiring FDA certification, revenue is not the key metric, but rather FDA approval is.

For medical device companies the key metric is cycle time through the 510K application and approval process. 

The purpose of a 510k submission is to demonstrate that your medical device is at least as safe and effective as an existing medical device on the market today.

The cycle time for approval varies based on type of device and ranges anywhere from 50 to 300 days.

Your key metric compares your performance against the standard cycle time for your type of device.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Kerry Rupp, General Partner at True Wealth Ventures. True Wealth Ventures is an early-stage venture capital fund run by women. They invest in women-led companies with products and technologies in the sustainable consumer and consumer health sectors that more efficiently solve the next generation of challenges. They believe that because women make the vast majority of consumer and healthcare purchases, having them on the management team designing, marketing, and servicing products is extremely beneficial.

In this episode, you learn more about Kerry’s background before early-stage investing. Right out of college she went into coding which was short-lived but got her into the tech space. She then spent 20 years in the early-stage-technology space working at early-stage companies. In her career, she has worked with everything from product management, biz dev, marketing, strategy, apps, and sales. She partnered up with former business associates to run one of the first accelerators in the market and fell upon investing in startups. They did not set out to create a venture fund next to an accelerator but realized they knew a lot about which startups were good and needed funding. The right model for the accelerator was to create an investment vehicle. It sprung out of the accelerator and was the right thing to do at that time.

Every startup has one key metric to grow their business to the next level.

For consumer product companies selling through retail, the key metric is same-store sales.

You track ongoing sales by units per store each week or month.

This metric tracks your organic growth rate of the product and can range anywhere from 1 to 10% month over month.

If selling online the CAC: LTV ratio applies which is the cost of customer acquisition compared to the lifetime value. This is the same as recurring revenue companies.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Sasha Shtern of Zero G Capital. Sasha is a seasoned entrepreneur with deep ties to the Denver startup community, and known for investing and operating companies in manufacturing, construction services, and technology. In addition, Sasha is the co-founder of Rocky Mountain Blockchain and co-organizer of Ethereum Denver, one of the largest blockchain organizations in the region. Sasha got his start as an entrepreneur at an early age in eCommerce, and gradually build on that success investing in the community.

Sasha talks about some of the investment opportunities in the Midwest and Mountain West, and how determining valuation is key, particularly when talking about startups across different regions. He explains how the differential in valuations between the middle of the country and the coasts can create opportunities for startups and investors. Sasha emphasizes the importance of capital efficiency and using early earnings to generate initial growth. He also discusses how there are fewer barriers to starting a business, and what that means for investing. Finally, Hall and Sasha discuss how the best founders can transition from being a technician to a salesperson and be good at both.

Every startup has one key metric to grow their business to the next level. 

For eCommerce, the key metric is sales conversion rate. Your conversion rate is the percentage of visitors who make a purchase. 

For most sites, the conversion rate is 1 to 5 percent. You can find it manually by dividing the number of people who bought a product by the total number of visitors.
 
In many sites, there are micro-conversions going on throughout the site that lead to a purchase. For instance, a user clicking on a product on a category page is a microconversion, because it takes the customer down the path to a sale.
 
You can use these smaller conversions to better understand your overall conversion rate.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Vickie Zisman, Owner at Bastet Communication. Vickie is a skilled corporate communications professional. She has led corporate activity in marketing, marcomm, events, as well as investor/partner/international relations. She has worked in corporate PR, digital media & social networks as well as the cross-cultural business environment in the private and non-profit sectors. Her background in marketing and communications has put her in contact with entrepreneurs and eventually led to her making introductions and connections between startups and investors.

Vickie speaks about her experiences with startups and investors and their contrasting points of view. She emphasizes that, for most investors, technology needs to be market-ready, and able to be translated into a solid business. She also highlights the importance of personal chemistry and shared vision between startup and investor, and a healthy partner relationship. Vicki also talks about the characteristics of the Israeli startup market and provides advice for investors looking into that space. Finally, Vickie explains how she achieves the best deals possible between both startups and investors, as well as what she sees as the biggest hurdles affecting today's startups.

The first vision of a business may seem grand and clear.  Upon launching the business you’ll find it doesn’t exactly fit with the market so you pivot. 

It takes 3 pivots to get to the growth phase of your startup.  

The first is the Target Market pivot-- you take this when you find the right market.

You then have to change your business model to fit the economics of that new market.  I call this the business model pivot in which you find the right way to structure your business.

Next comes the Team pivot-- finding the right people to grow and run that new business model.

The originally envisioned business almost never is the one that takes you all the way to a growth stage. 

You’re three pivots away from it.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Brian Deutsche, Founder of XV Capital Group. XVVC focuses on seed-stage investments across industries in the US.

Before XV Capital, Brian was a CPS by trade with a focus on chemical manufacturing. Brian then went on to grad school to get an MBA to transition into the world of investment banking where he was an M&A advisor in the world of consumer and retail. There was a focus on food, beverage, multi-site, retail, and direct-to-consumer. Brian helped early-stage businesses with their positioning and preparing for their fundraising. That's what led to his passion to be more deeply involved in the world of early-stage companies and now investing in them.

Before you launch your fundraise, you’ll need to build some basic documents for pitching the investor and following up their due diligence.

Start with a basic pitch deck, ten to 12 slides, that includes a non-confidential introductory version of your deal.

For first presentations to an investor, keep it simple and focused on the core. The goal is not to tell the investor everything. Instead, tell him the key value points in your deal, along with basic details such as how much you are raising, and what you are going to accomplish with the funds.

You’ll also need a terms sheet that an investor can sign to join the fundraise. You want to be able to take funding when offered. If you don’t have a lead investor yet, then start with a convertible note with a standard discount rate, interest rate, and cap rate.

For your diligence box or what some call a dataroom, you should gather your documents regarding articles of incorporation, entity filings, patent filings, income statement, balance sheet, and 3-5 year financial projections.

With these basic documents in hand, you are ready to engage investors.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Josh Chapman, Managing Partner of Konvoy Ventures. Konvoy Ventures is an early-stage venture capital fund that focuses exclusively on video gaming & esports.

Josh has a background in finance and has worked at both BlackRock and Morgan Stanley. He decided that he wanted to use those skills and be a life cycle company. He then decided to get into the venture space and launch his firm.

According to Josh, Konvoy is entirely focused on investing in technology startups behind video gaming and sports. He says there is also a large need for focused investment capital in the industry. Konvoy is incredibly excited about the future of video gaming. They've gone from 100 million people in 1995 that played video games to now north of 2.6 billion people that play. That breaks down between about 2.1 billion on mobile, 1.1 billion on PC and about 700 million on game consoles. The future is very bright for the industry.

I’m often asked where startups should look for funding. There are many sources.

First, start with your family and friends, as they already know you and believe in you.

Second, expand the circle to include current and previous coworkers.

If accelerators are appropriate for your deal, then consider those not only in your geographical area but also in your sector. Most accelerators take companies from across the country. Many are now offering funding of $150K or more.

Third, look for a local network of angel investors.

Fourth, ask around for family office investors in your area. These are high networth individuals who have organized their startup investments into a formal process.

Finally, approach venture capital, but only if you have a deal that fits the VC funding model, which looks for a 10X return, a scalable business model, strong growth and an experienced team.

There are literally tens of thousands of investors in the startup world today. The key is to gain an introduction, make a pitch, and then follow up to close.

In summary, it’s best to start with those you know and use their funding to show support and momentum to those further out in your network.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Paul Sethi of 2048 Ventures. Paul is a co-founder and Managing Partner at 2048 Ventures. For 7+ years prior to 2048 Ventures, Paul was CEO of Redbooks, leading sales data and intelligence platform for the marketing industry (acq. by List Partners - May 2018). He also co-founded Robuzz, an advanced ML/NLP practice, with a real-time alerts and data extraction engine built for enterprise.

Paul has been a first-check angel for over a decade, including in Flexport, SeatGeek, Transfix, Knotel and LearnVest. He serves as an Advisor to Transfix and OpenFortune. Early in his career, he was a public company investor focused on the tech sector.

2048 Ventures is an early stage venture capital firm. They invest in exceptional first-time entrepreneurs who are building businesses differentiated through technology. Based in NYC, and invest in founders from New York, Boston and Emerging Tech Cities.

For early stage funding there are several types of investors.

Angel, VC, Family office, or customer funding.

So which type is right for your deal?

This depends on your type of business, the return and timeframe for that return.

VCs want standard business models in high growth sectors with a 10X return in seven years.

Angels want 3 to 5 times their money in 3 to 5 years and have capital preservation in mind. They often look at businesses in non high-growth sectors.

Family offices are not time sensitive and can be very patient money but do expect outsized returns for that patience. They will also look at businesses in non high-growth sectors.

Potential customers are also candidates to fund your deal by pre paying or buying customized versions of your product. While this is not an investment, the cash earned works like funding to build your business.

In launching your fundraise, consider which investor fits your business type, return, and timeframe.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Michael Mealling and Steven Jorgenson of Starbridge Venture Capital.

Michael co-founded Masten Space Systems, was CTO of Seraph Group (a seed-stage VC fund), is the CEO of the Waypaver Foundation, and the President of the Moon Society. He has helped build several startups over the years ranging from telecom consulting to social media.

Steven is a founding partner of the Space Finance Group, Quantum Space Products, Space Angels Network, and Integrated Space Analytics. Steven is also an active angel investor in numerous other aerospace startups, giving him valuable personal experience as both the Investor and the startup Entrepreneur, as well as extensive experience as a professional investment fund manager.

Starbridge Venture Capital is a venture capital fund focused on the overlap between the space technology sector and traditional technology investments. There is true innovation happening across multiple sectors of space science and technology and at a pace that is quite obviously accelerating.

There are two primary deal structures for your startup fundraise.

There’s the convertible note which is a debt instrument that converts to equity later. However, if you want to use a straight debt instrument you should use a promissory note.

Then there’s equity. It gives ownership rights in the company. The ownership is set by the valuation put on the company. An equity deal often comes with additional terms such as board seats, voting rights, and more.

Most startups use the convertible note to kick off their fundraise because it doesn’t set the valuation of the company which drives how much the investor gets for their investment.

You will find setting valuation is a major step in the fundraise process.

Until there is a lead investor and the valuation is set, there will be many investors who want to “just be in the deal,” but not spend time setting the valuation.

At some point in the fundraise an investor will express interest in joining but wants equity. If they are investing $100K or more, then they are a candidate to be the lead investor.

After the equity investment is made, the convertible notes convert into equity.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Grant Newlin of Newlin Ventures. Grant started his career as a management consultant at UI, before moving to investment banking, M&A, financial planning, and eventually working in food tech with Kraft Heinz. He ultimately started working with New Stack Ventures doing angel deals, before founding his firm, Newlin Ventures.

Grant talks about how the angel and VC investment worlds have changed in recent years, and what excites him about the food tech space, whether it is in CPG, agricultural, restaurants, or software. He explains how food tech differs from other traditional tech businesses, particularly when it comes to fixed costs and volume. Grant also talks about how funding for food tech companies often follows a different roadmap than other startups, and how getting positive gross margin in the beginning is key. He touches on how the food tech space has evolved, and what role the larger CPG giants and small startups are playing. Grant discusses his investment thesis in the food tech space, and some of the technical and regulatory challenges to expect. Finally, Grant advises would-be startups and investors in food tech to five some consideration to building in-house to ensure product control.

Every day I ask entrepreneurs how much they are raising.

Most begin with the big number--the full and complete raise they anticipate to run. This ranges usually between $1m and $10M.

It’s good to have the big picture in mind.

Some actually consider raising it all at once because “they want to get the fundraising out of the way.” I remind them that raising too much money on a round will cost you equity that you don’t have to give up.

Your valuation is low at the beginning. It’s best to raise only the funding you need to reach the next milestone, and no more. As you grow the business, your valuation will go up and you’ll give away less equity.

Consider breaking your fundraise into tranches. It will save you time and make each fundraise easier.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Reed Berglund of iSnap. Reed is a tech startup advisor and CEO of iSnap, a SAAS company with a platform that is helping businesses collect customer video stories and gauge customer satisfaction. As an advisor, Reed supports a portfolio of the company's capital, content, time and experience. The current portfolio of companies includes S4M and Hanna Essentials.

Reed was CEO and Co-Founder of Fullbottle whose company was one of the early entrants in influencer marketing across on Instagram, Facebook, and Snapchat. A marketplace for creating and acquiring visual content from photos to videos from creators around the Globe.

Competitive advantages increase revenue by 30% over the competition or decrease cost by 30%.

Virality is a key competitive advantage in which users invite other users to join your platform.

Virality reduces your cost of customer acquisition. It’s is different from Network Effects. Network Effects shows the platform increasing in value based on more users participating.

I once had a CEO tell me “I wish I had designed for virality rather than revenue.” If you build virality into your product, you will have a larger pool of prospects to monetize as well as a lower cost of customer acquisition.

For you next project, consider designing for virality.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Ciarán Hynes, co-founder and Managing Partner at COSIMO Ventures, a deep technology firm specializing in Blockchain. With over ten years of deep tech market experience, Ciarán leverages his extensive network of investors, advisors, government agencies and business leaders throughout the U.S. to bring strategic benefits to these organizations.

In this episode, you’ll learn Ciarán's background before COSIMO Ventures. He has founded over seven companies, was the CEO of five and had several successful exits. In the process, Ciarán met Robert Frascar, and they worked on several startups together. Finding they had instant chemistry and worked well together, they formed COSIMO five years ago. As a reflection of the founders’ entrepreneurial background, COSIMO Ventures looks at companies from an entrepreneurial perspective and brings that knowledge to their portfolio

A competitive advantage increases revenue by 30% over the competition or decreases cost by 30%.
Most businesses increase in value as the customer base grows and validates the product/service. Users encourage others to join the platform. This is called Network Effects.
As the number of users grow, so the value of the platform grows as well.
If a business can harness that customer base and turn it into a community that more aggressively attracts other users then it’s a competitive advantage.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today!

In this episode, Hall welcomes James Somauroo of HS. Ventures. James is a Founding Partner at HS. Ventures, which build, scales and invests in the best health tech startups. James is a health tech contributor for Forbes and hosts the HS. Health-Tech Podcast, which is listened to in 80 countries. He’s an anesthetics and ICU doctor by training, he’s held roles in leadership, management and innovation at NHS England, Health Education England and the British Medical Journal and previously directed an accelerator that provides startups with market access to the NHS, saving £48M for the UK health service. James holds degrees in biomedical sciences and education and is a guest lecturer on health tech innovation and entrepreneurship at University College London.

Competitive advantages increase revenue by 30% over the competition or decrease cost by 30%.

A platform-based solution is a competitive advantage over a single-product company, as a platform brings an inherent cost advantage.  

Platforms reuse the research, design, architecture, and product packaging.

Customer support is also reused.

Consider adopting a platform-based approach to your business. 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Kevin King, Managing Director of Texas Halo Fund. Texas Halo Fund (THF) is an investment company that specializes in investing in early-stage businesses with promising growth prospects and exceptional management teams. Their investment approach identifies compelling businesses from multiple sources and without regard to the industry or geographic location. They seek the best opportunities to generate the highest returns for investors with the lowest possible risk. Each fund invests in multiple companies in a variety of industries to construct a diversified portfolio.

Today, you’ll learn about Kevin’s background before Texas Halo Fund. He’s been in the startup industry for most of his career and has successfully run 10 early-stage businesses. Kevin advises would-be investors to have a definite plan of approach before writing a check, and not to just invest in something interesting without a little due diligence. Kevin suggests investors challenge themselves to build a portfolio of ten to twelve companies. For startups seeking funding, Kevin advises persistence and flexibility. As he explains, startups often must do a little of everything. For that reason, having a rigid approach (the "I have a skill set in a certain sector and that's what I'm going to do" mentality) can lead to unfortunate surprises when you're running an early-stage business.

Competitive advantages increase revenue by 30% over the competition or decrease cost by 30%.

Recurring revenue is a key competitive advantage.

In today’s world you would think every business has recurring revenue. Yet, I find most businesses who are raising funding did not structure their business for recurring revenue.

Recurring revenue helps your business in several ways.

It opens up your business to new customers who could not afford your product previously because the one-time payment was too high. By breaking the payment into smaller steps, more customers will be able to afford it.

It provides an ongoing revenue stream so you can plan your business better as you know how much you will have coming in.

It helps you maintain engagement with the customer and gives you the opportunity to find new opportunities to serve the customer. 

Overall it should increase your revenue in the long run by at least 30%.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Stephen Meade of MonetaPro, a B2B sell-for-credit exchange using blockchain technology to deliver better efficiency, liquidity, and trust to global trade. Stephen is an entrepreneur, executive, and founder who has built numerous successful technology companies over the past 20 years.

Stephen talks about how he entered the FinTech space and the importance of blockchain technology. Stephen advices that investors in the blockchain space should consider equity or a blended offering rather than token offerings alone - in other words, consider sacrificing some liquidity for better long-term control and value. He explains how companies are moving towards using blockchain on the funding side, while also highlighting those that are using blockchain technology as part of a product or service. In addition, he discusses some of the regulatory developments in blockchain, and how the challenges for startups remain fundamentally the same - acquiring customers and raising capital. Finally, Stephen expands on the role of MonetaPro, how they fit into the FinTech space, and where they are going from there.

A competitive advantage increases revenue by 30% over the competition or decreases cost by 30%.

Channel access is a key competitive advantage. Channel access lets you connect to a set of customers that others cannot.

Perhaps your previous job gave you contacts throughout the industry that you can now leverage for your startup.

Perhaps you have found a social media channel, SEO, email, or other marketing channel that works well. It may take some experimenting to find that channel but now you have something your competition does not.

In your pitch to investors, you want to highlight this as a key differentiator. It may not be a sustainable advantage for the long haul, but it can be crucial to launching your startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Gary Madsen of ProTransit Nanotherapy. Gary Madsen, Ph.D., has over 30 years of experience in developing and launching biotechnology products in a wide variety of markets at companies of various sizes. He spent 17 years at Abbott Laboratories in product support, new product development and business development. His expertise in product commercialization has helped him to success building new technologies; today that has led him to a promising new technology -- nanoparticle drug delivery.

Gary advises that potential investors in biotechnology make sure that the technology is workable, scalable, and that it has good supporting data beyond just slick advertising. Gary explains some of the technology behind nanoparticle drug delivery, and its potential applications. In addition, Gary touches on why skincare is a good entry point for new technology, as well as some of the technical challenges in scaling production. Finally, Gary outlines some of things that ProTransit has done to set themselves up for success as they pursue additional applications for their technology.

In raising funding you need to find investors. So how do you get in front of them?

First, identify the right type of investor and build up your network in that area. 

Know your sector, stage, and revenue category and look for those who invest in it. If your target investor funds  biotech then you should skip pursuing investors who fund fin-tech. 

Second, start building a list of your target investor group.

Target specific people and not firms or funds. Compile a list of 20 investors and start building a relationship with them.

Third, start connecting with them online and in person.

In emailing, start with an introduction of who you are and what you’re all about and how it is relevant to them.

You need to bring something to the investor in addition to the ask for funding.

If you have a contact making an email introduction, provide them a short two paragraph summary. Include the following:

-Who you are - demonstrate experience and credibility

-What you are doing - make it interesting

-Why you want to connect - is it about an investment, advice, feedback, etc.

Don’t make your contact do all the work because they won’t be able to provide that information. Write it up for them.

In meeting them in person, bring something interesting to the discussion such as new information about a sector, company, or group that may be useful to the them. It could also be the latest research you have done on a topic of interest.

Keep the dialog going until you build a rapport with the investor.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Djalil Reghis of Agroecology Capital. Agroecology Capital is a mission-driven early-stage venture fund that invests in technologies that help agriculture transition toward practices focused on safety, sustainability, productivity, and equitability. Djalil is an AgTech early-stage investor with an experience that spans roles in investment, M&A, Government Affairs, and Board Director. He has held key roles in implementing $1B of strategic international investment projects with a focus on consumer packaged goods. 

In this episode, Djalil talks about how technology is transforming the Ag space, and is helping push Agroecology’s principal values. He also explains how the AgTech space remains a small, nascent market, where sharing between investors in important. He explains how a technical, specialized knowledge is key to unlocking value and potential.

Entrepreneurs are often enchanted with the idea behind their business that they think investors will write them a check based on the idea alone.

Many have great ideas but I always say no matter how great your idea is standard startup metrics apply.

New technologies can capture the imagination such as blockchain in 2017 that sent startups through a hyper funding phase, but this only lasts for a short time. Today standard startup metrics apply.

Some have a rockstar team and think that will make the fundraise a slam dunk. But again, I say standard startup metrics apply.

Standard startup metrics means you have a platform setup with users on it and line of sight to revenue. You have market validation and product validation - the user likes the product and will pay for it at some point.

You too may be excited about your idea, product, team, or more but standard startup metrics apply

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Stephanie Campbell of Houston Angel Network and The Artemis Fund. Stephanie is the Managing Director of the Houston Angel Network, one of the most active angel networks in the country. She is also Managing Partner at the Artemis Fund, the first female-founded, female-focused venture fund in Houston, Texas. The Artemis Fund is investing $20M in 15-20 female-led US-based companies that disrupt the Consumer Tech, Life Tech, Fin-Tech, and Energy Infrastructure industries.

Stephanie explains how Artemis Fund focuses on companies that make a difference in the world, solve real-world problems, and solve problems for overlooked communities. She provides advice for female founders and investors and talks about the investing world from a female perspective. She touches on some of the challenges startups face and emphasizes the importance of understanding your customers and how to get to them.

When I ask an entrepreneur what their competitive advantage is, most point to their product and say it's better. Of course, they spend ten minutes citing anecdotal stories to “prove” it.

My definition of a competitive advantage is that it increases revenue by 30% over the competition or is a decrease in cost by 30%.

Here are five sources of competitive advantage:
- Channel access
- Recurring revenue
- Platform based solution instead of singular products.
- Network effects in action -- the value of the product increases with the number of users
- Virality -- users invite other users -- it’s not the same as network effects

These advantages give your business the ability to scale. Scale comes from revenue increasing faster than cost.

In raising funding, competitive advantages can make the difference in closing an investor. The key is to quantify the effects of your advantage in dollars. If you just say you have it then it will convince no one. You must demonstrate with numbers.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Manuela de Paula of Babel Ventures. BABEL Ventures is a VC firm based in Silicon Valley that focuses on investing in early-stage startups founded by antifragile entrepreneurs. They focus on innovation and technology, partnering with revolutionary startups.

In this episode, Manuela shares how she got into investing before Babel Ventures. She also shares what she finds most exciting at the moment. According to Manuela early-stage companies and their technology can change the world for good. They’re not only interested in profits. They have a focus on humanity. They're making and building to create solutions to help and to do something big that will improve people's lives.

When I started angel investing over twenty years ago, there were angels, venture capital funds, and accelerators. That was about it. Today there are many more investor types in the early stage funding arena.

Here’s my experience with the investor types including how much they invest and what they expect as a return in general:

Crowdfunders -- Invest $500 to $2500, expect 2X to 3X their investment in five years

Pre-Revenue VCs -- Invest $150K, expect 3X their investment in three to five years

NanoVCs -- those who have a $10M fund,  Invest $100K on the first check and expect 5X their investment in five years

MicroVCs -- those who have a $25M to $50M Invest $150K on the first check, and expect 5X their investment in five years

Traditional VCs -- Invest $150K to $500K on the first check and expect 10X their investment in seven to ten years

VCs with Accelerators  -- Invest $150K to $250K on the first check and expect 3X their investment in five years

Incubators/Accelerators - Invest $25K to $150K, expect 3X their investment in seven years

Angels - Invest $25K to $50K, expect 3X to 5X their investment, in five to seven years

HNI -- Invest $100K, expect 10X their investment in five years

Family Office -- Invest $250K, expect 5 to 10X their investment in five to ten
Years

Hopefully this helps you identify the right investor for your startup.

Let’s go startup something today!

In this episode, Hall welcomes Rufo Guerreschi CEO and Founder of Trustless.ai. Rufo is an entrepreneur, activist and researcher in the area of leading-edge IT security and privacy. As a founder of startups and NGOs over the last 20 years, he has strived to radically advance the state-of-the-art of security and privacy of private digital human communications and transactions.

Trusteless.ai is focused on building an ultra-secure social computing platform, that brings real privacy and security to consumers. Trustless.ai core philosophy boils down to its untrusting approach to design, fabrication, and software.

How Investors can find an exit in a Startup Investment.

One of the challenges for investors funding startups is finding the exit.  

Startups typically exit through an IPO or an acquisition by a larger company.

As a startup  investor you have little to no control over the exit and can end up in a deal for ten years or more. 

So how can an investor find an exit?

The solution is to define the exit before investing.

Setup conditions to give you the option of exiting at a prescribed time or stage of company.

You can insert redemption rights and clauses into the terms sheet giving a predefined exit and return.

If the startup is not defining the exit, then you should. 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Faris Ghawi of Vytalize Health. Vytalize Health enables primary care providers to enhance the scope of care provided for Medicare patients. Their comprehensive services include in-home, remote and brick-and-mortar care, as well as on-demand urgent care.

Faris provides advice for investors coming into the healthcare space and highlights how the space has changed.  As Faris explains, a successful healthcare technology is about "cutting costs, and capturing savings, and sharing savings out of the value that's created in the system". The emphasis is on creating efficiencies and aligning the economics of all the stakeholders. Faris discusses how and why Vytalize focuses on Medicare, and where they fit into the overall landscape. He also touches on the cost savings goals that a value-based startup should be looking for. Finally, Faris talks about how the value-based healthcare is being received by the larger market.

I meet a great number of entrepreneurs and have seen numerous approaches to raising funding. Some approach it as an opportunity to meet new people and explore another part of the entrepreneur ecosystem. Others see it as a chore that distracts from the real business such as product development, closing sales, creating the next unicorn (take your pick).  

Some bring their sales skills to the process and are quite good at meeting investors, listening to their concerns, and closing the deal. Others expect the investor to be bowled over by the idea, the pitch deck, the rock-star team (again take your pick). When that doesn’t happen they look at it as a failed meeting.

The key is to bring your best game to the meeting and treat it as you would fishing. 

In fishing you have to set the bait and be patient for the right fish to come along.  

Just like you can't rush a fish to take the hook so you can’t rush an investor.

If you don’t get a bite in one place you can move to another location or you can stay where you are and change the bait.

I see entrepreneurs setting specific time schedules for their raise.  This is the same as casting the line and then saying “By 3:25 we will have our first fish”. The fish rarely work on your schedule. Investors won’t either.

While a fisherman can throw a stick of dynamite into the waters to expedite the process, this is where the analogy ends as you can’t do that with Investors.

Fundraising is like fishing. It can be a joyful experience or a terrible one. It takes the right place with the right bait and patience.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Bader Alam of CAVU Venture Partners. CAVU Venture Partners is a consumer-focused investment firm founded by operators, that aims to partner with operators in building high-growth and disruptive businesses. They are partners and operators first, investors second. Bader is the Senior Vice President at CAVU and has over 10 years of private equity experience, focusing on growth equity and middle-market transactions primarily in the consumer sector.

In this episode, Bader shares his thoughts on how the consumer product sector is growing and his advice to those wanting to invest in consumer brands. According to Bader, as an investor, the consumer-product space is interesting because you have a product you can touch and feel, and it's very easy to just have an affinity for a product. It's important to base decisions on all factors, though, and not just on the product itself.

There are some statements I’ve never heard a startup Investor ever say.

Here are some of them:

No startup investor ever said:

-I hear way too often from that startup that I invested in.

-There are so many good deals to invest in- where do I start?

-The payback on that startup investment came fast.

-Of course the startup hit their forecast- they all do

-I love leading new investments.

-Due Diligence is fun.

What statements would you add to this list? 

Please send me your suggestions and we’ll add them to the list.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes back Forbes' Top-50 angel investor James Sowers. Since we heard from James last, he has been speaking at several family-office conferences and working with corporations to further educate them on blockchain technology, and whether it is a realistic solution for them. James talks about some of the latest companies he is working with in the blockchain space.
In addition, James discusses some of the challenges in late-stage investing, in particular the problem of valuation. James touches on a few startups he regrets not investing in, and some of the biggest ups and downs he's experienced in startup investing. Finally, James and Hall discuss in depth the current state of the blockchain and cryptocurrency space, focusing on regulatory issues, scalability, and other challenges.

There are some statements I’ve never heard a startup CEO say.

Here are some of them:

-Fundraising just flew by. I didn’t have a chance to really enjoy it.

-Sales is the easiest part of the business.

-All my customers are happy and no one is complaining.

-There are so many good people to choose from for that new position we opened up.

-Why are these terms sheets so simplistic?

-The product features just fly out the door.

-There’s so much revenue, I just don’t know what to do with it all.

What statements would you add to this list? 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Mark Lesney of Chilligence. Early in his career Mark worked in the retail-automotive space as Vice President of Operations with a large automotive company that was acquired by the Blackstone Group. Mark had colleagues in the entrepreneurship and startup space and was intrigued. He decided to change paths when his partner's father was going through an acquisition and they saw a need that wasn't being filled yet.

Chilligence was then conceptualized to help make due diligence easier. Whether used by a new business owner or a seasoned investor, they wanted to create a product that would eliminate wasted time, money, and stress from people’s lives. They believe that ideas are about forwarding momentum. Chilligence is designed to never hold back opportunity - instead, they want to help it out along the way.

Raising funding can have the same effect as winning the lottery.

Those who raise funding are both exhausted and exuberant. It’s a big win for the team and promises a brighter future for the company.  Just like the lottery, the sudden inflow of cash can change one’s perspective.  

Be careful to keep your spending in line during the times you are flush.  

A leading angel investor once said, “The IQ of a startup is inversely proportional to the size of their bank account.”

Stick to your plan and don't let the influx of cash lead into mission creep or overpaying for standard services.

Stick with your original goals and don’t let the funding change your spending.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Flavia de la Fuente of BuildGroup. BuildGroup is an operator-led investment company that provides permanent capital to entrepreneurs building the next generation of technology businesses. Their innovative structure allows them to invest for the long term, so founders can focus on running their companies instead of raising the next round.

Flavia started her career as a community organizer at the Sierra Club, where she worked on the organization’s flagship Beyond Coal campaign, before getting an MBA at the McCombs School of Business at the University of Texas. After business school, she worked for four years at the Employees Retirement System of Texas, flying back and forth to Asia to invest in technology stocks and lead an initiative on improving Japanese corporate governance policy. Flavia is a builder and senior associate with BuildGroup. She handles due diligence by going through financials, contracts as well as products and technology to see what makes a company great.

The startup world is open to anybody and it seems like everybody comes through it at some time or another.

I receive calls daily from entrepreneurs who are seeking to start a business, raise funding, or hire a team member.

I can always tell who is the serious entrepreneur and who is the pretend-preneur- someone who likes the idea of running a startup but is not committed to the work required to make it a success.  

That’s important because a pretend-preneur who raises funding will ultimately waste it and there are too many good startups to invest money in those who aren’t going to see it through.

Here are some telltale signs of a pretend-preneur

They are more worried about job titles and credit for the work.

They don’t seem too focused on the customer and what it will take to make them happy with the product as that’s ‘a detail to figure out later.’

They focus on the superficialities of the business and not the core functions of building the product and selling it.

They look for ways around the hard work rather than working their way through it.

Problems are the fault of everyone else and there’s nothing that they can do about it.

They don’t know who their customers are and it doesn’t bother them.

They think funding will solve all problems and life will be easier after the raise.

They don’t know their numbers but someone else in their organization does and that’s good enough.

As an investor, be on the lookout for these signs.

Let's go startup something today!

In this episode, Hall welcomes Gene Wang, CEO of People Power, a developer of consumer and white-label IoT solutions. Gene is a four-time CEO with a history of successful exits. Gene talks about how People Power uses IoT technology in the clean tech and senior care spaces, among others. He also provides advice for investors looking into the home care sector, and how affordability and simplicity are key for any product in that space.

Gene also touches on some of the technical challenges in the healthcare and home care space, from HIPAA compliance to accessibility. Gene also talks about People Power's current place in the market, and where they are headed in the future, with a focus on caregiver support products.

In the past venture capitalists stood in the shadows of their successful portfolio companies hinting about their contribution using veiled wording in Twitter posts. Today we see VCs stepping up to take more credit for their contribution. There are numerous examples of VCs using successful exits as validation for their investment thesis.

With the explosion of the number of venture capital providers comes the need for VCs to engage in brand marketing. A list of successful portfolio companies burnishes their brand and helps them gain new deal flow as well as limited partner investors.

Just having a fund is no longer a source of attraction for the best deals- there are too many other funds out there. Today VCs have to position themselves as unique in expertise, dealflow, support, and connections.

VCs need to gain market exposure on their unique value proposition to generate deal flow which is the lifeblood of the VC business model. They are now brand managers who in many cases have a business development and marketing team driving the awareness around their fund.  

As venture capital becomes more abundant, the startup has more choices to consider.  

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Max Brickman, Managing Director of Heartland Ventures. Max is an entrepreneur and venture capitalist with a passion for expanding technological innovation into smaller, underrepresented Midwestern communities. He founded Heartland Ventures, a $15mm Indiana-based venture fund, to enhance Silicon Valley startups’ access to this market.

Heartland Ventures is a Midwestern-based, venture capital firm. They co-invest alongside top VCs and Micro VCs to add immediate value to high-growth startups disrupting traditional Midwestern industries. Their value is generated by utilizing our board of executives at industry-leading corporations in the Midwest to validate technologies and acquire pilot customers, even before investing.

I love startup stories. In the startup world everyone has a grand idea and big plans to make it happen.  It’s the venture world so you better have an idea that can be big. The talk around the idea is large and full of hyperbole. The future is going to be so bright that you find yourself reaching for your shades.

But then the startup has to actually build it and show the growth story in progress. 

Scott Adams once wrote - “Losers have goals.  Winners have systems.’”

If the startup has some revenue traction then they probably have some system behind it that makes it grow. But what if they don’t have any meaningful revenue yet?

One technique is to ask questions that identifies the systems they will put in place such as:

Tell me about your system for generating leads. Exactly how will it work?

Tell me about your sales process. What system are you going to use?

Exactly how do you find the right prospect and close them? 

In other words, the startup needs to do more than just tell you their goals in the slide deck. They need to describe the systems they can put into place to accomplish the goal-.  

If the answers are vague and fuzzy, then they probably haven’t figured it out yet. 

If the answers show expertise and experience, then this one has potential for investment.

Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding.

Let’s go startup something today!

In this episode, Hall welcomes Ben Jones of Skipcart. Skipcart is an on-demand last-mile delivery company. Retailers, grocers, and local businesses have the option to give their customers same day delivery by utilizing software and a crowdsourced community of drivers. Ben started out as an entrepreneur working on the service side for large companies before breaking out on his own. Skipcart grew out of the Amazon-Whole Foods acquisition, and the emerging space of grocery delivery.

Ben talks about the competition in the space, and the importance of solid technology and innovation to back up your last-mile delivery startup. Ben also discusses the effect of crowdsourcing and how it drives efficiencies in the space. Finally, Ben also touches on some of the challenges in the space, from getting drivers to adopt a gig-based income model, as well as software that maximizes the efficiency of route-planning to ensure drivers remain loyal to the company.

When I look through my LinkedIn network these days it appears every fifth contact is a venture capitalist of one kind or another. When I started in the early stage funding world 20 years ago, the VC was a rare breed who had access to venture funding. Most of them were in a handful of tech clusters in the US - Silicon Valley, New York, and Boston to be exact and they were few and far between.

At that time, a typical VC had a $100M fund or greater which they raised from LPs or limited partners - primarily the pension funds. They operated in ten year funding cycles which means they could run a long ways off one good return. They charged 2% management fees and a 20% carry.

In the 2000s angels grew to prominence because the cost of starting a business came down so much, startups no longer needed $5M to start a web business but could now do the same thing for $500K. Angels became attractive financiers because they were more numerous and easier to access.  Today, MicroVC, NanoVC, Venture Studios and Corporate VCs are coming onto the startup scene with new fund sizes and funding models.

MicroVCs raise $25M to $50M fund while NanoVCs raise $10M to $15M funds.  Aside from the size of their fund, the main difference is that Micro and Nano VCs typically target a narrower criteria- either a specific geography or type of deal.  Many use the pledge-fund model which means each deal the VC wants to fund must go through a screening process by the limited partners.  

Because the fund size is small most MicroVCs are taking 3% in management fees and a 20% carry. Given the size of the fund, they can only invest in 5-10 deals. The fund lasts only a few years before it’s time to raise the next one.  They raise primarily from family offices and high net worth individuals.

Then there is the Venture Studio model. This type of VC essentially builds a team from which they launch a startup with an ecosystem of providers. This works well for one stripe zebra startups that provide niche products or services as they can tie into a bigger team with more resources.  

Finally, there is the strategic or corporate VC which seems to be popping up everywhere.  A venture fund provides a competitive advantage for burnishing the company’s brand and selling its product. They invest for strategic reasons rather than financial ones in most cases. 

Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding.

Let’s go startup something today!