Tag Archives: funding

You Are Right. VCs Don’t Know Shit.

On his blog, Lee Hower (one of LinkedIn founders) has an interesting post titled Making good decisions still means you are sometimes wrongin which he talks about the tough choices VCs have when deciding which startup to back. There are so many deals coming their way, they can’t possibly bet on every single one of them and identifying good opportunities, especially early stage, is really difficult.

I especially liked his link to Bessemer’s “anti-portfolio” web page where they show companies they declined to invest in and have great comments on why. Just goes to show that you shouldn’t feel bad after that meeting where the VC tells you the startup you have been working on and investing your life savings is not interesting to them. Maybe they are missing on the next eBay, Google, or PayPal. Just maybe. 😉

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Hackers & Founders Launch New Incubator

If you’re in San Francisco and wished you could join an incubator but for any reason you didn’t, now there’s another option. Hackers & Founders “The Co-Op” is a different type of incubator, focusing more on business advice than in giving you money, is an interesting proposition.

How The Co-Op Works:

  1. Founders in The Co-op get together for weekly dinners where they listen to speakers and mentors and become a community.
  2. Founders are encouraged to become advisers in each other’s companies by trading small (0.25% to 0.5%) equity stakes.
  3. After working together on things like learning how to pitch and present, as well as the ropes of funding, founders are connected to the investment community (office hours are setup with a prominent angel in the community, personal introductions are made and AngelList).
  4. Towards the end of the program short video pitches are made and investors can view them online.
  5. Finally, there’s a party where investors meet founders in person.

For a full description and the history behind this new incubator-style program, check out the full article on Hackers & Founders site.

Wired Tells Us How YCombinator Works

YCombinator LogoAn interesting article appeared recently on Wired Magazine talking about YCombinator. If you’ve been following the incubator for a while, there’s not much new but it gives a nice account of how the demo day works, the internal meetings, and a bit of what it feels like to be part of the lucky ones that make the cut and are accepted into the program.

Link to the story “YCombinator is Bootcamp for Startups“:

http://www.wired.com/magazine/2011/05/ff_ycombinator/

Choosing Your Angel Investors

Max Shapiro from People Connect Staffing turned me on to this great video of a recent gathering of Angels and VCs titled “How to Select Your Angels“, from a Total Access session sponsored by Orrick.

The panelists were Jeff Clavier, Jared Hansen, Rob Hayes, Mitchell Kapor, and Naval Ravikant and moderated by Larry Kane.

Here are some key points from the talk:

  • The bar for startups is set higher, you need more than an idea to get funding, need to show traction.
  • Investors want to see something that actually works, if you have revenue is better.
  • What’s your team structure? Investors want to know who’s going to actually do all the work. Make sure you have more “doers” thank “executives” in your team.
  • The product that gets funding is almost never the product that ends up winning, so investors are looking for a team that can move in a big enough market, take whatever they started out with, and make it work, become massive.
  • You’ve gotta know how customer acquisition, retention, and referral will work for your company. If you don’t, is likely investors may pass (higher risk).
  • Naval says “focus on the product, the team, when the time is right the money will show up” and what he means is that the funding process takes time and energy, don’t let that distract you.
  • On incubators, they suggest you pick one as if you were choosing the best college. Each incubator has its own culture, find one that fits you.
  • A key aspect of getting funded is showing you know where you are, how far you’ve come, and that you know the meaningful milestones you have to reach for your next round of financing.
Click below to watch the video.

How to Select Angel Investors

A 10 Step Guide to AngelList

Brendan Baker wrote a really nice post on Quora on “How To Hustle With AngelList in 10 Steps“. He talks about:

  1. Make sure your profile is solid
  2. Leverage markets
  3. Leverage your location
  4. Be visible
  5. Build your team
  6. Get their support
  7. Get them to share your profile
  8. Expand your team
  9. Convert and exploit your new supporters
  10. Reach out to AngelList
Brendan explains that:
“In the last year I’ve seen thousands of startup pitches and coached hundreds of founders while working with the AngelList crew. I’ve also seen how quickly the AngelList platform improves, giving startups new ways to reach investors with every push. This is about using those tools.”
Read the full post, is worth it.

How to Hack Your Funding Process

Last week Naval Ravikant did a presentation at the Hackers and Founders event about hacking your funding process. There’s a lot that is similar to other presentations from Naval but a few slides talking about what is angel list, possible startup bubble and tips for founders that make the talk worth watching.

You can watch the whole talk at the Hackers&Founders TV website.

 

Lean Startup Challenge: Money+Mentors=Success!

First, Eric Ries decides to produce a free Lean Startup 101 online course. Now, together with AppSumo guys he is bundling cash, products, and access to mentors all in one package deal.

The Lean Startup Challenge

Here’s how it works. AppSumo has a bundle of solutions for only $99 that purchased individually would run over $6K. They include Twillio, Pivotal Tracker, Postmark, HipChat, Pandaform, Kissmetrics, crazyegg, Chargify, Backbook, WP Engine, Texting.ly, and more.

So after you pay $99 you get to use the apps and you can then submit an entry to the “lean startup challenge” saying how your startup is being “lean” and enter the contest. If your startup is selected as the winner, then you will win some really good prizes, including:

►$50,000 from “500 Startups
One $50,000 investment, access to the 500 Startups incubator program and Five $5,000 seed investments from the fine folks at 500 Startups.

► $50,000 & incubation from Band of Angels and Pivotal Labs
A $50,000 investment from BoA and office space, agile and lean development advice, a Pivotal Inception (two day deep dive on product planning) and help hiring from Pivotal Labs.

► $10,000 of testing services from uTest
$10,000 in functional, usability and/or load testing for your web or mobile apps.

► $8,000 Recurring Billing Services fromChargify
Two 12 month plans with Chargify that will allow you to automate billing and payments for up to 2000 users plus advice on subscription services from the industry experts behind Chargify

… And more. Check the whole list at: http://appsumo.com/leanchallenge/

  • The Lean Startup Challenge Starts: March 7th, 2011
  • The Lean Startup Challenge Ends: March 23rd, 2011

UPDATE: It seems the bundle from AppSumo has been sold out! Too bad…