Tag Archives: Angel Investors

7 Notable Investor Insights of the Month

7 Investor Insights of the Month from The Startup Garage

7 Notable Investor Insights of the Month

Straight from the investors mouth.


7 top insights from investors around the globe.

1. Marc Andreessen @pmarca
Twitter Investor

“The biggest misconception 1st time founders have is that they will always stay aligned with their the co-founders.”

 
2. Reid Hoffman @reidhoffman
Facebook Investor

“We’ve moved from the information age to the networked age. Are you network literate?”

 
3. Josh Kopelman @firstround
LinkedIn Investor

“Being a VC is like watching a car accident.”

 
4. Todd Chaffe @toddchaffee
Dropbox Investor

“Investing in high growth stocks both in private and public markets is a challenging game, just like hockey.”

 
5. Theresia Gouw @Tgr
Trulia Investor

“Diversity is more than gender and ethnicity. It’s about diversity of thoughts.”

 
6. Marc Cuban @Mcuban
Sharktank Investor

“Anything you text can & will be used against you.”

 
7. Jim Goetz @Jimgoetz
Whatsapp Investor

“We’re confident WhatsApp will flourish Facebook just like Instagram. On their way to a billion active users and just getting started.”

 
 

Whether you have a question about you investing or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

HBO Show Silicon Valley Shines The Spotlight on Business Planning

Silicon Valley Show On Business Plans from The Startup Garage

HBO Show Silicon Valley Shines The Spotlight on Business Planning

The clip below provides accurate yet comical insights into a typical angel investor meeting.

Key Take Aways From Video:

  • Investors are in the business to invest in companies, not just products.
  • Investors are not guidance counselors for your Startup.
  • Investors are smart and sophisticated, they want you to be prepared.
  • There are key Milestones investors care about.
  • One thing you want to never hear in an investor meeting
    “He doesn’t seem to know what he’s doing.”
  • Are you prepared to #Getfunded?

     

    Whether you have a question about your business plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Need To Raise Capital For Your Startup? Ask A Celebrity

Need to raise capital ? Ask a Celebrity from The Startup Garage

Need To Raise Capital For Your Startup? Ask A Celebrity

There’s a new breed of angel investors, taking over the tech-funding spotlight, Hollywood celebrities, or rather tech-ebrities.

Tech ventures are exciting, popular and trendy, making investing in startups a must have for the rich and famous.

The roster of celebrity tech investors include:
Justin Bieber, Lady Gaga, Bono, Ashton Kutcher, Leonardo DiCaprio, Kim Kardashian, Justin Timberlake, Will Ferrell, Dr. Dre, Kayne West, Mc Hammer, Jay-Z, Will Smith, Jessica Alba amongst others.

Collaborations between Hollywood and Silicon Valley, aren’t entirely new.
They’ve been have been around since the dot.com boom in 1997.

It was then that the “godfather” of the movement, William Shatner, partnered with Priceline.com to become the official spokesperson for the discount travel website. Rather than accepting money for his role in the company, Shatner decided to take stock equity.

Celebrities took heed when 10 years later, Shatner cashed out his Priceline equity, to a resounding $600 million.

Suddenly, being a spokesperson and/or investing funds into underground technology startups, become the fast track to creating long term wealth to those celebrities, willing to take the risk.

“Like everyone else, celebrities are now hyperaware of just how many billions of dollars an early stake in, say, Facebook, could be worth down the road.”said Alan Hock, a partner at the law firm Moritt Hock & Hamroff who specializes in endorsement contracts for entertainers.

According to Rolling Stone Magazine Bono, the lead singer from U2, did exactly that.
His private equity firm Elevation Partners, invested 90 million for a 1.5% stake in Facebook.
When Facebook went public in 2013 and sold for $100 billion, he walked away with crisp $1.5 billion. It’s been rumored that Bono made more money investing in Facebook than he has with U2.

However, unlike traditional Angel Investors , world class musicians, artists, actors, and athletes aren’t always investing simply for a big payoff. Afterall, their jobs are not fueled on acquisitions and exit strategies.

It’s fair to say, we’re referring to individuals that have built their careers out of emotional creativity, passion, and determination. Present a viable business plan, while pulling at their heart strings, and you might just find your business funded.

Avid tech investor Aston Kutcher told TechCrunch founder Michael Arrington
“I really think that, technology probably has the greatest potential to accelerate happiness. Everybody sort of looks at investing and, you know, for me, if I don’t make any money, but what we deliver people — love and happiness and connectivity and friendship and health and whatever it is that we can deliver that ultimately leads to people’s happiness — I’m fine losing my money, if that’s the case.”

Bono shared a similar perspective on MSNBC:
“I got interested in technology because I’m an artist, I’m interested in the forces that shape the world, politics, religion, the stuff we’ve been talking about today. Technology is huge. I wanted to learn about it. People say it’s odd, ‘you’re a musician, why are you doing all this.’ But I think it’s odd if artists aren’t more interested in the world around them.”
 
Whether you’re in favor of the tech bubble reaching Hollywood or not, there’s no denying world of investment capital continues to expand.

There has never been a time in our history, that funding sources are have so readily available. Whether from Mc Hammer’s pockets or from various crowdfunding platforms, raising investment capital is more accessible than ever.

Are you prepared to #GetFunded?

Whether you have a question about your business plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

What Do Investors Want in A Professional Business Plan?

What do investors want to see in a business plan? from The StartupGarage

What Do Investors Want in A Professional Business Plan?

Welcome to video Fridays from The Start Up Garage


A place where Tyler Jensen, The Startup Garage’s founder, answers questions directly from our viewers.

Key Take Aways From Video:

1. Investors want to see a clean, professional looking, honest, and reasonable assessment of the business.

2. Investor wantwell-sourced research sections, which include the market, industry, and competitive analysis.

3. Investors want an exceptional product description that explains all the features and benefits of the product or service you’re going to be selling.

4. Investors want a reasonable sales, marketing, and operational plan and budget.

5. Investors want 5-year financial projections.

Overall, investors are sophisticated and smart, this isn’t a traditional sales document.

Complete transcript below:

“What do investors want to see in a professional business plan?”

Great question Jen, overall investors really just want to see a clean, professional looking, honest, and reasonable assessment of the business. They want clear, well-sourced research sections. So this includes the market, industry, and competitive analysis. These really need to be cited with trusted sources, so add footnotes in there as well.

The next thing you want is a really good product description that explains why all the features and benefits of the product or service you’re going to be selling. Then they’re going to want a reasonable sales, marketing, and operational plan and budget — so you just need to be reasonable in these expectations of what you’re really going to be able to achieve in terms of growth.

And then they’re going to want to see a well thought out 5-year financial projections. These include balance sheet, cash flow, and profit/loss along with all the assumptions that go into making those up.

So overall investors are sophisticated and smart. So this isn’t a traditional sales document — you don’t want to make it too “salesy”. They want to see something that is just reasonable and honest — and I think you’re going to get a lot further with investors than something that is hyperbolic and exaggerated

Whether you have a question about your business plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Expert Communication Workshops Gets You ‘Shark Tank’ Ready

Communication Workshop from The Startup Garage

Expert Communication Workshops Gets You ‘Shark Tank’ Ready

The Startup Garage is pleased to be partner with Deborah Linggi, Principal of Linggi Communications.

With close to 20 years of experience working in senior-level, global communications roles for such industry leaders as Apple, HP, Illumina, Motorola and others, including startups, she provides invaluable communications counsel to The Startup Garage clients.

The Startup Garage provides the Pitch Deck and Linggi Communcations provides the language and optimal communciatoin methods.

Get your startup ready for the ‘Shark Tank’

Clear and effective communication is critical to building (and maintaining) positive brand perception, as well as achieving long-term financial success. Missing the mark in how you communicate limits your ability to:

Secure capital
Attract and retain customers
Create a high-performing workplace
Drive long-term growth and revenue

As an entrepreneur, you’ll be encountering many types of “sharks” as your business grows. Potential investors, existing or potential clients, partners and members of the media are just an example.

“Are YOU ‘Shark Tank’ Ready” is a hands-on, high energy workshop.

You’ll learn how to effectively communicate with any shark.

You’ll learn how to create targeted messaging and then deliver them in a clear, confident and professional manner, particularly under pressure.

Industry best practices and proven communication techniques used by seasoned executives working in the Fortune 500 will be shared.

Not only will you learn valuable concepts and ideas, you’ll walk away with completed messaging templates and tools which you can immediately incorporate into your business!

Whether you have a question about your pitchdeck or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

What Startups Got Funded In May?

Startups That Got Funded In May from The Startup Garage

What Startups Got Funded In May?

May Monthly Startup Wrap-up.

Find Out Who Got Funded and What Type Of Deals Are Attracting Investment here:

May 1st Bookbub the bargain bin for ebooks, secured $3.8 million in it’s first round of funding.

May 3rd Waggl the startup survey app inspired by honeybees,
secured $1 millionin funding.

May 5th Automattic which runs WordPress.com, became a billion-dollar company, thanks to a new $160 millionin funding.

May 5th PearSports which acts like a human personal trainer, secured $5 millionin a second round of funding.

May 6th Allclasses an education startup, closed a $1.5 million dollar round of funding.

May 6th Flux a top-secret spinout from Google X, landed $8 millionin venture funding.

May 12th Adform an Ad-Tech Startup , that creates rich media display ads, raised $5.5 million in funding.

May 13th Bitpay a Bitcoin startup, secured $30 million, to provide business solutions for merchants.

May 14th FanTV a startup set to revolutionize cable, tuned into $8.3 million in funding.

May 15th Uber the app that delivers you sophisticated car service, raised a new round of funding estimated at $350 million .

May 19th Autopilot a marketing Automation Company, grabbed $7 milllon in new funding.

May 20th Sumologic a log management app, pulled in $30 million in funding.

May 20th Centrify a cloudbased I.D. service raises $42 million in funding.

May 21st LiveOakVenturePartners an early stage lead investors, secureed $109 milion in investment funding.

May 27th AverInfomatics a health care billing system startup, secured $8.5 million.

May 28th MessageBus a custom email platform, raised $4 million in funding.

 

May was a momentous month for the 16 startups listed above.
Uber, ranked supreme, securing the top $ investment of $350 million bringing the company’s validation to an estimated $3.5 billion.

 

From Education Startups to Cable TV Startups, a common theme remains amongst those that secured investment, they all provide innovative solutions to modern day inconveniences.

Whether you have a question about Startup Funding or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation

To read more on all success stories referenced above click here.

11 Reasons Why Angel Investors Say No

Angel Investor Rejection Reasons from The Startup Garage

11 Reasons Why Angel Investors Say No

There are several factors that an Angel investor will analyze when considering an investment opportunity.  Some of the more obvious factors include: the product or service, the business plan, the founding, intellectual property, market validation, and the investment itself.  In addition to these factors, there are some less obvious reasons that will make an Angel investor pass on a deal.  We’ve highlighted some of these reasons below:

1.  Breach of Trust or Confidence

Nothing will turn an Angel way faster than untrustworthy character.  Stay clear from misleading comments, pretending to know answers that you don’t, or showing any sign of flaws in integrity.  While investors expect some amount of hype, don’t go so far as to lie or be unrealistic about your assumptions.

2.  Lack of Homework

Most Angel investors are as sharp as a tack.  They come to the table ready to quiz you in order to find a flaw in your business.  If you haven’t don’t your homework and your either not able to answer their questions or have not provided the information they need to assess your business they will be sure to walk away.  Additionally, an Angel will find it disrespectful that you are asking for their money when you haven’t done your due diligence to make sure it’s a sound investment.

3.  Financials Do Not Pass the Smell Test

Yes, Angel’s want to see hockey stick revenue numbers.  But, you must also paint a plausible picture based on realistic assumptions.  An Angel investor should be able to clearly see the growth drivers that defend your revenue projections.

4.  Underfunding

Entrepreneurs often underestimate their expenses or their run way before breaking even.  Angels are cautious not to underfund a startup as this will cause them to write additional checks down the road or bring in new partners which will dilute their stake.  There is a tendency to request less than what is needed in hopes of raising the potential to raise enough capital to get the project off the ground.  This is a losing strategy and Angels know it.  An Angel investor would rather provide no funding at all than underfund a company.

5.  Unrealistic Valuation and/or Investment Terms

Angel’s will often start by asking how much capital you are seeking and for what stake in the business.  They do this because if your valuation and/or investment terms are so far off from what they are seeking, it won’t matter how good the rest of your pitch will be as you’ll never be able to come to an agreement.  You valuation is not based on what you think the company can achieve with their capital investment.  Your valuation is based on what you have achieved to date.  An idea is only worth so much.  What raises your valuation is technology, your management team, your business plan, paying customers, etc.

6.  Unclear Exit Strategy

Angel investors are looking for startups that have the potential to provide a large ROI.  Angels realize their ROI during a liquidity event.  The exit strategy is the entrepreneur’s opportunity to demonstrate what a probable exit looks like, when it will likely occur, and what type of return can be expected.  One of the bigger mistakes that an entrepreneur can make is to neglect the ultimate motivation of a potential Angel investor: a large return on their investment.

7.  Incomplete Management Team

Angel investors heavily weigh the importance of the startup team when evaluating an investment opportunity.  The reason is simple, the company will face adversity, things will go wrong, and the plan will change.  But, if the right team is in place the company can overcome the adversity, fix the issues, and adapt the plan.  You should plan on having a team member, service provider, or advisor for every part of the business other than your area of expertise.  For example, if you are a tech expert launching a mobile app, you will want a team member, service provider, or advisor fulfilling the following roles CEO, CFO, sales, and marketing.  At this stage, it is fine for one person to fill several roles so long as they have the expertise to fill these gaps at their fingertips.

8.  Outside of Their Portfolio

Angel investors usually have an industry profile that they feel comfortable investing in.  These are typically industries that they have experience in as well.  Angels are sensitive about the industries they invest in for several reasons: 1) they want to be able to add value to the companies they invest in; 2) they feel more comfortable evaluating the market need and potential for a new company in an industry they are familiar with; 3) investors can identify growing markets that they see have a large potential and target companies within those markets.  Don’t set yourself up for failure by approaching Angel’s with investment portfolios that are outside of the scope of your startup.

9.  Inexperienced Founder

While some Angel’s will invest in first time entrepreneurs, many Angels don’t want to take that risk.  Although it is best to have a proven track record of successfully launching one or more startups, this is not the only way to show entrepreneurial experience.  Having worked for other startups or launching a new department or initiative for an established company can also show entrepreneurial prowess.  Alternatively, you can bring on a partner or team member that contains this experience.

10.  Lack of Follow Through

Angel’s want reliability.  If you promise to follow up with additional documentation, research, or a phone call – do it.  If you drop the ball on something now, it’s a pretty clear indication that you won’t deliver on your promises in the future.

11.  Uncoachable

Passion and coachability are two personality traits an angel is looking for in an entrepreneur.  With passion, an entrepreneur will be able to see and keep their eye on the end goal of success, and has the belief in their idea to see it through the tough times without being derailed.  However, the passion must be balanced with an ability to accept advice and guidance and to not be stubborn with a piece of your business that is not working to its full potential.  Angels want to provide feedback and expect you to be receptive to it.  If you show signs during the pitch that you are not coachable and open to their feedback, they are likely to pass on the deal.

Want To Learn More?

Raising Capital from Angel Investors eBook

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

  • An overview of the angel investor process and who they are
  • The milestones angel investors look for when evaluating your business
  • Strategies for finding the angels best fit for your startup
  • How to nurture the relationship, prepare for the meeting and deliver the pitch
  • Rounding out the details and preparing for the future

A Closer Look at AngelList

Close Up on Angel Investment from The Startup Garage

A Closer Look at AngelList

AngelList is a platform for startups that allows entrepreneurs to share their startup with potential investors. It provides entrepreneurs, advisors, and Angel investors a digital network to follow startup activity and quickly jump into investment deals with new companies. Entrepreneurs create a startup profile and pick which investors can see their startup, both of which can be updated at any time.
 

AngelList Syndicates

Recently, AngelList launched AngelList Syndicates. In short, AngelList Syndicates allow any one investor to invite other investors to co-invest with them via the AngelList platform — essentially, forming an Angel investment group. Syndicators allow startups to raise larger amounts of capital while spreading out the risk to each individual investor, creating a win-win situation.
 

Benefits

AngelList provides several benefits including:

  • Access to brand-name investors that you might not have access to otherwise
  • Gain recognition from the best developers and designers
  • Roll in capital from friends and family into a single entity on the capitalization table
  • Build buzz around your company and establish market validation prior to have a beta or fully launched product

 


Want To Learn More?

Raising Capital from Angel Investors eBook

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

  • An overview of the angel investor process and who they are
  • The milestones angel investors look for when evaluating your business
  • Strategies for finding the angels best fit for your startup
  • How to nurture the relationship, prepare for the meeting and deliver the pitch
  • Rounding out the details and preparing for the future

7 Angel Investors That Entrepreneurs Should Avoid

Angel Investors to Avoid from The Startup Garage

7 Angel Investors That Entrepreneurs Should Avoid

As eager as you may be to get your venture funded, some capital should just be avoided.
 

1. Angels Swimming in the Shark Tank

While most Angel investors realize that there’s plenty of room for both the entrepreneur and the Angel to make plenty of money on a good deal, some investors use their position to take advantage of an entrepreneur’s lack of financial resources or deal-making experience, or both.  If the term sheet just seems too tortuous and outright unfair, it’s likely time to respectfully decline.  Plus, if your pitch really is that good, there is plenty of other money on the market.

 

2. Lawyer Angels

While all Angels want to make sure that their investment is legally sound, avoid investors that threaten you with lawsuits at every chance they get.  Similar to the overbearing shark tank angels, don’t fall into the trap of getting bullied simply because your investor has a stronger financial position than you.

 

3. Shrewd Angels

Like the big banks that thought they were too big to fail, some successful business people turned Angel investors think they are too smart to fail.  They use their ‘superior intellect’ to influence your decision making despite whether it truly is what’s best for the startup.  You should be prepared to openly accept coaching from your Angel investors, but you too have your area of expertise.  This is your startup and you need to stand behind your decision making, for better or worse.

 

4. Angel Brokers

Many brokers position themselves as Angels but actually have no intention of investing their own money.  Some actually go so far to convince you to pay them to introduce you to real investors.  Again, if you are presenting a good business and investment opportunity, there is plenty of money out there that won’t cost you a dime (other than an equity position of course).

 

5. Control Freaks

Angel investors can be control freaks for several reasons.  For some, it’s one of their first investments and they are keeping a tight rein.  For others, they setup your contract so that when you hit your first road bump there are clauses that give him more control and require him to step in and run your company.  Similar to lawyer angels, don’t sign a bad contract for easy money.  If you find yourself in one of these situations, it may be up to your Board and only your Board who can save your right to control the company.

 

6. Senseless Angels

Despite some level of business success, understand that wealth does not equate to good business skills.  You should be prepared to be asked the tough questions by Angels.  If they are not asking the tough questions, focus on the superficial aspects of the business, or sign on board too soon to be true, then this capital could end up seriously harming your startup.

 

7.  Has-Been Angels

The has been Angel usually comes with a fair amount of former success in his/her career, likely in the dot-com era.  They ask all the right questions – sometimes too many of them – but either have a major liquidity problem or downright don’t have the capital to invest. These are a waste of your time.

The moral of the story is simple, be sure to vet your Angel as much as they are vetting you.  Capital should come for one cost: equity.  But not a headache, loss of control in your startup, or bad decision making.
 

Want To Learn More?

Raising Capital from Angel Investors eBook

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

  • An overview of the angel investor process and who they are
  • The milestones angel investors look for when evaluating your business
  • Strategies for finding the angels best fit for your startup
  • How to nurture the relationship, prepare for the meeting and deliver the pitch
  • Rounding out the details and preparing for the future

The Company Milestones Angel Investors Care About

Milestones Angel Investors Care About from The Startup Garage

The Company Milestones Angel Investors Care About

The most important principle of startup fundraising that every entrepreneur needs to know is: raise enough capital to achieve a set of milestones that will allow the company to attract the next round of investment. When raising pre-seed capital from friends, family, and founders (FFF) you’ll want to consider the milestones that Angel investors care about and be sure to raise enough capital to reach those milestones.

Below are the milestones that you will need to achieve in order to attract seed investment from Angels:
 

Business Plan

You may have self-financed the initial startup costs and/or raised FFF capital without a business plan, but in order to attract seed investment from Angel investors you will need a comprehensive plan complete with extensive market research and a detailed financial model. A major piece of the business plan will be your capitalization strategy demonstrating the milestone timeline discussed above as well as the effects of accomplished milestones on the company’s future valuation.

 

Product Development

Depending on the complexity of your product you may or may not be able to complete a working prototype or beta version with just your pre-seed, FFF capital. If not, at the bare minimum you will need an interactable wireframe or mockup that demonstrates the product’s features and functionality to attract seed capital from Angel investors. You will also need proposals for the cost to develop the minimum viable product (the features that allow the product to be deployed).

 

Founding Team, Key Hires, Advisory Board

Seed or Angel investors heavily weigh the importance of the startup team when evaluating an investment opportunity. The reason is simple, the company will face adversity, things will go wrong, and the plan will change. But, if the right team is in place the company can overcome the adversity, fix the issues, and adapt the plan. If you cannot afford to hire the individuals with key expertise you may need to bring them on as co-founders with an equity stake or hire a part-time, interim individual or company. You can also bring these skillsets to the organization via a board of advisors. In any case, you should plan on having a team member, service provider, or advisor for every part of the business other than your area of expertise. For example, if you are a tech expert launching a mobile app, you will want a team member, service provider, or advisor fulfilling the following roles CEO, CFO, sales, and marketing. At this stage, it is fine for one person to fill several roles so long as they have the expertise to fill these gaps at their fingertips.

 

Legal

Be sure to spend a small amount ($2,500 – $5,000) of your pre-seed startup capital to ensure that you legally setup your firm. Work with a lawyer to ensure that you are setting up the business according to what’s best given your goals and capitalization strategy. It’s better to pay a little now and get it right rather than have to go through the costly and arduous transition down the road.

 

Intellectual Property

If your business can secure any intellectual property rights now would be the time to do it. Common types of IP rights include copyright, trademarks, patents, design rights, and trade secrets.

 

Market Validation

While all of these milestones are vital to the success of raising seed capital from Angel investors, market validation is towards the top of the list. In your pitch to FFF investors you told them that there was a need for your product in the market. In your pitch to Angel investors, you will need to show investors this need. If you were able to build your product or a working prototype / beta version of your product it’s time to get either paying customers or even free users. At the bare minimum, obtain customer feedback and demonstrate that your product is fulfilling a real market need.


Want To Learn More?

Raising Capital from Angel Investors eBook

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

  • An overview of the angel investor process and who they are
  • The milestones angel investors look for when evaluating your business
  • Strategies for finding the angels best fit for your startup
  • How to nurture the relationship, prepare for the meeting and deliver the pitch
  • Rounding out the details and preparing for the future