Tag Archives: Fundraising

Inside The 2016 Tech Coast Angels 10th Anniversary Quick Pitch Event

Inside The 2016 Tech Coast Angels 10th Anniversary Quick Pitch Event

It’s no secret, the Tech Coast Angels is one of the largest, if not THE largest angel investor group in the nation. “Consisting of experienced CEOs, senior executives, current and former entrepreneurs, venture capitalists and other professionals, members have invested over $180 million in more than 300 companies and have helped entrepreneurs attract more than $1.6 billion in additional capital rounds,” according to the TCA Website. Regional chapters include: Los Angeles, Orange County, San Diego, Central Coast, and the Inland Empire. Within those chapters, the San Diego John G. Watson TCA Quick Pitch Competition celebrates its ten year anniversary this year.

“The Quick Pitch Competition is one of the most recognized angel investor events in the nation, showcasing talented entrepreneurs who each have two minutes to pitch their business to an expert panel of judges and large audience of investors, business executives and community leaders,” states Qualcomm Ventures. Finalists this year showcased San Diego’s entrepreneurial diversity, showcasing companies in various industries, including life sciences, consumer products, and tech industries.

This year the event was conducted a little differently, instead of the winner being selected by the judges, the audience of 500 were privileged enough to name the 2016 Quick Pitch winner. Another incentive for entrepreneurs was the doubling of last year’s cash prize to $30,000, although the top three winners would have to divide up the cash prize. The ten judges were therefore considered coaches and provided insight and feedback to the top ten savvy startup competitors. The winners were announced following an evening of meet and greet with TCA members, quick pitch finalists, and thought leaders within the San Diego startup community. As one can imagine, these entrepreneurs were eager to hear the results, but they were able to enjoy themselves throughout the entire event.

In The Hot Seat [The Feedback]

With a panel of the top players in the San Diego Startup Community serving as coaches during the TCA Quick Pitch event, there was extensive feedback provided to each presenter. Following each two-minute pitch, judges were given three-minutes to provide constructive thoughts or ask questions to each presenter.

Top 5 Points of Feedback From the Coaches

Credibility – Highlight key experiences and certifications that make you and your team a credible player in your target space.

Traction, Traction, Traction – Clearly present metrics and data points that show how your company is gaining traction.

Customer Acquisition Cost – this is a key metric all investors are interested in. Lifetime value (LTV) is also a key metric in rationalizing your CAC by quantifying your ability to monetize customers.

Optimization – If you are allotted a specific time period, use every second as effectively as possible. Two minutes is short – asking the audience questions, spending too much time on basic company information is not a meaningful use of your time
Growth Potential – Make sure you clearly communicate current revenue as well as the big picture in Year 5; investors want profitable, scalable companies to invest in.

Mark Your Calendars

The Startup Garage is a proud sponsor of the annual TCA Quick Pitch event. For San Diego entrepreneurs, these events not only bring entrepreneurs and major Angel investing groups in the country together, but they provide an open environment to collaborate, learn, and strengthen our startup community. With the increasing number of innovative startups being created every year, these events keeps everyone up to date on ongoing trends and resources. If you are a company looking for funding, please visit the TCA website and check out their application criteria.

At TSG, we believe that entrepreneurs change the world and push the boundaries of innovation, especially when they collaborate. San Diego is an expanding ecosystem of business owners and thought leaders from all walks of life. Be sure to mark your calendars for future events similar to the TCA Quick Pitch event as they bring a multifaceted perspective on industry trends and provide insight into what it means to be an entrepreneur in a time where innovation is ever evolving.

5 Excellent Startup Tips on Securing a Bank Loan

Bank Loan Tips From The Startup Garage

5 Excellent Startup Tips on Securing a Bank Loan

It’s no secret that securing bank funding for your startup is difficult these days – but it’s not impossible.

Give yourself better odds with these 5 simple
Startup tips:

Write a clear and convincing business plan.

Business owners must build a strategy from the very beginning around being “lendable,” so a business plan helps lay that proper foundation. Focus especially on the financial estimates and offer well-researched documentation for those estimates.

In addition, be sure to illustrate in your plan how you will generate revenue, how
much you’ll generate and how long it will take to get to positive cash flows. (Side tip: you may
want to have a CPA look over your financials beforehand).

Boost your credit rating.

A solid credit score lends legitimacy to your request and shows you’re less of a financial risk to the bank. They’ll want to see that you have a history of paying bills on time, as well as your history of minimizing outstanding debt. Have a less than desirable credit score?

Seek out smaller, more local banks, since large banks typically are pickier as to the kinds of businesses they want to work with. Smaller ones may be more forgiving of new businesses and may have less stringent credit requirements for opening accounts and lines of credit.

Launch your business in a solid industry.

Certain industries, such as food service and apparel,are considered extremely risky by potential lenders. Thus, if you are determined to get bank funding, consider an industry that doesn’t depend on fluctuating resources (such as oil prices) and has a relatively large profit margin.

Once selecting that industry, be sure to demonstrate your experience in it: offer real, measurable examples of your expertise in your chosen industry or of your experience of running successful businesses. Banks back those with a track record of success, so you’ll have to convince them you have the skill set, drive and experience to make their lending decision a successful one.

Owner’s equity.

If you expect lenders to put their “skin in the game,” they’re going to expect
you to do the same. As a general rule, you should personally invest 20% of the total projected
loan request. Your willingness to risk a sizeable portion of your own capital (and not just capital from their bank loans) shows your commitment to the venture.

Relationships are key.

Ultimately, securing a bank loan is about building a relationship with your bank, and if done correctly, your banker can become your biggest ally. If the banker knows you, your business operations and that you have good employees and a stable customer base, they
will be more likely to go out on a limb for you.

Having a good relationship with your bank can
make running your business a lot easier, so don’t underestimate it!

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

5 Reasons to Attend The USD V2 Pitch Competition For Entrepreneurs

5 Reasons to Attend The USD V2 Pitch Competition For Entrepreneurs

On Thursday April 28th University of San Diego School of Business will hold an exciting competition in a “Shark Tank” like setting.

Top student entrepreneurs from USD and Tijuana will compete for a total of $100,000 in cash and invaluable mentorship and support.

The Startup Garage Team Compiled The Top 5 Reasons this is a must attend event:

1. There’s is no cost to attend.
It’s a completely FREE event although space is limited.
*HINT sign up early to reserve your seat.* When was the last time you had the opportunity to spent time with like minded entrepreneurs in a beautiful setting at no cost?
Register here

2. Absorb expert advice and insights from keynote speaker Tim Suski.

Tim co-founded one of the fastest growing boutique fitness franchise in Southern California, (The Rush Cycle Franchise) and also launched a technology platform used by 500+ businesses across the globe.

3. Fuel your entrepreneur inspiration.
The students pitching include a unique blend of entrepreneurs, each with their own innovative story and journey to share.

USD Current Student Entrepreneurs includes:

Lacy
Lacy is a bra washing machine (patent pending) that carefully protects bras and
delicates from the damage they normally endure during traditional washing methods.

FoldedColor
Technology company FoldedColor is an e-commerce solution for custom printed
packaging, offering standard and customizable folding carton options through a web-
to-print interface that includes instant pricing, an intuitive design editor, virtual 3D
proofing and online checkout.

TechMeetsTrader
This free social community for stocks and options investors, TechMeetsTrader
makes it easy to capitalize on investment opportunities and to learn from
experienced traders.

Like Cats and Dogs
Like Cats and Dogs produces a safe pet toy for both cats and dogs.

Bi-National Track Entrepreneurs Include:

AGROSOL
AGROSOL offers a fertilization, fumigation and geographical scanning system
performed by drones.

Baja Saver
Baja Saver generates clean and cheap energy through a product as small as a home
refrigerator that is 100 percent self-sufficient, more effective than wind and solar
systems and a better return on investment.

Ñapanga
Ñapanga produces and distributes a microbrew with a female focus.

FXR
FXR is an app used to request certified professional services for home repair and
maintenance.

4. Learn the art of pitching a Startup first hand.
Feel the presenters emotion and techniques when listening to a pitch, and tune into the panelist (potential “investors”) asking hard hitting questions.

5. Anyone can benefit from attending the V2 Pitch Competition.
Networking is key. “Meeting the right people and making connections to the San Diego start-up community is key to the success of any venture. We are lucky to bring in a unique crowd to the V2 Pitch Competition filled with investors, Entrepreneurs, alumni, and community partners. V2 has become an evening to connect, celebrate, and support our thriving San Diego and CaliBaja start-up ecosystem.” Regina Bernal, Entrepreneurship and Experiential Learning USD

Now that you’ve decided to join us, be sure to say hello to The Startup Garage Team!

We’ll have a table set up from 5-6pm at the Venture Fair prior to the event to answer any burning Startup Questions

Business Plan Writer vs. Business Plan Strategic Consultant

Business Plan Writer vs. Business Plan Strategic Consultant

People often ask me, “What are my options for writing a business plan?”

At the highest level, there are two options, writing it yourself or hiring someone else to do it for you.

The benefits of writing the business plan yourself are that you will save money and you will learn a lot about your business by going through the research and financial modeling processes.

However, this can be a risky option if you haven’t written a business plan before and/or if you haven’t raised capital before.

It is important to have a solid understanding of the way investors see value in a company as well as the milestones they care about if you are going to be successful writing the business plan yourself.

Furthermore, even if you have a good grasp on the investors’ perspective, you often miss out on objective, third-party pushback that can elevate your business plan to the next level. Lastly, as a time-strapped entrepreneur, spending several hundred hours writing your plan probably isn’t the best use of your time as you should be focusing on developing your product, expanding your team, and establishing
awareness with your customers.

While hiring someone to write your business plan for you will save you a lot of time, the capital outlay may or may not be worth the time savings – who you hire to write your business plan will make all the difference.

Hiring a Business Plan Strategic Consultant that can elevate your plan and strategy to help increase your chance of nailing the first impression with investors is money well spent. However, hiring a Business Plan Writer that merely saves you time but doesn’t add value to your pitch is a waste.

Below we’ve provided the differences between a Business Plan Writer and a Business Plan Strategic Consultant.

Business Plan Writer

A Business Plan Writer can be half the cost, or more, of a Business Plan Strategic Consultant. Typically, these savings come at the expense of the quality of the final product (you get what you pay for type of thing).

A Business Plan Writer typically completes a business plan in far less time simply because they can only put a limited amount of time into the plan in order for their business model to be profitable.

The problem with this model is that a business plan isn’t complete once a certain amount of time has passed; a business plan is complete once all red flags and issues have been identified, addressed, and overcome.

At the end of the day, a Business Plan Writer will require you to present the content, solutions, and answers that they will plug into a cookie-cutter template. While a Business Plan Writer can certainly save you time, the plan will ultimately only be as good as the information and strategies you provide them.

Business Plan Strategic Consultant

Hiring a Business Plan Strategic Consultant is certainly more expensive than hiring a Business Plan Writer or writing the plan yourself. However, the result will pay off in the long run when it comes to providing yourself with the best chance possible of successfully raising capital.

First a foremost, a Business Plan Strategic Consultant brings specific experience and education in the startup sector beyond expertise in broad business writing.

Second, a Business Plan Strategic Consultant understands what it takes to attract capital. They have an intimate knowledge of the capitalization timeline, who invests at the various stages, and what investors need to see at each stage. They will be able to coach you on the milestones and accomplishments you should be focusing on while crafting the investment story.

Third, a Business Plan Strategic Consultant takes a holistic approach to assessing your business including monetization strategies and business models, target markets and competitive differentiation, management team and personnel plan, sales and marketing communication strategies, and more.

Fourth, a Business Plan Strategic Consultant identifies red flags and gaps in your model by asking tough questions and challenging your assumptions in a way that is constructive and educational.

Finally, a Business Plan Strategic Consultant will compile all of this information in investor friendly documentation (business plan, executive summary, pitch deck, financial projections, one-page business plan, etc) based on your specific needs and audience.

The Startup Garage is a recognized Business Plan Strategic Consultancy that helps founders raise capital and get out of the garage through proven business plan writing and startup strategy consulting 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!

How To Create a Revenue Model

How to Create a Revenue Model from The Startup Garage

How To Create a Revenue Model

The first step to building the Financial Projections for a startup company is to build out the revenue model.

The revenue model answers one of the most important questions about a new business: ‘how does it make money?’

The revenue model is important for several reasons:

1. It provides the top-line of the profit and loss statement (total revenue)

2. It also provides gross or operating revenue

3. It allows us to understand marketing, personnel, and operating budgets

4. It helps us to determine the valuation of the company and the potential returns an investor can expect on their investment.

There are several types of revenue models that businesses can choose from.

In this blog post, we’ll discuss some of the most common revenue models.

Before we can chose the best revenue model for the business, we need to understand the cost to produce our product or service (also known as the cost of goods sold or COGS) as well as the price of our product or service.

Determining the Cost of Goods Sold

COGS are the direct costs that relate to the production or purchase of the product or service.

Potential direct costs include:

– Cost to purchase the merchandise for resale

– Cost of raw materials

– Packaging costs

– Cost of inventory of finished products

COGS or direct costs can be thought of as the marginal cost or the added costs of producing one more unit of your product or service. This is opposed to the indirect costs that include labor salaries, equipment used in the manufacturing process, etc.

Determining the Price

When determining the price of your product or service there are several aspects that you need to consider:

– What are my competitors pricing their product or service at?

– What is my target market willing and able to pay?

– What do I need to price this at in order to turn a profit?

There is no right answer or formula for determining the price of your product but by taking the questions above into consideration you should be able to identify a reasonable price for your product or solution.

Determining the Revenue Growth Model

All revenue growth models are created using a growth driver.

A growth driver is a key assumption or set of assumptions that determine the number of units the company will sell.

Below are some of the most common revenue growth models and growth drivers:

1. Sales Growth Model
The sales growth model is the most basic revenue growth model as the growth driver is simply a percent increase on sales every month. For example, we will sell 10,000 units in year 1 growing 50% per year to 22,500 units by year 3.

2. Sales Rep / Distributor Model
The sales rep growth model is best used for companies with a salesforce that is responsible for wholesale or retail sales. There are two key growth drivers for this model: the total number of sales reps and the total number of sales per rep.

3. Website Traffic Model
The website traffic model is used for websites whose revenue is directly tied to the amount of traffic visiting the site. The key growth driver for this model is the rate at which traffic will grow overtime.

Additionally, depending on the type of website (e-commerce or software as a service) additional growth drivers will be important.

For example, for e-commerce sites, you’ll need to convert traffic to purchased items.
Similarly, for software as a service sites, you’ll need to project the free trial conversion rate, paid subscriber conversion rate, and churn rate.

4. Mobile App Download Model
The mobile app download model relies on two key growth drivers: customer acquisition spend and customer acquisition cost. The customer acquisition spend is basically the marketing budget allocated to acquiring new customers through advertisement.

The customer acquisition cost depicts how much it costs to acquire one new customer. If a company has a customer acquisition cost of $1 and they spend $1,000 per month of customer acquisition, they can expect 1,000 new users per month.

Mobile apps often have additional assumptions such as registration rate if the mobile app requires the user to register an account after downloading the app.

5. Online Advertisement Model
Many websites and apps generate revenue through advertisements. The key growth drivers for this model are the number of impressions (which is derived from the number of ads per page and the number of page views) as well as the CPM (cost per million page views).

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

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

Building a High-Tech Startup Team

Building a Tech Startup Team from The Startup Garage

Building a High-Tech Startup Team

Aligning the Startup Team Strategy with the Capitalization Strategy

The single most important factor to raising capital for any tech startup is the management team.  This is true for early stage funding as well as venture capital funding.  A bonafide team is the assurance that the idea can be executed and that the business can scale when the time is right.  Furthermore, when faced with adversity only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.

Importance of the startup team from The Startup Garage

When building the team, avoid these common myths and mistakes:

  • A team is not one person and investors rarely want to invest in one-man shows.  While some investors will be willing to help you build your team, they will not be willing to invest in your startup if you are not willing to distribute responsibility and bring on diversified expertise.
  • Never confuse the number of years worked with experience.  Credibility is based on accomplishments and relevant experience.  Furthermore, a startup works differently than a large corporation.  Try to build a team with startup experience as these individuals will be far more likely to understand the importance of flexibility, perseverance, collective success and team playing.
  • Have a diversified team.  One recipe for failure (business failure and capital raising failure) is building a lopsided team weighted to one function of the business.  Don’t hire people with skills and qualifications similar to yours.  If you have a technical background and you are focused on product development, consider a co-founder with a sales and marketing background that can focus on selling your world class product.
  • Hire based on functionality and avoid having too many C’s.  Rather, give titles such as VP of Engineering, Product/Technology, Sales, Marketing, Finance, etc.  This helps to better divide the work, make people accountable, and show investors just why each founder/hire is key to the organization.
  • Don’t make everyone a founder.  Be sure to leave plenty of equity for investors.  You will likely need to raise more rounds of capital than you originally anticipated.  Having too many co-founders will only lead to your eventual dilution.
  • Hiring the right people at the right time is key.  You shouldn’t hire a senior executive from an established company for an early stage startup.  On the flip side, when it comes time to scale the company, the founder and CEO may need to relinquish their CEO title and hire a CEO with the ability to drive efficiency, make incremental process improvements and expand on the established market presence.  Below are some tips for aligning the startup team with the capitalization strategy.

Early Stage

With little to no revenue, many early stage entrepreneurs turn to the Co-Founder model to build credibility for their startup when raising seed capital.  This is not a bad strategy when done correctly.  The reality is that over time most founders will have their differences.  While you should be prepared to give up a large portion of the company’s equity to a co-founder, it is important that one founder maintains a majority share and creative control.

Additionally, be sure your co-founder is well diversified from your skill sets and traits.  Investors understand that you wont have all the pieces to the puzzle at this early stage.  But, the more business functions that you can divide among the original team the better.

Seed to Series A

For most tech startups, the Series A round allows the team to expand by making some key hires.  Typically, these hires fall into 2 buckets: product development and sales.  The CEO of the company will be in charge of leading the company by making these key hires, product managing, driving sales and understanding the companies financial situation.  This leaves the CTO / Senior Architect to focus on product development and managing the recently hired engineers.  On that note, it is important for high-tech companies to keep tech development inhouse.

Series A to Series B

Series B capital signifies that the company is ready to scale.  Key hires at this stage should reflect this strategy.  First, hire an office manager that can double as an admin assistant thereby allowing founders to not get bogged down in minutiae and focus on growing the business.  Hire a VP of Finance that can increase profitability by monitoring operations, legal fees, HR expenses, office space and the like.  Hire a diversified base of sales reps.  While consultative reps are key to building new business with big accounts, relationship managers are key to retaining those accounts.

 

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

VCs Bet on Mobile App Development

Venture Capital Bet on Mobile App from The Startup Garage

VCs Bet on Mobile App Development

Mobile is the Rage & VCs are Taking Note

Corporations from banks to fast food to software firms are turning to mobile app developers to build mobile app devices for their customers.  Given the popularity of mobile devices and the apps that make them great, venture capital investors are chomping at the bit to get a piece of the pie.  Since the beginning of 2012, mobile app development startups have raised $262M across 36 deals.  This represents 59% of the $446M that mobile app development firms have raised overall!

M&A Spurring Growth

In addition to the increasing popularity of mobile apps and enterprises deploying mobile apps as a result, M&A activity has helped to make investors bullish in the sector.  Notable recent exits that have caught the interest from strategic investors include:

  • Facebook’s $85M acquisition of Parse; and
  • IBM’s $70M acquisition of Worklight

On a broader note, VC funding to the developer tools category as a while hit $646M in the last year, an increase of 77% over the previous year.  The following chart outlines VC funding to the mobile app development since 2011:

VC Funding To Mobile App Development from The Startup Garage

All data and graphs thanks to CB Insights.

 

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

7 Critical Steps for Attracting Venture Funding

7 Steps to Attracting Venture Capital from The Startup Garage

7 Critical Steps for Attracting Venture Funding

First and foremost, venture capital firms want to see an entrepreneur with passion and vision.  Unfortunately, this usually isn’t enough to get them opening their pocket books.  Some venture capital firms will have narrow criteria for the types of companies that they invest in while other will adopt a more broad portfolio and invest across many sectors.

In any case, nearly every venture capital firm is looking to see if you’ve made signification traction for each of the following critical steps.

 

1. Team

Investors may think that you have a great idea and that the market poses a significant opportunity, but if they have confidence in your team’s ability to seize the opportunity you will be dead in your tracks.  Your team is perhaps the single biggest factor that investors consider when they are evaluating the attractiveness of the investment.   Your management team does not have to be fully built out, but the founders must possess the credibility to launch the company and built a world-class team.
 

2. Stellar Idea

Every entrepreneur gets attached to their idea.  However, the reality is that very few start-ups present an idea that is actually unique.  What makes an idea compelling to an investor is 2 fold: 1) does the idea offer a solution to a big problem or opportunity, and 2) is the idea protected via intellectual property or some other barrier to entry.
 

3. Technology

Technology is similar to the stellar idea.  Your technology needs to be broad enough to to solve a problem for a large group of people but focused enough to solve a problem that is not currently being solved.  Similarly, good technology needs to be protected.  Patents alone are not enough; you need talent to assure investors that you will stay ahead of the game.
 

4. Market Opportunity

A good market opportunity is more than just a large market size.  It is a market that is not over crowded with competition.  It is a market with an opportunity that has yet to be exploited.  It’s a market that has a lot of potential for you to continually create value down the road.  Truly innovative companies discover ways to create big markets.
 

5. (Sustainable) Competitive Advantage

Most entrepreneurs understand the need to have strategic advantages (both product/service advantages as well as business strategy advantages), but what many fail to understand is that venture capitalists want to know just how sustainable that advantage is.  If your competitor can reverse engineer your idea, hire new personnel, implement a new sales/marketing strategy or lower their costs to match your price point then your competitive advantage is not very sustainable.  Sustainable competitive advantages are not easily copied and generally stem from one or more of the following: vendor relations, product sourcing advantages, prime location, unique products / services, customer loyalty, customer service reputation, or distribution channel advantages.
 

6. Credible Financial Projections

Every investor knows that your financial projections are dependent on assumptions and that those assumptions will undoubtedly change.  But, financial projections are extremely valuable in explaining the business to the investor – they show what drives your growth, how profitable you can be, and where the company can go over the next 3 to 5 years.  They also show your ability to turn a business concept into a realistic, attractive business model.

 

7. Proof of Concept

Lastly, we have proof of concept, or market validation.  Behind the management team, this is one of the other more influencing factors.  Venture capitalists want to know, are people buying this?  Have businesses signed letters of intent?  Is there evidence that your solution will be adopted by the masses?  The more credibility and market traction that you have, the more attractive your startup will be to venture capitalists.

 

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