Tag Archives: Milestones

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

Tips for a Successful Relationship with a Contract Developer

Tips for a Successful Relationship with a Contract Developer

Finding the right contract developer can be a big undertaking, especially if this is your first time doing.  This blog will provide you with some critical advice on how to develop an effective and efficient relationship with a contract developer.

1. Define the goals of your project

Before you approach any contract developers, you will need to understand and have clearly defined your project goals.  Usually, you will fall in one of two boats: you either want to develop a prototype or beta that will allow you go out and start testing your product, or you will want to make the end product perfect, just as you envisioned it.  If you fall in the former category, you will likely be able to higher the cheaper developers.  Though, keep in mind, you will need to do a lot of hand-holding and provide a lot of feedback.  If you fall in the latter category, you will need to shell out the money for a professional developer that can create great code and provide advice for overcoming any ambiguities.

2. You are paying your developer to code, not to consult

It is important to go into the relationship knowing that your developer is not your strategic adviser   The more clearly you can convey the desired features that you are going for and your vision for the end product, the better the outcome will be.  If you can provide mock-ups of how you envision the end product, even better.  The more you know what you are looking for and the better you can communicate this to you developer, the better chance you’ll have of getting exactly that.

3. Negotiations and Milestones

For the most part, you have the upper hand when negotiating with your contract developers.  If you are not sourcing your work to several developers, you should be.  Not only does this allow you to compare pricing, services and capabilities, but this gives you leverage in your negotiations as well.  Two great ways to leverage this power to protect yourself are through milestones and payment terms.  Setting up milestones will allow you to see progress and determine if you want to continue with the developer before you have gone too far down the process.  Similarly, setting up the payment terms to have as much payment as possible towards the end of the project, after you have been able to review some of these milestones, will further protect your pocketbook.

4. Elance and Lower-Than-Market-Value Developers

In today’s globalized society, you can find great developers abroad via freelance websites such as Elance for a fraction of the cost of a domestic developer with the same skill sets.  Be sure to review their portfolio, ensure that you can clearly communicate with the individual and they are able to answer your questions in an intelligent and timely manner.  If they have reviews posted, be sure to read those as well.  One great way to interview the developer (and to work with them down the road if you contract them) is to communicate via Skype.

5. Project Management

You may have thought that hiring and paying your contractor was enough to ensure that your project is appropriately managed.  However, this is not always the case.   While it is in their interest to do their best work for their clients and to keep them happy, be sure to touch base frequently to ensure that progress is being accomplished.

6. Feedback

It is very rare for a contract developer to get it right the first time around.  This should be expected.  Rather than letting your emotions get the better of you, take some time to clearly describe to your developer what you don’t like about the product and what would make it better.  Again, clearly defining the scope of what you are looking for will help.

7. Payment

Like most service providers, the better you pay, the better the service you will receive.  If you like what you have received be sure to pay your developer for their hard work.  Additionally, pay on time.  This will make them much more likely to continue to do their best work for you down the road.
 

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