What is the story with the unicorns? Is there a tech investment bubble? What on earth is going in in the venture investing world? The short answer is that we’re at a crux of a paradigm. The paradigm wrapped around investing venture capital in startups. Few people I talk to know that venture capital, as practiced today, is a fairly new concept. People instead assume...
My morning today includes 18 pitches at the quarterfinals of Social Venture Partners Seattle’s Fast Pitch competition. 18 first-time entrepreneurs, each with just five minutes and no Q&A, hoping to impress the judges enough to make it to the semi-finals. It’s a tough format. 40 judges in auditorium seating in a University of Washington classroom. 40 judges staring down on the...
In the last post, I talked about how revenue-based investments are a lower cost of capital than traditional equity. In this post, as promised, I’ll explain how they also better align the the incentives of investor with the entrepreneur. To start with, always remember to put yourselves in the other person’s shoes when raising money. Investors invest to make a positive return on their...
Revenue-based investments are quite uncommon in startup investing, and as such, few entrepreneurs and few investors understand their benefits. The traditional form of startup capital is equity, with investors expecting a “10x” return on their investment, i.e. they expect that the company will be acquired for a sufficient amount that the investment will earn the investor at least 10...
As the collective we bootstrap the impact ecosystem, hole after hole becomes more apparent. Business models. Talent. Funding. Etc. Far less obvious, but as important, is the information hole. Specifically, the lack of information on what is happening around the impact-oriented world. And where it’s happening. And who is making it happen. This is one assumption I discovered very...
In the world of social responsibility, co-ops are a corporate form that stands out as an functioning design. Consumer co-ops are a well-worn form for grocery stores (PCC and a dozen others here in Washington State), for retailers (see the multi-billion dollar REI), producers (see Organic Valley and Equal Exchange), and savings (see any credit union). Expanding that cooperative ethos across the...
How long will it be before entrepreneurs realize and start treating fundraising is a sales process, not as an inalienable right?! Last week I attended my umpteenth Angel group forum. Four formal pitches. Six mini pitches. Plus a few updates from the ecosystem. Not an uncommon pattern for a gathering by an Angel group. The problem… nearly all of these presenters presented facts and figures. Slide...
Winding down the last third of Fledge, my conscious company accelerator, the inevitable topic on the mind of all the fledglings is funding. Who will fund their startups? Where can they meet these people? Given Fledge is not a typical tech accelerator, but instead a program focused on socially and environmentally conscious companies, the answer is complicated. Fundamentally, there is a lot...
Ah… the proverbial hockey stick in a startup’s financial projections. No one believes it, and yet it must be included in any investor pitch. Why? Two reasons. First and foremost, investors are looking for big opportunities, and if the revenue forecasts grow exponentially, that serves as a proxy to claim a large opportunity exists. Second, investors want their money back (and more), and...
Raising money is a sales process, one in which a very small percentage of customers want what you are selling. Following on “If you think it… they will fund“, if you actually want that funding, you’ll need to talk with investors. How many investors??? More than most entrepreneurs think. A conversation with a potential fledgling led to this post. He was frustrated at...
