At its most basic, these are the three things that any investor wants to get answered before they will consider investing in your enterprise. Unfortunately, most entrepreneurs only address one of them.
Why this?
This is what most entrepreneurs focus on. Their idea. The product. The business plan. The marketing strategy. The sales channel. Manufacturing. Pricing. The website. The blog. Social media. Intellectual property protection. All critical things. And must be done right. But most people understand that, so let’s move on.
Why now?
Timing is everything. Are you the first player in an unproven market? Are you the last entrant in a crowded market with an undifferentiated solution? Being too early is just as bad as being too late. Is the market truly ready for your solution? How can you prove it? As they say, “you can’t time timing.”
Why you?
This my be the single most important piece of the puzzle. Why are you and your team the right group to pull off this business? Just because you thought of the idea, or are passionate about it is not enough. Do you have the ability to design the product, build the product, sell the product? Do you have domain experience in the market you’re going after? Can you be trusted with someone else’s money? Do you know what it really takes to run a startup company?
Think through these questions from an investor’s point of view. Make sure you are just as compelling on the timing and the team as you are on the product, and maybe you will be attractive to outside capital.
Cardlytics Inc., an ATDC member company, just closed on a $5 million round lead by Canaan and Polaris Ventures. Cardlytics software allows retailers to target advertising to specific consumers, via banking websites. Retailer ads are based on transaction information collected through the consumer’s bank card usage behavior. The transaction information is cleaned of personal data, so retailers can’t identify individual consumers.
“It’s a new way for customers to save money through the online banking relationship,” Cardlytics co-founder and Chief Operating Officer Lynne Laube said.
The company has raised about $8.4 million so far, and plans to add about 50 jobs early next year — more than doubling its current workforce.
That’s one of the essential questions we help you answer in our upcoming educational program CapVenture. CapVenture is a six week long, boot camp that will educate and equip early stage CEOs and executives to better manage and fund their business.
If you’re actively seeking funding or ever expect to, this is an essential program for you. You’ll get a inside look at the minds of venture capitalists and angel investors with an experienced team of investors, CEOs and industry executives. You will create a fundraising strategy, practice and sharpen your investor pitch, and at the end of the program, give your pitch in front of a room full of investors.
But CapVenture is not solely focused on fundraising. For entrepreneurs not looking to raise capital, CapVenture offers a unique opportunity to develop their business model, sharpen their go-to-market strategy, and enhance their network by sharing with and learning from a room full of CEOs, executives and investors.
We are still accepting applications to CapVenture through July 15th. So, if you’re interested, or know someone who might be, fill out an application.
Entrepreneurs, if you sell your company tomorrow, do you know how much you would make? Do you know how much your investors make? How about your employees? Better yet, you're raising a round of funding and you just received a new term sheet. How does this change everything?
The Liquidity Event Proceeds Calculator ("LEPC") was developed as a
joint project between the Atlanta Technology Development Center (ATDC)
and Siavage Law Group, LLC with assistance from Atlanta investment
bankers Croft and Bender, LLC. The LEPC provides users with a
comprehensive understanding of the effect of their particular venture
capital deal terms. It allows the user to input valuation, option pool
size, amount of investment, and amount and timing of the liquidity
event in order to customize various scenarios to the company's unique
financing circumstances. The LEPC projects the proceeds to be derived
by common holders, preferred holders and option holders in liquidity
events at varying valuations and varying time periods. The assumptions
are listed on the first page and the tool proceeds through three
pro-forma rounds of funding, A, B and C. In order to gain a working
understanding of the tool, we recommend that users review the
spreadsheets as written first before they modify the assumptions to
suit their needs. Each of the rounds has a pro-forma liquidity event at
increasing dollar values that can be modified by the user.
ATDC spends innumerable hours every week coaching entrepreneurs on their investment pitches. We see many entrepreneurs with good intentions make common mistakes and help them avoid common pitfalls as they prepare to present their companies in the best possible light. A great opportunity to observe fellow entrepreneurs in action is next Tuesday May 19th at MIT Forum of Atlanta’s Run it By the Pros workshop.
At Run it By the Pros four new companies will present their business plans to a panel of experts. The Venue : Law Offices of Carlton Fields, One Atlantic Center, 1201 West Peachtree Street, 49th Floor, Atlanta, GA, 30309; Time: 3:30 p.m. – 7:00 p.m. You can register here (members only but TAG members are eligible and can attend at the MIT Forum Member $25 rate). Clarification: You must be a member of the MIT Enterprise Forum to attend.
ATDC graduate entrepreneur Patrick Taylor of Oversight Systems will serve as the experienced entrepreneur on the panel along with VC’s Mark Johnson of Total Technology Ventures, Linnea Geiss of Arcapita, and Lawrence Gold from Carlton Field.
In addition to attending Run it By the Pros many an entrepreneur will find our articles on Telling a Compelling Story and Top VC Questions valuable resources when prepping to pitch their own deal.
Due to low demand, we have cancelled this event. We apologize for any inconvenience. Stay tuned for the next Meet the VC.
Meet the VC cranks up again next week with Steve Nussrallah of Atlanta based Venture Plus Ventures being the featured attraction.
Value Plus has a unique approach of providing both active management and capital to emerging technology companies.
The basic format of Meet the VC is a question and answer
session delving into the fund raising process, venture capitalists'
investment criteria, and specific venture capital firm profiles. This session will
take place on Wednesday, May 13th from 7:30 to 9:30 am.
The series is free but you need to register to attend (link removed).
Last year, I introduced a multi-part blog built on the premise that an effective fundraising program is investor-centric, milestone-driven, realistic, targeted, anticipatory, and market facing. To date, I have written on the merits of strategic fundraising and discussed details on making your activities "investor-centric". Today, let's discuss the concept of being milestone-driven.
One of my earliest lessons in entrepreneurship was the concept of the risk-return tradeoff. Core to this concept is that investors are naturally inclined to avoid risk and, all things being equal, prefer less risk. The corollary of this concept is that investors will only bear additional risk under the prospect of increased rewards.
In applying this model to the real world, it is easy to see how an investment in a well established public company is less risky than an investment in a university spin out in nanotechnology. It gets a little murkier, however, when you assess the riskiness of that same university spinout today and then again twelve months later. Here is where milestones come in handy.
Milestones are company acheivements that significantly reduce the risk of an investment. The key attribute of this definition is the adverb significantly. From my experience, all company acheivements are not created equal. Closing on a key hire is important but bringing a product to makret is big and getting someone to pay for your product is even bigger! The latter two accomplishments are the type of milestones that significantly reduce the risk profile of your company and increase its attractiveness to investors. Raise money in advance of such milestones and you run the risk of overpaying for capital and delaying additional fundraising while you try to achieve unrealistic milestones. You may run out of money in the meantime! The key is to commence your fundraising to coincide with the accomplishment of key milestones and it is equally important to present a plan to investors that achieves additional milestones with the funding you seek. Good luck and stay tuned!
PWC has recently released its annual list of Georgia's Top 25 Venture Capital Deals of 2008. We're proud to report that ATDC graduates and member companies comprised 8 of the top 25. These 8 companies have raised a combined total capital of $138.2M and are creating jobs for Georgia and helping to strengthen Georgia's entrepreneurial base.
Congratulations to the 8 ATDC companies:
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Suniva Inc.
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$50.0M
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EnerTech Environmental Inc.
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$42.0M
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Oversight Systems, Inc
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$10.2M
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Qcept Technologies Inc
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$9.5M
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Clearleap, Inc.
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$9.0M
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FTRANS Corp
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$7.5M
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VT Silicon Inc
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$5.5M
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Qualtre Inc
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$5.0M
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Check out the other Top 10 deals in Georgia!
I am excited to announce that John Glushik from Intersouth Partners in Durham, NC will be the featured VC for the month of March. Intersouth Partners focuses on early-stage technology and life sciences companies and is currently investing their seventh fund. John has been with Intersouth since 1999 and concentrates on the technology sector.
The basic format of these gatherings is a question and answer
session delving into the fund raising process, venture capitalists'
investment criteria, and specific venture capital firm profiles. I
plan to ask John about 10 question to kick things off, followed by
questions that you can submit in the comments below, and then audience
questions.
The session will
take place on Wednesday, March 11th from 7:30 to 9:30 am. The series is free but you need to register to attend.
We look forward to seeing you there!
I am excited to announce a twist to this month’s Meet the VC event. We are bringing in three active angel investors to talk to you about investing in the Georgia area. Sig Mosley from Imlay Investments, Mitch Free, founder of MFG.com, and Gordon Rodgers, angel investor, will sit on our panel for February’s Meet the Angel event. The session will take place on Wednesday, February 11th from 7:30 to 9:30 am.
The basic format of these gatherings is a question and answer session delving into the fundraising process, venture capitalists’ investment criteria, and specific venture capital firm profiles (or angel investors, in this case). I plan to ask the panel a few questions to kick things off, followed by questions that you can submit in the comments below, and then audience questions.
The series is free but you need to register to attend.
We look forward to seeing you there!