November 30, 1999 in Uncategorized

Stuck In The Capital Gap?

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Recently, ATDC hosted an open brown bag session with Knox
Massey
, Executive Director of the Atlanta Technology Angels. Knox lead an informative discussion about the state of angel investing. He also gave great detail about ATA, its history, investment criteria, processes and track record.

In this discussion, Knox shared a very important chart on stages of capital raising and where different investors fit in. In this slide (shown below), he described a capital gap of between $500K and $1M and $2M. Typically it is very difficult for entrepreneurs to raise more than $500K from angels. And VCs tend to only come in north of $2M, with the average first institutional round of $5M.

ATDC frequently sees companies pitching investors on raising $750K to $1M or $2M. Seeking a round in this capital gap is a very hard road. How can an entrepreneur correct this situation?

Do you have any experiences that help shed more light on this challenge? If so, please comment.




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