How To Impress a VC

Clients often ask me how to impress a Venture Capitalist (aka "VC"). I tell them to make their presentation short - no more than 10 PowerPoint slides. Practice, practice, practice telling their story. Do not read it. Start with something grabby: an unusual, powerful fact about the need in the market or a question that will get the VC thinking about some problem or pain in his/her own life that their product or service solves.

Recently, I've started following an online columnist for Forbes, Peter Cohan, who often writes about the same topic - getting a VC to listen and take interest in investing in your company. Cohan makes good points and shares excellent insights from successful entrepreneurs and investors. You can tap his wisdom at his blog Forbes: The Startup Economy by Peter Cohan. 

To Get Funding, Get Creative

A lot of entrepreneurs who approach me to do a business plan for them think that it will be easy to raise funds because they have the best idea since the personal computer. But last week the Wall Street Journal ran an article on how very hard it is for entrepreneurs to raise money. According to the article entrepreneurs are turning to boot camps and contests. Sean Conway, owner of Notehall.com, wound up with $500,000 in funding by participating in a summer-long boot camp in Philadelphia called DreamIt Ventures. Of course, to win a contest or get accepted into a program, you need a solid plan and presentation. I recently helped an entrepreneur with his application for a grant to seed new businesses in Brooklyn.


The article went on to say that venture capital funding has been declining since 2007 and is now at about the same level as the mid-1990s. That doesn't mean entrepreneurs aren't trying. Entrepreneurial activity is usually high during downturns. The point of the article is that VCs aren't the only source of funding. And if VCs do fund you, you will have to give away a large equity stake.

So think a bit differently. As always, friends and families can become your first backers. But contests are worth entering. For example, you can compete at NineSigma.com and InoCentive.ocm - both sites that reward inventors for solving challenges. Read more at the Wall Street Journal -

http://online.wsj.com/article/SB10001424052748703790404574471433151548294.html

Angel Funding Forum - Stamford, CT

The Connecticut Venture Group is running a forum for entrepreneurs on how how to attract angel investors. Two of my friends, Andy Hanson and Doug Campbell, are on the panel. They are worth hearing.

Here is the scoop on the event --

http://www.cvg.org/upcoming_events.asp

Upcoming Events: EA Workshop: Angel & Early Stage Funding for Emerging Growth Companies When: Thursday, February 5, 2009 Time: Noon - 2:00pm Where: Schreiber Reading Room UConn Campus (2nd floor) Stamford, CT Cost: For Entrepreneurs Only: $20 Lunch will be available For More Information: Click here Registration: Click Here Directions: Click here

10 Tips for Starting a Business - Tip #10 - Get Going

You've done your research. You've developed a great plan. You've assembled a super team. You have an exit strategy.

Now, you have to launch. Execute your plan. Take action.

The first action you need to take, if you haven't already, is to be aware of any legal or tax restrictions or implications. It's best if you contact your attorney and accountant for advice. You can also read up on local, state and federal requirements.

Sometimes you don't need money to start. Other times, you do, but you can be creative in finding money. If you have savings or friends and family who are willing to bet on you and your team, you can get going. Banks, angels and VCs usually want to see that you have started and have a revenue stream or amazing intellectual property protected by patents before they'll jump in.

As you take action, you'll probably deviate from your plan. Things will happen. You have to be resilient and open to the possibilities while having enough focus to not get sidetracked. For example, Teroforma was originally going to sell its tableware via its unique website directly to consumers. But so many retailers were interested in their wares, they are now more of a B2B model.

10 Tips for Starting a Business - Tip # 7 - Your Team

Investors don't invest in products or services. They invest in people. They look at the management team as the most important part of the business.

Even if you aren't going to raise outside capital, you still need a strong team to make your business successful. Of course, the first member of your team is YOU. Why are you the person who will create a business that is successful? Do you have experience as an entrepreneur? Do you have experience in the industry? How about your partners or your advisers?

If you just have an idea or a prototype of an invention, can you tap outside experts to help you produce and market your product? Do you have trusted advisers, such as a lawyer or accountant, who can help you? How about a professional strategic planner or operations expert?

Figure out what people you need, whom you want to work with, then get the team together.

But whatever you do, make sure you work out who will contribute what and what each person will receive in rewards. Pay? Stock? Options? Work it out in advance. Then, put it in writing. Get a lawyer to help you craft a document detailing what will happen if the company grows or if the company goes bust or is sold.

In any event, if you're raising capital, highlight the skills, talents and experience of the management team in all your pitches. That is your key to success.