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Blockchain Technology: Cryptocurrency

Investing, Other /

1 min read Cryptocurrency in the Fintech Space. Fintech is a giant industry that spans lots of different segments. When you say FinTech, you’re talking about insurance tech, Paymentech, banking tech, lending tech, and data. However, you are also talking about cryptocurrency companies such as Coinbase or Circle. What is Cryptocurrency? A cryptocurrency is a form of currency used for digital transactions. Transactions using cryptocurrency are managed and recorded by a noncentralized technology known as the blockchain. Cryptocurrency and blockchain are not new. In fact, they consist of some of the easiest classes in today’s computer sciences. But while crypto has been around for a long time, it has just begun to make its way into the eye of the general public. Investors Using Bitcoin Bitcoin, a commonly known cryptocurrency, has started to become a legitimate store of value for institutional investors. This move to cryptocurrency by institutional investors is likely due to the degree to which people are worried about large government deficits potentially depreciating the value of the dollar. Using Bitcoin in particular as a store of value acts as a hedge against inflation. Bitcoin is even now being used as an actual transactional currency. This can add real value to cross-border transactions, especially where there are frictions between changing currencies. Resistance to Blockchain Technology Blockchain technology certainly has proven merits. However, there are a lot of regulatory conversations and discussions around the tokenization of some of the companies implementing this technology. As there always is when it comes to changing age-old practices, there is resistance to the widespread implementation of blockchain technology to enhance the use of cryptocurrency in the everyday marketplace. Read more in the TEN Capital eGuide: https://staging.startupfundingespresso.com/fintech-problem/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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Team Is the Only Thing

Fundraising /

1 min read  Team Is the Only Thing Vince Lombardi once said, “Winning isn’t everything, it’s the only thing”. In startup investing, “Team isn’t everything, it’s the only thing”. All problems will ultimately be solved by the team. If they can’t solve it, then the business will fail. In many years of angel investing, almost all failures trace back to the team not being up to the task. In reviewing a deal, the investor often makes the mistake of matching the team to the current problem but not future problems. In the earliest stages, one looks for a team that can build and sell the product, but will they be able to grow the business and later scale it? These are the future problems that must be solved. Hopefully, the CEO will change the team to match the needs of the business. Character Confidence Coachability In evaluating a team, there are elements to look for in a CEO for early-stage companies. The first is character. The CEO must have integrity and demonstrate character. Over time, the company will adopt the character of the CEO. If the CEO cuts corners, so will the rest of the company. The second is confidence. The CEO must have enough confidence in their vision, plan, and team that they can execute. Starting up brings challenges that require confidence to succeed. The third is coachability. This is especially true for first-time CEOs in that they don’t know what it is they don’t know. Experienced CEOs understand this better and recognize their limitations. CEOs who shun advice or forego coaching will run into problems later. Read more from TEN Capital: https://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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How to Get the Most from Your Board Meetings

Fundraising, Other /

3 min read How to Get the Most from Your Board Meetings Board meetings are essential Board meetings are essential for gaining input and advice on how to run the business. To get the most out of your board meeting, start with an objective for the meeting, a set agenda, and prepared documents such as company financials. It’s helpful to get feedback from the participants before the meeting to adjust the agenda if necessary. This type of prep also ensures everyone comes prepared to tackle the objective. Recruit a board member to help you keep things on track by watching the clock and reminding the group when the time limit is up on a topic. Maintain the time allowed for each topic and create an offline conference call/meeting to handle topics that go over. Board meetings can be an invaluable resource to the CEO, but only if you manage it well. Preparing for A Board Meeting It’s essential to prepare appropriately for board meetings. You should set the meeting schedule well in advance, as much as a calendar year out. In addition to planned meetings, you may need to call additional board meetings in crises, such as when the company runs out of cash unexpectedly or gets hit with a lawsuit. Prepare documents far enough in advance, so the members have time to read the materials and prepare for the meeting. Use the board package to give the status updates and focus on the critical decisions to take. Use a standard format for the board package so the members can find things more easily. Set up the meeting agenda to cover the most important topics first. You may want to include a slide deck covering your planned talking points. These should consist of the company financials, including cash position. What to Expect Most of the work tasks performed in a formal board meeting are perfunctory duties such as approving minutes and reviewing financials and metrics. The board also weighs in on critical decisions around fundraising, strategy, and other topics. Board members will discuss whatever you put on the agenda. Ensure the agenda items are of strategic importance and prioritized, as the top items get the most attention while the lower items often get rushed. The more preparation you do before the meeting, the better outcome you’ll have. It takes time for board members to come up to speed on issues, so it’s best to send out background information before the meeting, so they have an opportunity to prepare. Read more from TEN Capital: https://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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It’s About Execution and Momentum

Fundraising /

2 min read  What do investors look for? It’s About Execution and Momentum. It’s About Execution Some startups think their business will succeed based on the idea, the technology, the market, or something else. They think their technology will win the day, or their ideas are so great, or the market is growing so fast that they will succeed based on it. For the investor, all of these are important but in the end it’s about execution. Execution turns the technology, idea, or market into a winning business. In your pitch, demonstrate your past execution successes and talk about how you will execute on the idea, how you will execute on your technology and how you will execute to penetrate the market. Investors determine investments based on the startup’s proven ability to execute. Traction vs. Momentum Many investors look for traction in a startup to gauge their progress. Traction declared as a single number on a pitch deck can be hard to judge as sufficient for investment. Many investors tell the startup, “nice traction, but we’d like to see more” Instead of traction look for momentum. Momentum demonstrates things are continuing to progress and move forward. Sales, team, product, and fundraising are the core four to look at. Investors look at these four because they represent the results of the startup’s work and not that of the market’s progression. Momentum must be shown over time in numerous updates by email, phone, or in person. It takes four touches before an investor gets a sense that there is momentum and it will continue. Startups should always have some engagement with customers. This includes alpha testing, beta customers, MVP customers, etc., so they have something to talk about with investors. For startups pursuing the enterprise sale, show your momentum through the sales funnel with your large customers. It typically follows the model of interest, qualification, trial negotiations, pilot test, full product launch, and ongoing support. Show how prospects are moving through the funnel and customers are upgrading and expanding seats. It’s the continuing forward progression that counts. Read more from TEN Capital: https://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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Who Should You Put on Your Board of Directors?

Fundraising, Other /

5 min read  Who Should You Put on Your Board of Directors? The board of directors is a vital part of what makes a startup successful. If you are in the early stage, using funding from family and friends can create an informal advisory board. Try to meet with them monthly, and keep the group limited to a maximum of three members. After you launch your product and start raising funding from outside family and friends, create a formal board with three members- two members from the team and one investor. As you grow into a Series A raise in which you seek institutional capital, you can consider increasing the board to five members- two from the team, two from the investors, and one from the independent industry. The board will expand to include domain knowledge experts and investors who can help with growth issues. As you start to scale and raise Series B funding, you can expand to seven members- two from the team, three from the investors, and two from the industry. Later-stage investors gain a more significant portion of the board as they invest sizable sums of capital in the company and demand a board seat in exchange for their investment. The Ideal Board Member Board members are a crucial part of a growing startup. Building out the board is an essential step in setting up the company for success. Here are some characteristics of an ideal board member: Coming prepared to the meetings. They have read the material and done their research. Having an open dialog with the CEO and other board members outside of board meetings. Understanding the CEO and adjust their approach accordingly. Making efficient use of time with short and to-the-point questions and discussions. Prioritizing and focus on essential things. Encouraging others to participate and speak. Following up after the board meeting to make things happen. Having experience and steadiness in times of crisis. Board Member Types There are several types of board members, each contributing to the dynamics of your board. Here are some of the types you may see in your board room: The Cheerleader- Always optimistic and sees the upside to every proposal or situation. The Pessimist- Always pessimistic and sees the backside of every proposal and situation. The Analyst- Always analyzing the situation and commenting on the implications. The Skeptic- Always questioning the data and the implications of proposed solutions. A healthy mix of all the above is desired. For example, a board that is all cheerleaders leads to little scrutiny given to plans, whereas a board of pessimists will lead to no solution ever being good enough. The Independent Board Member You may want to consider adding independent members to your board of directors. The independent board member may add value to your company by bringing domain knowledge and operating expertise. Look for someone who has run a company of similar size and industry in the not-too-distant past. The independent often brings a new perspective to the company that can be helpful. Investors often look at independents as a sign of transparency, and in times of conflict, the independent can bring neutrality to the discussion to help resolve disputes. However, you should double-check that they have adequate time to commit to the board work. It helps to choose someone who is close to the startup or where the meetings will be held. The Board Observer? In general, the board observer is just that- an observer. This is a member who listens to the discussion but doesn’t actively participate unless called on to join in. The board observer attends your board meetings but does not have voting rights. They gain access to the board documents but don’t have a legal say in any decisions. They may even be asked to leave during discussions of a sensitive nature. Some investors negotiate a board observer position as part of their investment to monitor the company’s progress. Angel investors, corporate VCs, and others will use this as a means of staying connected. Read more from TEN Capital: https://staging.startupfundingespresso.com/education/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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The Future of Digital Communities

Investing, Other /

3 min read The Future of Digital Communities. COVID-19 imported the future that we were planning on for around 2030- a future where everybody is going to be able to see and create a digital community. This digital community is unlike that of present-day social media. These communities will function more like how gamers’ communities do. Gamers are great at having a digital community today. Yet for some reason, the world is taking note. Everyone, individuals and companies alike, is still trying to do live online with the audience they get from Facebook groups and pages. Profitable Digital Community Stuart Kime is the Co-Founder and Chief Future Officer of hOp, a company that builds trust within the community while selling micro-social networks to multifamily apartments and churches. Their venture started by selling private social networks to apartment complexes, giving the residents a quick and easy way to communicate as a whole. The company assumed that the platform would be used for the residents to rent and sell to each other. But what the residents created with this micro-network took them by surprise. People were giving and sharing. They were seeing things pop up on the network such as: “I’m at Chick-fil-A, does anybody want anything?” “I’m making brownies, does anyone have vegetable oil? I’ll give you a beer.” A unique marketplace was unfolding, but hOp was never going to get paid on it. They realized they had created a great feature but had the wrong customer. They switched their sites to property managers and owners- people who would have an interest in sponsoring this community. This essentially turned the micro-social network into a subscription-based SaaS application. They then extended to other potential users in subsects that can benefit from this ease of communication but don’t have the modern tech in place to do it such as churches, schools, and HOAs. The Shift to Micro-Social Networks Giant social networks like Facebook are trying to make everything happen on their platform. Facebook tried to clone Snapchat, eBay, and Letgo but inside of Facebook. Now they’re even doing their Nextdoor clone. They are dealing with these large algorithms that are going to lead to challenges in functionality. They end up taking control away from the end-user and dealing with outrage, an outrage you hardly see on smaller social networks such as LinkedIn for example. With smaller social networks comes smaller audiences, meaning less competition, increased control over information, and more direct reach. These micro-social networks also come with the advantage of increased privacy. Look at the difference between Facebook advertising (a mass social network) versus DuckDuckGo (a smaller enterprise). DuckDuckGo works sort of like a Google, but instead of needing to read your Gmail and Google Docs to know more about you to put the right ads in front of you DuckDuckGo simply uses your search term. Facebook is trying to know about you- to really know about you. Facebook is one of the largest buyers of ovulation data from Maya, which is the largest cycle tracker for women. They are collecting ovulation information to know which ad to put in front of you at which time. It’s a bit ridiculous. Creating privacy-friendly alternatives to these free tools that all of us are using on the internet is going to be probably one of the largest growth sectors in the next five to 10 years, and micro-social networks are prime applications to provide this. Investor Advice It seems like it’s going from Facebook to micro-social networks in the generation because people want more control. How should an investor update their investment thesis to participate in this? The key is to look for those who actually own their audience- not those who are running it through Facebook. Investments should be made in companies that have direct control or connection over their social network. Strong companies moving forward are going to be those that create their own world, so to speak. Another interesting way of positioning is going to be going after the sectors that have already mastered this new kind of digital community. For example, gaming communities are really strong. Companies like Discord are going to be moving us into the future with their digital community applications. In short, it is about looking at deals that deal a lot with owning audiences instead of running audiences. Read more in the TEN Capital eGuide: https://staging.startupfundingespresso.com/ten-capital-eguide-the-future-of-investing-in-saas-2/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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To Raise Funding

Fundraising /

1 min read What does it take to Raise Funding? First-time fundraisers make many mistakes. Here’s a list of key points to consider before your next meeting with an investor for your startup. It’s show, not tell. There’s an old saying: If you tell me, it’s an essay. If you show me, it’s a story. To raise funding you have to show, not just tell. Forecasting alone doesn’t close the round. You must demonstrate progress towards it. Never show up to an investor meeting or call without something new in hand to show your growth story. Always talk about a customer and their engagement with your product or team. Show how the team is making things happen. Show how other investors are interested in committing funds.  Show how the product is working and what it is doing for the customer today. You must own it. In raising funding just as in running your business, investors look to see if you own it. Do you own the challenging problems, or do you avoid them? Do you own the core business, or do you delegate it to someone else?  Do you abide by the contracts you sign, or do you try and duck out when it goes against you? Investors are looking at how you run your business to see if you own it. So, in the fundraise, do you own the numbers?  Do you own the investor relationship? Do you own the results you show them after the fundraise? Read more in the TEN Capital eGuide: https://staging.startupfundingespresso.com/due-diligence-and-leading-the-deal/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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How COVID-19 Is Driving the Need for Digital Security

Investing, Other /

2 min read How COVID-19 Is Driving the Need for Digital Security COVID-19 is driving rapid adopting of SaaS technology in sectors ranging from telehealth, remote management, virtual conferences, and more. As the world and with it the workplace moves online, we are seeing great leaps in efficiency. However, we are also seeing weaknesses emerge. One of these weaknesses, the reason the virtual work realm hasn’t emerged sooner, is trust in the security of the system. Privacy and security of data, both personal and business, are becoming imperative needs. And when there is a need, there is an innovative company that will emerge to fill it. Why Is Digital Security Suddenly Such A Concern? Covid has driven the vast majority of companies to transition to an online workspace. This means every employee is working from their homes, using their own computer and their own WiFi network. When people work from home in this way, there are more endpoints. Essentially, every employee becomes a potential access point of possibly confidential information. Because of this, companies are suddenly more vulnerable to hacks and intrusions. The increased scalability of cloud infrastructure and the widely distributed workforce add to this susceptibility, making impactful solutions to the issue of data security now even more impactful and valuable. We also are seeing critical societal services being forced for the first time into the virtual workspace that require high-level security. Accountants and lawyers who typically pass paper hand to hand are now working remotely and needing to find ways to manage the security of document transfers and sensitive client information. This shift is leading to innovation and the adoption of new tools in the digital security sector. Investing in the Digital Security Sector Again, when there is a demand or a need, there is always a company that will step up and fill that space. These are the companies you should be looking for as an investor. For example, companies like Zoom had a large increase in their user base and had to build out new security features on their platforms. In the beginning, there were mishaps like the one dubbed the Zoom bomb. People were randomly popping into meetings and sharing things they shouldn’t be sharing within the webinar or group meeting taking place. In response to this, Zoom added new security features to enable waiting rooms. They also required a supervisor to approve everyone that came into the virtual meeting. There is a shift towards companies filling new needs in the marketplace. This includes everything from e-commerce to tools for increased efficiency in the manufacturing and supply chains of businesses during mass crises. And of course, this includes companies offering innovative and effective means of ensuring digital security. So What’s the Takeaway? The adoption of this technology, while rapid, is still in an early phase. A lot of data will be gathered from this time and applied to the next iteration of applied software or service applications. As an investor, you want to look for a company in this sector that can gather the incoming data, process it, and ultimately make it actionable. Read more in the TEN Capital eGuide:  The Future of Investing in SaaS Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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The Most Common Reason Why Startups Fail to Raise Funding

Fundraising /

1 min read What is the Most Common Reason Why Startups Fail to Raise Funding? I work with entrepreneurs every day on starting and growing their businesses. In addition to building a product/service that the market wants, recruiting a team that is effective, and finding customers, they must also raise funding. A select few have the funding to start and grow the company but the vast majority of today’s startups do not. They have to raise funding from outside sources and they know it. The most common reason why startups fail to raise funding is that they don’t budget the time or financial resources to do it. When they ask me for help in fundraising, I ask for their business plan. In reviewing it I find they have a time and financial budget for building the product. They also have resources set aside for marketing and selling it. When I ask for their time and financial budget for raising funding, I often receive a blank stare. The four components of a startup are product, team, customers, and funding. They budget time and dollars for the first three but many miss the fourth one: funding. Fundraising typically doesn’t require a great deal of financial resources upfront but it does take some. Pitching to angel groups requires application fees. Putting investor docs in order requires some cost as well. The cost is not great but a budget of zero dollars makes it harder. The primary cost in raising funding is time. It’s a near full-time job for three to six months in most cases. Who on your team is dedicated to the process? Closing investors is not unlike closing a customer. You must have several interactions. For a new company with a new product is almost never one visit and you’re done. You have to go back and show how the product is improving. Getting the first customer is the hardest and as you gain more users it does get easier. The same is true with investing from investors. So if you’re starting to raise funding, I recommend you review your time and financial budget and make sure you are prepared for it. Read more in the TEN Capital eGuide: https://staging.startupfundingespresso.com/due-diligence-and-leading-the-deal/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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