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Your Fundraising Growth Story Pt. 1

Fundraising /

2 min read  Your Fundraising Growth Story Pt. 1: To raise funding, you must have one. Many entrepreneurs approach me for funding for their startup. The biggest misconception most have is that they must first raise funding, and then they can launch and grow their business. In reality, the ones who raise funding already have a growth story and can communicate it effectively to the investors. Investors funding startups seek market validation and product validation. The product works, and people will pay for it. Some investors fund deals based solely on the team, the space, or the technology, but these are rare examples. Most are seeking what I call the “Growth Story.” They look for an operational revenue model in the business with increasing numbers on sales, team, product, and fundraise. If you have substantial revenues, say $1M, then the investor assumes you have a growth story going at some level and will start looking for the growth story’s limits- how far will it go without funding and how much further it could go with funding. Later stage investors will look at the growth story to see how well you can scale it. If you don’t have substantial revenue, you must validate the business model and use metrics to show how it works on the following levels: Activity: basic activity of the business, which includes leads, downloads, trials, etc. Unit economic metrics: the unit economic model, shows the cost of customer acquisition and revenue. Growth metrics: the user base and usage of the product is growing. Most startups can show activity metrics, but alone it won’t engage the investor. Typically the activity metrics show several users and customer engagement, but since it’s not related to what drives the business, it doesn’t mean much. But I’m pre-revenue! If your company is pre-revenue, you can show how the business model is “profitable” just on the unit economics level.  At the core, you can generate leads, qualify, and close them for revenue that exceeds the cost of acquiring the customer. Over time, you can improve these numbers. In the early days of a business, the revenue is not large. Most investors know that and don’t expect large revenue. What they look for is repeatable and predictable revenue. Showing unit economics at the core of what you are doing will generate interest. The growth metrics show the number of users increasing and the use of the product increasing over time. Daily active or monthly active users should be going up and to the right. If the business has seasons or cycles, one can use six-month moving averages to show the growth rate’s slope. Scott Adams once wrote, “Losers have goals. Winners have systems.” A startup pitch deck filled with forecasts alone is just a set of goals. A startup pitch deck showing how the business model is currently working is a system. It’s best to show up with a pitch deck showing how your system is working today. Read more: 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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Fundraising Metrics That Matter

Fundraising /

2 min read  Investors look for the specific metrics in your business, so it’s important to know the fundraising metrics that matter. There are three areas that you should focus on: Activity Metrics show the basic activity of the business Unit Economic Metrics show the unit economic model, including the cost of customer acquisition and revenue. Growth Metrics show the growth in the user base and usage of the product. So what to include? Activity metrics can include things like the number of users, downloads, or subscribers. While they fall short of business results such as closed sales, activity metrics can show your customer engagement level. If your company is pre-revenue, you can show your business model’s potential profitability using unit economic metrics. Ultimately, you want to show the cost and process to generate leads, qualify them, and close them for revenue. In the early days of a business, the revenue is small. Luckily, most investors know that and don’t expect large revenue. Instead, they want to see an accurate forecast of repeatable and predictable revenue. Showing unit economics demonstrates that you have a core business model working, and with time and funding, can improve. Growth metrics can demonstrate several things, such as an increase in the number of users, or an increase in the frequency in which customers are using the product. Active users should be going up and to the right. If your business has seasons or cycles, you can use a six-month moving average to show your growth rate. Knowing your metrics is vital when looking for funding, so be prepared, and potential investors will take note. If you can only show activity metrics, then do so. Better yet, validate your business model with unit economic metrics. Ultimately, the fundraising metrics that matter show growth in users and usage. Whatever you do, don’t show up empty-handed. Read more: 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 Tell A Story

Fundraising /

2 min read How to tell a story. What makes a story? At its core, a story consists of a beginning, middle, and end. If it’s a good story, that beginning, middle, and end will take you on a journey. If it’s a great story, it’s likely one you will never forget. So, what does the art of storytelling have to do with your startup? The ability to tell a story gives you the means to make your company memorable. When pitching your business plan, use the story format for a more significant impact and as a way to connect with investors. Start with the problem you faced in the industry (the beginning). Show how you couldn’t find a solution (the middle). Show how you created your solution (the middle). Highlight the challenges you overcame (the end). Show the current business status and your upcoming plans (the end). After you address the issue of not finding a solution, be sure to show how others are now coming to you for that solution. Along the way, you can talk about how you built the team and chose a go-to-market strategy. Remember, it’s about taking the investor on a journey, so make it as memorable as possible. Each element of the story should highlight one aspect of the business plan. When contemplating how to tell a story to your investors, remember to keep your audience engaged throughout the pitch. Make sure your presentation has direction and that there’s a beginning and an ending. This makes the journey worth it. Read more: 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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What Investors Look For

Fundraising /

2 min read So you’re about to raise funding for your startup and wonder what investors look for. Startups can be pretty shy about discussing their current revenue in the business’s early stages. Being pre-revenue or just beginning to show traction is typical in the beginning, and investors know this. Even if you are pre-revenue, you can show traction with your startup. You define your traction as customer activity, and you don’t need to have revenue to show there’s traction with customers. To exhibit that you have traction while pre-revenue, focus on customer engagement at all phases, even before you have a product. One of the most important things to understand as an early-stage startup is this: The investor doesn’t care about the size of revenue. What investors look for is the predictability of that revenue. If you do have a sales funnel, it’s helpful to share that with the investors. Having visibility on that progress is vital because the investor can then see the traction you have in your sales prospecting process. Use the funnel in multiple investor updates to show how prospects are moving through it. When speaking with investors, mention your process with phrases such as: “For every ten leads, we generate one customer worth $5000 in revenue.” Showing leads is precisely what investors are looking for. It shows that you have a system with repeatable and predictable outcomes. Additionally, when communicating with investors, always include the customers in your discussions. Never engage in an investor meeting without new information about your customers and always mention any updates you have on revenue. TEN Capital helps startups, growth companies, and investors, raise funding through its extensive network of accredited investors. Our Funding as a Service program includes investor introductions, an email campaign with updates, pitch events, webinars, podcast interviews, and assistance with investment closing documents including pitch decks and data rooms. In short: we provide the leg-work, saving you time and money. Sign up today to speak to a TEN team member and see if TEN Capital’s Funding as a Service program is right for your fundraise: https://staging.startupfundingespresso.com/company-signup-form/ 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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COVID-Resistant Businesses

Fundraising, Other /

1 min read What are the COVID-resistant businesses? As businesses continue to close and others face uncertainty many startups find themselves wondering how they will stay afloat. One of the biggest steps a company can take to ensure they are among the COVID-resistant businesses is to reassess their financial projections. For many startups, this should be the first step in ensuring the company stays alive. It’s essential to look at expenses from the bottom up to see what waste you can get rid of and how you can do things more efficiently. While many startups are already running lean, it is important to look at ways to run even leaner. Startups also need tight control on their timelines and roadmaps during these times. When people are remote, it’s a less transparent work environment. Less transparency means that companies need to make people accountable. Employees need to have a clear understanding of the company’s goals to be responsible. It is now more important than ever to keep the lines of communication open. We no longer have the luxury of seeing someone in an office setting where it is easier to measure how employees are doing personally and professionally. It’s essential to be as transparent and open as possible to make it through these uncertain times. Read more: 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 Vaccines

Other /

1 min read As the world works toward a vaccine, COVID has the potential to shape what the future of vaccines looks like. It’s not so far-fetched to say that, in terms of medicine, things will never be the same. Of the many emerging trends we see in terms of medicine and the future of vaccines, is the belief that AI-enabled technologies will allow for more rapid drug development. These tools will likely aid in shortened timelines and lower costs for developing drugs and vaccines alike. Another exciting development we see as a result of COVID is the trend of conducting clinical trials remotely. Remote tests have traditionally been a challenge because centers have had to enroll patients, and then for every check-in or check up the patient has had to physically enter the center. However, if you can recruit and screen patients remotely, you can have quicker, more efficient, and more convenient trials.The ability to change how clinical trials are done will dramatically affect how drugs and vaccines conduct their trials. New developments will speed up the clinical trial process. The quicker tests become, the faster humanity can find solutions to health-related challenges. Read more: 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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What is the Real Due Diligence Process?

Investing /

2 min read, I’m always surprised by how many investors say the team is the most important element of a startup, but how little the due diligence process focuses on the team. I can look back on successes and failures in my startup investing career, and almost all failures can be traced back to the “team wasn’t up to the task.” I recognize that I often underestimated the challenge at hand, but in all cases, failure was due to the team lacking skills or focused commitment. In running the due diligence process, it’s not about the product; it’s about the team. There are standard checklists, and the investor should verify the basics such as legal entities, tax filings, patent filings, etc., but the real due diligence comes when you go to the startup’s office and meet the team. I had a new angel investor ask me the other day how he should diligence a startup. I encouraged him to set up a meeting in the startups’ office and meet the team and interview each one. The first person you want to meet if you haven’t already is the CEO. You are assessing leadership, communication, strategy, and other key skills. If this interaction isn’t stellar, there’s no need to continue further with the potential investment. In reviewing the rest of the team, you want to check to see those on the team’s skill levels. If there are advisors or mentors, you want to meet with them to see how much time commitment they have for the project. In the end, time, skills, and focus will need to be applied, and you are looking to see if the team can do that. You can learn a great deal about a company when you go to their workplace. I had a friend who worked for IBM and considered investing in a startup by some of his former coworkers and set up a meeting at their office. When he followed the address, it led him to a skyscraper in the downtown area. There he found the team had rented out the entire 12th floor of the building. Needless to say, the startup ran out of cash in just 6 months. Walking through their office, you’ll get a much deeper sense of who they are and what they are doing. Products come and go, markets shift, and change, but the team is a constant. Read more: 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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Best Practices for Hosting Online Meetings

Other /

1 min read In the time of working remotely, more and more organizations are moving entirely to online meetings. Not only are online meetings convenient, but an excellent opportunity to engage more of your members that may not have been available to travel to meetings previously. Inform your members ahead of time. In preparation for moving your meetings to an online format, you must inform your members ahead of time of the move. Virtual meetings may be a new experience for some, so it’s essential to provide information on how the session will work so that the transition is seamless for all members. Consider various formats. Online meetings can be a combination of previously recorded content and live-action engagement. In general, any pre-recorded content should be a shorter form of communication. For example, ahead of each pitch, you can have an introduction from a member that reviewed the deal. These introductions can also be live or previously recorded. Or consider having prospective entrepreneurs pitch in real-time, and then use the Q&A box to field questions during and after presentations. In other words, you have less time to say what you want to say, so you need to make it count. Update your processes. Update your deal flow process to include asking for 1-minute recorded pitches from those you are screening ahead of the session. Adding this to your checklist ahead of each meeting is an excellent way to get pre-recorded content you can use for this and other online events. The more you can record in advance, the more efficient you can make the entire process. We’ve created a checklist that you can use to help you keep organized in these new processes: Read more: https://staging.startupfundingespresso.com/ten-capital-network-for-angel-groups/ 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 Importance of Non-Financial Factors in Setting Valuation

Fundraising, Other /

1 min read There are financial factors in setting valuation for a startup, and then there are non-financial factors. Often, startups prefer to focus more of their attention on the financial side of things, and that’s okay. However, it’s just as essential to understand that other areas deserve attention. The non-financial factors can be just as important as the financial factors. Some non-financial factors include: Current market conditions As the market heats up, specific sectors turn hot. If a market turns hot, then it will command a higher valuation than the numbers indicate. Pay attention to the needs because they can determine your valuation. Predictability Companies with recurring revenue streams and long term contracts command a higher valuation because their revenue is much more predictable. If possible, try to aim for predictability to receive a higher valuation. Customer concentration Startups with a broader list of customers will survive longer. If a customer accounts for over half of the business, you should reflect that in the valuation. Take a look at your business and figure out how you can appeal to the broadest base. Pre-profitability For early-stage companies, those with profitability should command a higher valuation. If at all possible, aim for profitability. Pre-revenue For early-stage businesses without revenue, intellectual property and customer forecasts are essential. If you are in a pre-revenue stage, try to focus heavily on IP and customer forecasts for the best valuation. Read more: https://staging.startupfundingespresso.com/eguide/ 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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