If you are a startup raising funding, it’s good to have a few key principles you can rely on. Being an entrepreneur and scaling a business is a hard, but it’s supposed to be. You need a complete team to start a business – someone building it and someone selling it. It isn’t a team if everyone is building it and no one is selling it. You’ve got to be all-in. Part-timers need not apply. But remember that sweat equity is table stakes – not valuation metrics. Startups often assume investors want big revenue, but what investors really want is predictable and repeatable revenue. In an early stage company, the revenue is never large. However, if it’s predictable based on recurring revenue, repeat revenue or known lead generation funnels, then you have a growth story to tell the investor. Build and test your funnel so you know it works. That way you can tell a growth story instead of telling the ‘we’re a unicorn’ story – which nobody believes. Don’t expect funding to solve all your problems. Funding should be an enabler that accelerates what you already have going. You’ve heard the saying- if you build it they will come. But things work differently in the startup world. Sell it first, build it second. If you can’t sell it in the first place, there’s no need to build it in the second place. Many startups over-spend on their tech and then then have trouble finding buyers. A better strategy is to sell it and then build out what the customer wants.

When you’re a startup and want to expand, it can be a daunting task to figure out which products to develop. Before you dive in and spend, it’s a good idea to ask yourself “who will pay for this?” It’s important to ask yourself these questions to make sure that your overall cost also matches your sources. If you are working with an existing product that needs an upgrade, your current customers are a great source of payment. It’s important to ask yourself these questions to make sure that your overall cost also matches your sources. If you are working with an existing product that needs an upgrade your current customers are a great source of payment. You can even survey your customers about what their needs are. If you decide you’d like to develop a new product, it’s a good idea to find customers who are willing to prepay. If you can’t find those customers you should reconsider. A lot of startups think that pre-selling a product is difficult to do. In reality, it’s about the same amount of work. You can get a lot of benefits when working with your customers in the product development phase. You get a clear idea of problems that need to be solved and what customers are willing to pay for. It can also give you a slight competitive advantage. Matching product development with customer payments keeps you aligned with the market.

When talking to potential investors for your startup, the first questions you get will invariably involve product validation and market validation. In other words, investors want to know if your product works and if someone will buy it. Investors will need to see evidence of validation before they move into further diligence, so it’s important to be prepared to show product and market validation in your pitch. Beta users are a great way to demonstrate that a product works and has customer interest. In many cases, the product is a website providing some value in the form of data storage or analysis. More than likely, you will get the product up and running—but will someone use it, and more importantly, pay for it? Customers who pre-pay for it check the market validation box. It demonstrates you are solving a real problem. If you don’t have anyone paying for it, then you’ll need to resort to pipeline metrics showing the number of downloads, trials, and pilot programs. While not the same as a paying customer, these metrics can give a leading indicator that customers are likely to buy. It’s also helpful to illustrate the funnel that prospects go through when engaging with your product. This includes lead generation, qualification, closing, trials, pilot tests, and signed customers. Investors will look for a consistent signup percentage on the leads going through your program. While the absolute number of signups may not by high, the repeatability of your model can be compelling to the investor

In raising funding you hear no most of the time. It reminds me of  a saying, “A good salesman never takes ‘no’ for an answer.” I worked as a salesman for several years and saw how others used this statement. It played out in several different ways. The rookie salesman harangues the prospect with the current product and pitch. They reminded me of the door to door salesman who put his foot in the door and wouldn’t let you close it until you bought something.  An experienced sales person didn’t just repeat the offer, instead they changed it up. When you hear no, you can alter the price, product, or promotion. So when an investor says no, you can change the price (the terms of the deal), the product (improve the startup with more sales, better team, etc), or the promotion (reposition the deal from say an ed-tech deal to an impact deal). The foot in the door almost never worked for the salesman, and repeating your investment offering will almost never work for on an investor who doesn’t buy into it. Make a change to what you are offering and see what happens. Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies

TEN Capital is not a broker/dealer but rather a Funding as a Service program. Here at TEN, we help startups raise their own funding rather than raising funding for them. Other groups such as broker/dealers (which requires a license) raise money for startups. TEN Capital is a good fit if you want to raise your own funding a lower cost of funds raised to control your raise including the terms to decide who you want as investors Broker/Dealers are a good fit if you you don’t have time to raise the funds you don’t want to deal with the details of the fundraise such as negotiating the terms want to have someone else raise the funds for you Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies

You have to ask five questions to get to the full answer. Ask one question, and you get the idea. Ask four more questions, and you will get you the answer you want. In talking with startups, I find the investor must always probe for the final answer. A single question rarely reveals the full answer. I spoke with a startup recently about their funding progress. They said, “We’re raising a million dollars, and we have raised half of it already.” On the surface, it sounded like they had $500K invested in the business. So then I asked, “You already have $500K in the bank from your raise?” They responded: “Well, not exactly, we have several investors telling us they are interested in investing.” After four more questions, the truth emerged: they had $100K in the bank and around $300K in soft-circled commitments. That’s good progress, but not exactly the half million we heard at the beginning. Never take the first statement as the final answer. It takes at least 5 questions to get down to the real answer, and as an investor, you want to know what the real answer.  Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies

2017 was a banner year for ICOs. The money was flowing. Startups with nothing more than a whitepaper were raising millions of dollars. The events around ICO’s were extravagant affairs at high-end hotels and on cruise ships. Then it came crashing down by the end of Q1 2018 when it came out that 42% of all ICOs in 2017 were already dead. The party was over. Even today, two years later, it’s still over. I see those who raised funding during 2017 come back around for their next raise. They now appear as ICO Refugees. They have the mindset of 2017 in which the ‘sky is the limit’ and the investment dollars infinite. Their pitch starts with the promise of blockchain and the new market they are going to create. They’re going to tokenize an application and create a market. They have big-name partners lined up to work with them. The only need $5M dollars to build out the system and another $10M to launch it. For some reason, I never seem to recognize any of the partner names and I can never see a working version of the software. The reality is that 2017 is over and standard startup metrics apply. Blockchain is another enabling technology. You must have a product with users engaging it and line of sight to revenue. No one is going to invest $5M to develop something that will launch 3 years from now.  Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies