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Understanding the Types of Family Offices: A Guide for Family Businesses

Understanding the Types of Family Offices: A Guide for Family Businesses

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Fundraising, Investing

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    Guide to Startup Ecosystems

    June 17, 2023

    2min read Guide to Startup Ecosystems If you are a serial entrepreneur or are otherwise serious about startups, building a startup ecosystem may be an attractive option for you. Startup ecosystems provide built-in connections and ongoing support, making the growth of a startup from the grassroots stage to a mature business far easier to manage. In this article, we discuss the best way to begin building your startup ecosystem. What is a Startup Ecosystem? A startup ecosystem is a network of startups, investors, and others who come together to foster startup formation and growth. At the core of the network are startups led by founders who launch high-growth businesses. This network encourages innovation through shared resources such as capital, talent, and mentorship. Each member of the network has something to offer: Accelerators and incubators: provide education around the initial launch Investors: provide potential capital Universities: provide talent for launching and supporting startups Freelancers: provide additional talent in the form of labor Providers: offer support for legal, financial, marketing, and other services Mentors: provide coaching and guidance on how to grow the business How to Build a Startup Ecosystem In building out your startup ecosystem, consider these points: First, investigate every kind of funding and consider where it may fit into your overall funding plan. It’s most likely that you will use two or three types of funding over the life of your business. To understand the type of funding you should look for, ask: “How will you pay the investor back?” For example, equity funding should be considered if you plan to pay back when you sell the business. On the other hand, if you plan to pay back out of the company’s cash flow, then debt funding is a better choice. If you have a consumer-facing product, consider crowdfunding which offers both debt and equity options. Break your funding down into parts, and consider using more than one type of funding for your business. How to Prepare for a Raise Before launching your fundraise campaign, prepare your business, complete your investor documents, and build your investor network. Start with a group of entrepreneurs interested in startups and meet regularly. Encourage startups to share their projects and invite others to support them through coaching and making introductions. Set up a blog and publish a newsletter each week on startup activities in the area. Interview startups and investors. Build a resource list for all startups to use. Recruit lawyers, accountants, and other professionals to join the meetings and support early-stage companies. Set up events such as pitch sessions and happy hours to expand the network and recruit more people into the community. Put the group on website lists for startup communities to generate awareness. Set up a coworking space to give startups a place to work. Recruit startup programs to your area, such as the 3-Day Startup, to provide additional programming. Start small and grow your startup community through regular meetings and consistent newsletter mailings. Remember that your role in building a startup community is to create connections and networks for players in the space. Therefore, facilitating communication and connection is key. Read More TEN Capital Education Here 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

    Two Key Elements of a Crowdlending Campaign

    November 17, 2022

    2min read Two Key Elements of a Crowdlending Campaign The key to success is compelling presentations and getting the word out to as many people as possible. Let’s start with the presentation. You need to provide a simple, well-organized explanation of your business. The things that are requested are things you already know – what your business is, how you would use the proceeds of the offering, simple financial information, the people behind your business, and the risks related to the business and the offering. You already know all of this. Your potential investors need to know it, too, so they can make an educated choice on whether or not to invest in your loan. Securities laws also require certain kinds of information since you are essentially issuing “mini securities” under the Texas intrastate crowdfunding exemption.  All this could get somewhat confusing, but a good crowd-lending platform should provide you with organized and straightforward instructions. The second step is getting as many people as possible to look at your project.  This would be time-consuming if you had to make the presentation personally.  But you don’t.  All you need to do is interest people in your project online.  Using personal contacts, email lists, daily customer contacts, social media, or whatever means will get the simple message to as many people as possible.  “You know me and my business. I am raising money to expand.  I am conducting an offering at “Your URL.” Read More TEN Capital Education Here 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

    Two Key Elements of a Crowdlending Campaign

    November 17, 2022

    2min read Two Key Elements of a Crowdlending Campaign The key to success is compelling presentations and getting the word out to as many people as possible. Let’s start with the presentation. You need to provide a simple, well-organized explanation of your business. The things that are requested are things you already know – what your business is, how you would use the proceeds of the offering, simple financial information, the people behind your business, and the risks related to the business and the offering. You already know all of this. Your potential investors need to know it, too, so they can make an educated choice on whether or not to invest in your loan. Securities laws also require certain kinds of information since you are essentially issuing “mini securities” under the Texas intrastate crowdfunding exemption.  All this could get somewhat confusing, but a good crowd-lending platform should provide you with organized and straightforward instructions. The second step is getting as many people as possible to look at your project.  This would be time-consuming if you had to make the presentation personally.  But you don’t.  All you need to do is interest people in your project online.  Using personal contacts, email lists, daily customer contacts, social media, or whatever means will get the simple message to as many people as possible.  “You know me and my business. I am raising money to expand.  I am conducting an offering at “Your URL.” Read More TEN Capital Education Here 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

    You have to look beyond your backyard

    November 13, 2022

    2min read  You have to look beyond your backyard Recently there has been a lively debate about the lack of funding in Texas. It’s not a new debate but an ongoing dialog between entrepreneurs and investors.  Entrepreneurs feel funding is scarce in Texas compared to other parts of the country.  Investors counter that they would invest more and more often if the deals were further along and better prepared. The debate is not new.  It comes up every year.  The solution is to change the way fundraising is handled.  It’s no longer in your backyard.  You must have a national focus on your fundraise from day one. When I was the director of the Central Texas Angel Network, we had just restarted the formal angel community in Austin.  The previous group, the Capital Network, had gone out as they were tied to the dot com world, and when that went away, they went away with it. At that time, it was a great boost to have a formal angel group in Austin so central Texas entrepreneurs could raise money in their backyard.  It worked for a while.  When we started, we had 15-20 deals on each round, of which 4 would receive presentation slots and 2 would get funding on average. As the years progressed, two things happened.  First, the number of deals grew.  Today it’s not unusual to see 75 to 100 deals considering CTAN, of which 4 will get to pitch to the membership, and 2 will get checks.  The funding rate is higher because there are more members, but fundamentally, entrepreneurs looking for funding have a 2% chance of getting it from the group. Daunting odds. Crowdfunding The second thing that happened is that crowdfunding came into its own.  After several years of debate and government ()activity, the rules are starting to change.  It’s now possible to raise from non-accredited and accredited investors who are not in your backyard.  At CTAN, we all gathered at the Headliners club in downtown Austin to see the live pitches.  With crowdfunding, one can source angels from across the country, if not further, because the pitches are online.  The tools are improving, and the entrepreneur’s ability to use those tools is increasing. The world of angel investing is going vertical.  The chance that an angel investor interested in your particular application (mobile apps, enterprise software, consumer product goods, etc.) is in your backyard is shrinking.  You must reach the country to reach an investor interested in your stage and type of deal. Crowdfunding is how you do that.  By placing your deal, online angel investors can now find you.  You can now reach angel investors from a broader area. It’s helpful to have some support from your local area, but from day one, entrepreneurs should have a national perspective on their fundraise.  If you have a real business (not just an idea), you probably have an investor out there who would be interested in your deal.  He’s no longer in your backyard. Read More TEN Capital Education Here 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

    Funding Analytics–How it helps you raise funding

    November 10, 2022

    2min read Funding Analytics–How it helps you raise funding Fundraising is moving from a local exercise to a global one.  One can still get a loan from a local bank or an equity investment from a local angel group, but the availability of capital throughout the world awaits those who know where to find it. Investment Analytics shows investors how to make better investment decisions.  Funding Analytics shows entrepreneurs how to find better investors.  By researching the track record and criteria of venture capital funds, private equity funds, and angel group portfolios, entrepreneurs can more accurately target the right investor group for their deals. Funding Analytics includes the current market rate for valuations — always a key decision in negotiation with investors. Analytics shows the best way to approach investors and keep them informed of your progress. Funding Analytics shows which investors have funds ready to deploy versus those who are still raising their next fund. Funding Analytics shows the required due diligence documents and how to build them. Total capital investment throughout the world is over $100 Trillion. The funding is there — to find it you’ll need Funding Analytics. Read More TEN Capital Education Here 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

    The Contractor Startup: Why it gives the investor pause

    November 7, 2022

    2min read The Contractor Startup: Why it gives the investor pause I hear many entrepreneur pitches, and the one point that stops the conversation cold comes when the entrepreneur says he can start building the business just as soon as he raises funding.  He explains why he can’t do anything unless he has funding. An investor hears that the entrepreneur and his team can’t (won’t?) build the product unless someone is paying them, and there are no customers to pay the team.  Again, the team can’t (won’t?) sell the product unless someone is paying them. I call this type of business– the “salaried startup.”  They only work when money is available to fund the process.  Bootstrapping, sweat equity, and doing it for the passion isn’t in the mix.  If the investor asks for traction or other evidence of progress, the excuses fly fast and furious–a thousand reasons why that’s not possible.  The investor imagines this conversation at a post-investment meeting and hears, “I can’t grow sales unless you give me more money to hire more people,” or “I can’t build more product unless you give me more funding.” At scale, this is certainly true. In a seed-stage startup, this is certainly not true. The investor is looking for team building and growing the business now.  It may grow slowly, but it is moving forward.  In the early days, the founders built it and sold it.  They’re not waiting for someone to pay them to do so.  Those who take that path are “contractors,” not “entrepreneurs”. You can start building your startup now.  You can grow it with or without funding. If the fully funded startup is your only path forward, you’ll find fewer investors willing to climb aboard. Read More TEN Capital Education Here 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

    Five Universal Principles for Startups

    November 3, 2022

    2min read Five Universal Principles for Startups Startups are great.  They provide new careers.  Will constitute new jobs.  They are the path to the next generation, but it’s not for the fainthearted.  There are five universal principles in the world of startups:   1. It always takes longer than you think — this goes for building the product, closing the sale, and growing the market.    2. It costs more than you thought — most entrepreneurs are off by a factor of 10 when it comes to estimating the time to complete the software, the work required to raise funding, and the effort needed to close the sale.   3. There’s always a better idea — no matter how great your idea is, there’s always a better one — it’s called progress.   4. The journey is the reward — in retrospect, building the company is the best part of having a company.   5. The team is what you will remember — products come and go, and markets go up and down, but the team and the relationships you build will stay with you in the long run.    Read More TEN Capital Education Here 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

    The Three Levels of Due Diligence

    October 28, 2022

    2min read How much due diligence is enough? While there are many checklists and rules of thumb surrounding the process of due diligence, the endpoint never seems clear. Most investors dedicate a certain number of hours, 20, 30, or more, and when those hours are used up, they make the investment decision. In my experience, there are three levels of due diligence: First Level The first level answers the question, “do we invest or not?” After reviewing the standard documents and talking to customers and industry professionals, the investor decides if the potential rewards outweigh the risks. Second Level The second level of due diligence answers the question,” what will the startup have to accomplish to be successful?” This is not always an obvious answer, such as making sales, or gain a 10% market share, or ensuring the product works. There are often one or two critical factors that determine success. In today’s world, it increasingly comes down to cost. The cost of customer acquisition, product development, or something else. Yes, the startup can find customers and sell a product, but at the end of the day, the margins come out razor-thin, if not negative. Another critical factor I see is building the team. Can we find the right people to fill the gaps (and there are always gaps)? Do you know what the startup must do to achieve success? Third Level The third level of due diligence answers the question: What can the investor do to help the startup succeed? Nothing is more frustrating than seeing a startup failing and not being able to do much about it due to a lack of knowledge of the industry, the market, or the technology. If you can’t help the startup, it’s questionable that it’s a good investment for the angel.  I’ve never invested in a startup that, at some point, didn’t need help. On the other hand, if I can help the startup through connections, mentorship, or team building, then it may be a good fit. Read More TEN Capital Education Here 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

    Five Characteristics of a Lead Investor

    October 23, 2022

    2min read Five Characteristics of a Lead Investor I often hear of entrepreneurs stuck in their fund raise efforts with several prospective investors but no one willing to be the first.  That’s because the first investor could be the last in a deal, and no one wants to be that investor. The lead investor breaks down that barrier by providing the initial capital and due diligence that paves the way for others to join the deal. Here are some key characteristics of a lead investor: The Lead investor provides a substantial sum of capital, at least $100K. The $25K check writer should not be leading the deal. The Lead investor also gives advice. He should have experience in the industry and know well the problem the company is solving. By going first, he’s putting his reputation on the line, making him your lead advocate.  Keeping the lead informed is essential as he’s championing your deal more than other investors. He should also bring a strong reputation that attracts others to your deal. Finally, the lead investor performs the initial due diligence. All investors should be performing their due diligence, but most will use the lead investors’ work as the basis for their decision.  This can easily reach 30 to 40 hours of work.  Signing up a lead investor can be challenging if the entrepreneur doesn’t offer compensation. Finding a lead investor helps to start with those who know your industry and market.  Those with a successful business track record are ideal candidates. They say it takes seven touches to close a sale, so it takes seven touches to close an investor. Read more TEN Capital Network Education Here 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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