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The Ins and Outs of Whistleblowing: What You Need to Know

The Ins and Outs of Whistleblowing: What You Need to Know

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Fundraising, Investing

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    10 Reasons an Investor Will Pass on Your Deal

    September 12, 2021

    2 min read  Investors see many deals and can spot glaring holes immediately. Here are ten main reasons an investor will pass on your deal: No Traction. You need to show some evidence of market validation. Even without a sales team and a marketing budget, there should be some demand for your product. No Social Proof. There needs to be some evidence the product works. The Team Doesn’t Fit. If there are major holes in the team or you’ve filled the secondary roles and left the primary ones empty, then it’s going to be a problem. Criteria Don’t Fit. Many funds are clear about what they invest in (SaaS, Healthcare IT, etc). Your deal needs to fit into one or more of those criteria. You Don’t Know Your Market. Those with a vague or fuzzy knowledge of the market or customer will have difficulty raising funding. The ability to site numbers (market size, growth rates, customer spend, etc) helps demonstrate your knowledge. Financial Projections Don’t Add Up. Some startups use the excuse that they can’t predict the future and therefore they have no financial projections. Most investors see this as a lack of knowledge about the business and the market. Fuzzy Business Plan Some plans are filled with future possibilities and great opportunities but fail to define the core product and how it will be built and sold. Investors can spot a lack of focus on the business plan a mile away. No “Use of Funds”. The phrase “I’m raising $1M” often triggers the bull meter because the fundraiser rarely knows how they’ll apply the funds. No Validated Business Model. There’s no evidence of a business either in product or customer activity. Lack of Follow-Up. Surprisingly, an investor will express interest and then never hear from the entrepreneur again. It can take several follow-ups to close an investor. TEN Capital has created a series of calculators to help you see how your startup compares to industry standards. You can discover if you are ready for funding, see how your deal will be seen by investors, learn how to set the price for your next raise or exit, or calculate how much TEN Capital can save you on your fundraising campaign. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: https://staging.startupfundingespresso.com/calculators/ 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

    Successful Fundraising Habits

    September 5, 2021

    2 min read The best startups demonstrate key successful fundraising habits that can be easily replicated if you are willing to put in the work. Here are some of the key habits that will help you hone your fundraising ability: Goal setting. Know what you want from the overall raise and break it down into stages. The entrepreneur who vaguely requests $1M has not yet thought through the use of funds and most likely needs less to get started. Setting (and sticking to) a budget. Set up a timeline and budget for raising funding, and then stick to it. This is a regular (daily and weekly) exercise, not a “some time” or “whenever” thing. Calendar consideration. Starting a raise in the middle of summer or just before Thanksgiving is going to be difficult. Plan the launch of your fundraise with the investor’s schedule in mind. Knowledge of target audience. Understand the target investor and what they are looking for. It’s a good idea to see what they have already invested in and approach them from that angle. Document preparation. Spend time preparing investment documents. Make sure each document, your executive summary, pitch deck, and financial projections, are ready to go so that when an investor expresses interest you can provide them. Pitch practice. Successful fundraisers practice their pitch. Have yours well-honed and know it cold. Working the plan. Create a plan and then work the plan. Have a list of prospective investors and continually work investors through the process. Focus on metrics. Keep track of the numbers in your campaign. Know how many prospects you have and how many you need to achieve your goal. Asking for feedback. Ask investors for feedback. Be open to feedback from investors and others on your pitch and campaign. Demonstration appreciation. Solid fundraisers demonstrate appreciation. They show appreciation to those who help them in their fundraise. Fundraising is a skill just like most other aspects of running a business. These skills can be learned and honed. To learn more about the fundraise process, check out our Edu section: 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

    5 Signs Your Startup Isn’t Ready to Raise Funding

    August 31, 2021

    2 min read  So you want to raise funding, but are you ready? Here are 5 signs that you may not be, and how what you should do. Your Vision is Fuzzy. Investors will not be too interested if the vision is still fuzzy and hasn’t come into focus yet. if you’re still sorting out the market and your position in it, then you need to gain more clarity on the space and your company’s position. The Team Isn’t in Place Yet. if you still have major holes in the team that you are seeking to fill, you need to find candidates for those positions before funding. Investors will not invest in an incomplete team. No Repeatable Business Model. Before starting a fundraise, you must identify the repeatable business model. if you’re still pivoting from one business model to the other then you’re not ready for investors. At this stage, the business model must be predictable at some level. Financials are Not Under Control. You are definitely not ready to raise funding if you don’t have your financials under control. If you don’t know how much to budget for expenses or what the impact of a sales increase on your bottom line may be, then take some time to prepare those financials and be ready to present that information to investors. No Clear Path to Profitability. If you can not show a clear path to profitability (if you don’t see how you can grow to a profitable position with your current business model) then you’re not ready for fund raising. Investors want to see how and when you will be profitable before making an investment decision. TEN Capital has created a series of calculators to help you see how your startup compares to industry standards. You can discover if you are ready for funding, see how your deal will be seen by investors, learn how to set the price for your next raise or exit, or calculate how much TEN Capital can save you on your fundraising campaign. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: https://staging.startupfundingespresso.com/calculators/ 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

    How to Get the Most from Your Board Meetings

    May 10, 2021

    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

    It’s About Execution and Momentum

    May 3, 2021

    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

    Who Should You Put on Your Board of Directors?

    May 3, 2021

    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

    The Most Common Reason Why Startups Fail to Raise Funding

    April 6, 2021

    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

    How to Close an Investor

    October 8, 2020

    1 min read, from the “Fundraising Process” series As you gather your list of investor prospects and progress them through the funding “funnel”, it will come time to close an investor. But how? Some investors are transactional. They look at the deal, and then make a decision. Most investors, however, are not. They look at the deal and continue to study it for evidence of traction and momentum. Because of this, it is important to provide continuous updates showing progress and reminders that you are still actively raising funds. The lead investment is the hardest to close, so that it will take extra effort. No one wants to go first, and for your fundraise, you are looking for a lead investor who will take that charge. After that, you have the benefit of saying, “we have $150K of our $1M round closed.” This is the first big hurdle to overcome. Once you hit the 50% mark, you’ve achieved your second hurdle. After 50% has been raised, it gets much easier to raise the funding, as the perceived risk that the round will not close goes way down. At some point, it comes time to close an investor. A few techniques include: FOMO: Near the end of your raise, you’ll have some investors who are still on the fence. Scarcity helps motivate people to move along. In closing the round, you can release a statement saying “$850K of our $1M round is closed with only $150K left.” Incentivize: In some situations, you can offer an incentive to investors to move forward. You can offer a better deal to those who close before a certain date. I heard one entrepreneur who offered two warrants if the investors closed in 60 days, one warrant if closed in 30 days, and no warrants thereafter. Investors who wanted to be in the deal would make an effort to get their diligence done and their investment in. 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

    What We’ve Learned Over the Years- How You Can Tell you are Talking to a Pretend-preneur

    May 8, 2019

    The startup world is open to anybody, and it seems like everybody comes through it at some time or another. I receive calls daily from entrepreneurs seeking to start a business, raise funding, or hire a team member. I can always tell who is the serious entrepreneur and pretend-preneur – someone who likes the idea of running a startup but is not committed to the work required to make it a success. That’s important because a pretend-preneur who raises funding will ultimately waste it, and there are too many good startups to spend money on those who don’t see it through. Here are some telltale signs of a Pretendpreneur –They are more worried about job titles and credit for the work. –They don’t seem too focused on the customer and what it will take to make them happy with the product, as that’s a detail to be figured out later. –They focus on the superficialities of the business and not the core functions of building the product and selling it. –They look for ways around the hard work rather than working their way through it. — Problems are everyone else’s fault, and nothing can be done about it. –They don’t know who their customers are, and it doesn’t bother them. –They think funding will solve all problems and make life easier after the raise. –They don’t know their numbers, but someone else in their organization does, and that’s good enough. Everyone dreams of a successful startup and fundraise, but it takes more than a dream to be successful. 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

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