Gust

NOVEMBER 2, 2011

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. Dave Berkus is a founding member of the Tech Coast Angels in Southern California, a lecturer and educator. He has invested in more than 70 startup ventures. Dave’s valuation model first appeared in a book published by Harvard’s Howard Stevenson in the middle nineties.

Valuation 79

Valuation Pre-Money Valuation Intellectual Property Southern California 79

Gust

NOVEMBER 22, 2011

If you are looking for an outside investor, you need to know how they see you. Different types of investors look for startups at different levels of maturity. If your startup is at the wrong stage for the investor you are approaching, fishing for money is a waste of time for both of you. For instance, if your company is only a few weeks old and you have zero customers and your product offering is still in design, don’t expect someone to hand over $10 million to fund your efforts.

Venture Capital 171

Venture Capital Investment Bankers Angel Investor Initial Public Offering 171

Gust

NOVEMBER 29, 2011

Crowd funding enables entrepreneurs to raise money in relatively small amounts from large numbers of interested investors. In the sum, substantial amounts of money (as much as a million dollars) can be raised for each startup company. Recently, entrepreneurs in many countries have been soliciting investment through “crowd funding” websites designed specifically for fundraising purposes.

Securities and Exchange Commission 154

Securities and Exchange Commission Accredited Investor Angel Investor Due Diligence 154

Gust

NOVEMBER 28, 2011

Every investor is looking for the “dream team” of executives to put his money on. Often I find that experienced investors flip to the management page of a business plan, even before they read the product description. That’s how important the people are. What are investors looking for in the CEO and the rest of the top executives? Been there, done that, and won.

Startup 147

Startup Bootstrapping Social Network Internet 147

Gust

NOVEMBER 23, 2011

Talented entrepreneurs are nothing if not resilient in the face of change: Market forces, competitive threats, technological shifts, you name it. In recent years, government regulation has emerged as another such force to be reckoned with in the technology industry. Startups and founders need to come to terms with the stark reality that the rules of the game may be changed mid-play.

IPO 110

IPO Prospectus SEC Intellectual Property 110

Gust

NOVEMBER 11, 2011

All entrepreneurs know the feeling: your vision is crystal clear, but potential investors don’t get it. They ask small-minded questions. They niggle over details. They hem and haw as the weeks melt away your first-to-market advantage. It’s maddening! So, there are two things you can do after getting incredibly frustrated. You can keep pounding your head against the wall.

eCommerce 107

eCommerce Valuation Stock Community 107

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. In brief, a cap acts to place a limit on the conversion price of a convertible note such that investors are guaranteed a minimum number of shares for their bridge loans if the startup does a priced equity round at a high pre-money valuation – “high” meaning above the cap, which is often a heavily negotiated term.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Gust

NOVEMBER 1, 2011

Are you wondering about angel investment ? How to find investors? What steps you need to take? I suggest you start by asking yourself these three questions. If you can’t honestly answer “yes” to all three, revise your plan, beef up your team, refocus, or pivot. 1.) Can it really grow? Growth means a strong market and a deliverable that’s scalable and defensible.

Angel Investor 93

Angel Investor Intellectual Property Finance Web 93

Gust

NOVEMBER 29, 2011

It’s a common question: Why bother with financial projections? After all, they are never right, almost always inflated, and generally a waste of time. Right? Do investors even read them? And if so, why? I saw a great answer to that question in Pitching a VC: Why Financials Matter , posted earlier this month by David Hornik on his Ventureblog. David is a very well known venture capitalist, a partner in August Capital.

Hockey Stick 70

Hockey Stick Forecast Early Stage Finance 70

Gust

NOVEMBER 18, 2011

Perhaps the most misunderstood topic in the world of startup investing is the question of who the competition is and isn’t. And angels get this wrong just as often as entrepreneurs do. Of course, we’re all familiar with the inevitable pitch slide on the topic, which features some sort of grid or circle image with – how fortunate! – a blank space in the zone in which this particular company characterizes itself.

Audience 70

Audience Entrepreneur Technology Conversion 70

Gust

NOVEMBER 14, 2011

If only there were a single idea that could make any startup succeed, huh? Well, it does exist: a business seed that, planted and watered, will grow to the sky. And you can have it without even giving me a gold coin. Here it is: enable your users to thrive by using your product in a way that expands its utility to others. First stop: think about how Microsoft beat Apple in PC Wars I: by opening its platform for developers, who could profit handsomely by developing and selling Windows application

Startup 70

Startup Distribution Matching Developer 70