Venture funding
May 22, 2012 1:46 PM Subscribe
Getting funding from VC
I am looking for resources to start the process for getting funding for a project/product I am working on. Any pointers and tips, websites, forums etc. to fund a business and getting VC funding would be very helpful. I am in the early early stage but want to get the ball rolling and also get links from others who have either done this or have kept an eye on such news.
Thank you.
I am looking for resources to start the process for getting funding for a project/product I am working on. Any pointers and tips, websites, forums etc. to fund a business and getting VC funding would be very helpful. I am in the early early stage but want to get the ball rolling and also get links from others who have either done this or have kept an eye on such news.
Thank you.
Graham co-founded Y Combinator, which might be of interest to you. It's really competitive, but reaching for a great goal is the only way to meet said goal.
posted by k8lin at 2:16 PM on May 22, 2012 [3 favorites]
posted by k8lin at 2:16 PM on May 22, 2012 [3 favorites]
In particular check out YC's Hacker News
Angel List is another place.
posted by bitdamaged at 2:20 PM on May 22, 2012
Angel List is another place.
posted by bitdamaged at 2:20 PM on May 22, 2012
I've talked to a lot of venture capitalists over the years. Here are a few things they've told me:
* There is no idea so good that bad management can't fuck it up. So 60 percent of what VCs are looking at is the management team. They want people who have experience growing companies, coachabilty, loyalty among the team.
* They are looking for clarity in the numbers. "If I can create a product that does X, I can get Y-percent market penetration." What is your cost structure and how will it change over time? Hot technology and a big market are not enough.
* VCs tend to fund sectors where they feel comfortable. So look at their portfolio companies before you make your pitch.
* Early stage venture capital is a local business. All else being equal, they'd rather invest in a company across the street than across the country.
* They want validation from someone they can trust. Who in your network knows someone who knows someone in their network?
* They want to know your exit strategy. They get their profit when your company either goes public or is bought by another company. How are you going to get to that point?
posted by Longtime Listener at 2:22 PM on May 22, 2012 [4 favorites]
* There is no idea so good that bad management can't fuck it up. So 60 percent of what VCs are looking at is the management team. They want people who have experience growing companies, coachabilty, loyalty among the team.
* They are looking for clarity in the numbers. "If I can create a product that does X, I can get Y-percent market penetration." What is your cost structure and how will it change over time? Hot technology and a big market are not enough.
* VCs tend to fund sectors where they feel comfortable. So look at their portfolio companies before you make your pitch.
* Early stage venture capital is a local business. All else being equal, they'd rather invest in a company across the street than across the country.
* They want validation from someone they can trust. Who in your network knows someone who knows someone in their network?
* They want to know your exit strategy. They get their profit when your company either goes public or is bought by another company. How are you going to get to that point?
posted by Longtime Listener at 2:22 PM on May 22, 2012 [4 favorites]
Have you had seed funding (from "friends, family and fools")?
Have you had angel funding?
Because if not, don't start looking for VC funding.
Read up on the process.
posted by beagle at 2:31 PM on May 22, 2012 [1 favorite]
Have you had angel funding?
Because if not, don't start looking for VC funding.
Read up on the process.
posted by beagle at 2:31 PM on May 22, 2012 [1 favorite]
I met with a VC last week about a startup. We have founder and angel funding and are 1/2 way through prototype.
He said, "don't take VC money. There's enough angels now where most startups don't need VC. If you take VC money, always remember you're part of their portfolio. They are not interested in you, they have to return cash to investors. Thus they will always do what's best for them. That may or may not be what's best for you. Angels will be interested in you. As a VC, I'll tell you, try not to take VC money."
Damn. Cray.
posted by nickrussell at 3:00 PM on May 22, 2012 [3 favorites]
He said, "don't take VC money. There's enough angels now where most startups don't need VC. If you take VC money, always remember you're part of their portfolio. They are not interested in you, they have to return cash to investors. Thus they will always do what's best for them. That may or may not be what's best for you. Angels will be interested in you. As a VC, I'll tell you, try not to take VC money."
Damn. Cray.
posted by nickrussell at 3:00 PM on May 22, 2012 [3 favorites]
Getting any funding for a business is hard. The fund raising process is complex and lengthy - it's not something most people master quickly. I have also talked with many many VC and even extracted money from some of them, Longtime Listener's tips are pretty good.
Network, Network, Network! In reality investors will take meetings based on personal recommendations. From other investors and from successful entrepreneurs that they trust. For every pitch meeting an investor takes there's 10~100 business ideas that don't get that far.
Don't ever ever ever pay anybody to help you find funding - these people are con men. This includes IMHO 'pay to pitch' events that many angel networks hold.
IMHO angel investors aren't really that different from VC - they're all rich folks that will make you jump through hoops to get their money. At least VC usually have a process that they follow. Angels can be all over the map. It's true that they tend to fund smaller amounts than VC.
Business competitions can be useful for developing your pitch, business plans and getting some exposure in front of investors. Sometime you can even get some money.
Private investment is not the only way to start a business - most businesses are started with second mortgages, credit cards, friends & family etc. Also don't neglect SBIR grants (or the equivalent where you live).
At the end of the day any investor is looking for a good company - this is much more than just a good idea. The team, the leadership and the vision are often more important than the idea. Fundamentally - you have to be able to show that the business can make money and grow.
posted by Long Way To Go at 4:09 PM on May 22, 2012
Network, Network, Network! In reality investors will take meetings based on personal recommendations. From other investors and from successful entrepreneurs that they trust. For every pitch meeting an investor takes there's 10~100 business ideas that don't get that far.
Don't ever ever ever pay anybody to help you find funding - these people are con men. This includes IMHO 'pay to pitch' events that many angel networks hold.
IMHO angel investors aren't really that different from VC - they're all rich folks that will make you jump through hoops to get their money. At least VC usually have a process that they follow. Angels can be all over the map. It's true that they tend to fund smaller amounts than VC.
Business competitions can be useful for developing your pitch, business plans and getting some exposure in front of investors. Sometime you can even get some money.
Private investment is not the only way to start a business - most businesses are started with second mortgages, credit cards, friends & family etc. Also don't neglect SBIR grants (or the equivalent where you live).
At the end of the day any investor is looking for a good company - this is much more than just a good idea. The team, the leadership and the vision are often more important than the idea. Fundamentally - you have to be able to show that the business can make money and grow.
posted by Long Way To Go at 4:09 PM on May 22, 2012
As someone who just finished a nearly two year long startup odyssey, my anecdata is this: avoid external funding if at all possible, in favour of bootstrapping. Angel/VC funding imposes external priorities that align with your own only very generally, and brings with it external deadlines. Also, the only way to deal with investors, potential or otherwise, from a position of strength, is to not need them. Having your revenue streams established already is a huge benefit when dealing with anyone else.
MeMail if you'd like to discuss it in more detail. I'm not in the "VCs are evil" crowd, but it's important that you recognize the path you're taking by going the investment route, and I've confirmed a lot of what I've learned with other startups.
posted by fatbird at 5:16 PM on May 22, 2012
MeMail if you'd like to discuss it in more detail. I'm not in the "VCs are evil" crowd, but it's important that you recognize the path you're taking by going the investment route, and I've confirmed a lot of what I've learned with other startups.
posted by fatbird at 5:16 PM on May 22, 2012
A good, well-connected startup lawyer can introduce you to VCs and angels (and other entrepreneurs, etc.).
posted by odin53 at 6:10 PM on May 22, 2012
posted by odin53 at 6:10 PM on May 22, 2012
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And keep in mind the more work you get done first (business plan, market research, prototype, working product) the less equity you will have to give to the VCs.
posted by jeffamaphone at 2:03 PM on May 22, 2012 [1 favorite]