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Mastering Product Management

Mastering Product Management

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Fundraising, Investing

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    The Importance of Non-Financial Factors in Setting Valuation

    1 min read There are financial factors in setting valuation for a startup, and then there are non-financial factors. Often, startups prefer to focus more of their attention on the financial side of things, and that’s okay. However, it’s just as essential to understand that other areas deserve attention. The non-financial factors can be just as important as the financial factors. Some non-financial factors include: Current market conditions As the market heats up, specific sectors turn hot. If a market turns hot, then it will command a higher valuation than the numbers indicate. Pay attention to the needs because they can determine your valuation. Predictability Companies with recurring revenue streams and long term contracts command a higher valuation because their revenue is much more predictable. If possible, try to aim for predictability to receive a higher valuation. Customer concentration Startups with a broader list of customers will survive longer. If a customer accounts for over half of the business, you should reflect that in the valuation. Take a look at your business and figure out how you can appeal to the broadest base. Pre-profitability For early-stage companies, those with profitability should command a higher valuation. If at all possible, aim for profitability. Pre-revenue For early-stage businesses without revenue, intellectual property and customer forecasts are essential. If you are in a pre-revenue stage, try to focus heavily on IP and customer forecasts for the best valuation. Read more: http://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

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    A Note on Convertible Notes

    1 min read When launching a raise, you should always be in a position to take funding, and you are likely to meet investors who want to join the deal. However, many investors will not be interested in taking on a lead investor role because of the work and time involved in doing so. Many investors want to take on a more passive position in the deal. For this reason, a convertible note works well during this stage of the raise because it is a debt instrument that converts to equity later, so there is no valuation to negotiate. Here are a few useful things to know about Convertible Notes: Startups can accept investors into the deal with relative ease, given most notes have simple terms, rights, and conditions. You can use the note over several smaller fundraises to gather investor funds. When setting up a convertible note, consider what will happen upon conversion to the cap table. Startups use convertible notes primarily for seed rounds and bridge rounds. They are lower in cost because the documents are simpler than equity terms sheets. Convertible notes avoid setting a price, so they are easier to negotiate. A convertible note keeps the cap table simple as they start in debt form and convert to equity later. The downside to convertible notes is that they have few protective provisions found in equity terms sheets, such as board seats. Valuation is not fixed, which means a later priced round will set it, and there’s little control the investor has over it. Read more: http://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

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    How to Close an Investor

    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: http://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

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    Building Investor Engagement

    2 min read How to Raise Funding Step 2: Building Investor Engagement You have a good list of investors that are interested in your deal, but how do you get investor engagement? You need to introduce your deal to the investors and demonstrate why it’s a good deal, the operative word here being “DEMONSTRATE.” Most startups tell the investor why it’s going to be a good deal; superb product, great team, great market, great future, etc. The key is to SHOW them. Start by highlighting your traction with customers, the experience and ongoing work of the team, and the improvements on the product. Investors see dozens of deals every day. You can stand out by remembering one thing: Everyone promises, few deliver. Every startup has a great future. Every startup promises the moon.  So what does the investor do? Look for evidence of meeting milestones and a sense of momentum behind the deal. Your outreach to the investor is a campaign, not a one-time contact. You must demonstrate that you have traction. The team must be doing great things. The product must be progressing. If you can’t do anything until you have that $500K, then the process will get tough. You have to show you can do things with little or no funding. Use campaign mailers to tell your story. Over the course of several mailers, you need to showcase your deal and how it works. Investors are busy. They don’t have time to read 5000-word emails. They’ll read a half-page, maybe a little more, and that is it. You need to tell your story over a series of emails as we work our way into the busy lives of the investor. Break the information down into smaller pieces and schedule them out so the investor can see your progress regularly. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/how-to-raise-funding-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

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    The Various Types of Fundraises

    1 min read A common misconception among startups is that when they are looking to raise for investment, they have the total raise for the life of the startup in mind. It’s a big picture way of viewing things, when in actuality, it is better to look at the chapters rather than the whole story. Approaching the investment, the startup needs the total sum in mind. In many ways, it is biting off more than you should be chewing at the time. A bit more focus here is vital. The ideal way to approach raising for investment is by breaking the raise into smaller chapters and smaller bites, which means focusing on smaller rounds. By doing this, the founder no longer has to spend an excessive amount of time on the fundraise process. There are some things to consider when breaking the raise down into rounds. Below is a guideline on how to break up a startup fundraise into tranches.  Family and Friends Funding $10k to $100k Pre-seed $250k Seed  $500k to $750k Seed + $500k to $750k Series A $1.5M to $3M Series B  $5M+ When going through these rounds, it’s essential to know that if you raise too much money, too early in the life of your startup, you will find yourself giving away too much equity. To avoid giving up too much equity, stick to raising in stages. Read more: http://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

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    Building a List of Investor Prospects

    1 min read How to Raise Funding Part 1: Building a List of Investor Prospects (You Need Several Hundred, Not Just a Dozen or So) By now, you probably have your pitch deck and financial projections ready, and your due diligence box (some call it a data room) is coming together. Now it is time to take your deal to a list of investor prospects. The first step in a fundraise is to build a list of potential investors. You’ve to go through your contact list, your LinkedIn connections, and you rack your brain for potential investors in your deal. You’ve done a few Google searches and added a few local angel networks, you know. The list stands at about 15 names. Now what? You know the fundraise is similar to sales; it’s a numbers game. Only a small percent are going to invest, so we need more names. A lot more. You can search Medium and find a few lists online. Some have email addresses; most do not. You start asking around for lists from friends, and they share some with you. Some of the lists are up to date, but many are over a year old. Now what? At TEN Capital, we have over 12,000 investors in our network that you can access. We can introduce your deal to those investors based on their interests, so that you can confidently build your list of solid investor prospects. That doesn’t mean they will write a check for $1M in a few weeks, but now you know who you are targeting, and you can start the work of building a relationship with the investor. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/how-to-raise-funding-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

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    Pivoting is Okay

    1 min read Be prepared to pivot. The idea and the business you started with will almost never be the idea and business you end with. At some point, during the beginning of your startup, you’re going to find that your original vision doesn’t quite fit the market as you hoped it would. This doesn’t mean you’ve failed, it just means that adjustments need to be made. Don’t worry, nearly every new business faces this same dilemma. The good news is, it only takes 3 pivots to get to the growth phase of your startup. The Target Market Pivot This is when you find the right market. The Business-Model Pivot This is when you’ll find the right way to structure your business to fit the new market economics. Team Pivot This final pivot entails finding the right people to grow and run the new business model. After you’ve made these pivots, you should be on your way to growth. Through the lifespan of your business, try to remain as open and flexible as possible when it comes to pivoting. Try to keep in mind that, at any time, you may need to shift your business strategy to accommodate changes in: Customer needs Industry Unforeseen factors Being prepared to pivot can allow a business to move through changes with a graceful evolution. The more comfortable you get with allowing your business to change when it needs to change, the more likely you are to be successful in making those much-needed moves. Read more: http://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

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    Your Pitch Deck Slides

    2 min read Every startup is going to need a pitch deck if they intend to raise funding. So, if you’re new to the startup world, here’s a brief overview of the slides in a pitch deck and their purpose: Title – This will always be the first of your pitch deck slides. Your title slide should be unmistakably clear. It should convey the style and culture of the company. Problem – It’s important to start the pitch with the problem you are solving so the investor has a frame of reference for your startup. Show how this is an important problem that must be solved. Solution – After you have presented a problem to the investors, this becomes your chance to show how you intend to solve that problem. This gives you a chance to sell your startup to the investor. Make it count. Market – The market slide shows the size of the opportunity. The bigger the opportunity, the better. Monetization – The monetization slide has one basic goal: it answers the question of how you make money. Traction – For this slide, you should be able to show current sales as well as the funnel of upcoming sales opportunities. Be sure to include forecast numbers for each opportunity. Competition – The competition slide is useful because it often helps highlight the market size. Competitive Advantage – Make it a point to show what value the customer receives from your product/service. Team – This is your chance to showcase the people you’ve brought on board with your company. Value Proposition – The value proposition slide serves to show what value your product/service brings to the customer. Financial – The financial slide is used to give the current status of the company with respect to revenue, expenses, and profit. Investment Opportunity – This slide functions to show your fundraise target and how much is raised so far. Read more: http://staging.startupfundingespresso.com/how-to-build-a-pitch-deck/ 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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    The Importance of Your Pitch Deck

    1 min read A pitch deck is a huge step toward funding for a startup. In many cases, this is the first tool of communication you’ll reach for when presenting your ideas to an audience and first impressions count. A good first impression during a job interview may lead an individual to the career of their dreams, however, a good first impression during a pitch can lead an entrepreneur toward funding their dreams. A pitch deck is a brief presentation that provides your audience with an overview of your business. Ideally, the deck should answer any general questions an investor might have. The goal of the pitch deck is to introduce your startup to an investor. Additionally, the pitch deck should also serve as a way to highlight any essentials to an investor who may be considering your startup as an investment opportunity. What a pitch deck is not is a means to explain the full history of your company. It is also not a means to explain how your product works. These topics can be covered later on. Instead, focus on making a strong introduction of your company to the investor and do everything you can to leave a good and memorable first impression. Just as important as a strong first impression, is the proper follow up with an investor. After you’ve made your pitch, be sure to schedule a follow-up meeting with them. Use your meeting time to answer any questions the investor might have. Also, take advantage of this time and ask the investor questions you might have. Make sure you have new information to share. Give the investor a reason to join the call to learn more. The goal here is to keep the investor engaged well after you’ve made your pitch. Read more: http://staging.startupfundingespresso.com/how-to-build-a-pitch-deck/ 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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