In the startup world, everyone talks a big game and investors are looking for those who can do it. I love startup stories. In the startup world everyone has a grand idea and big plans to make it happen. It’s the venture world so you better have an idea that can be big. The talk around the ideas is large and full of hyperbole. The future is going to be so bright that you find yourself reaching for your shades. But then the startup has to actually build it and show the growth story in progress. Scott Adams once wrote- “Losers have goals. Winners have systems.” If the startup has some revenue traction then you probably have some systems behind it that you can grow. But what if they don’t have any meaningful revenue yet? One technique is to ask questions that go to the systems they will put in place such as: Tell me about your system for generating leads. Exactly how will it work? Tell me about your sales process.   Exactly how do you find the right prospect and close them? In other words, the startup needs to do more than just tell you their goals in your PowerPoint slide deck. They need to describe the systems they can put into place to do so. If the answers are vague and fuzzy, then it’s going to be a long, slow climb. If the answers show expertise and experience around it, then this one has potential for investment. 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

TEN Capital is ten years old now. We’ve picked up a few lessons along the way in helping startups raise funding and helping investors fund those startups. Here are some key principles for startups raising funding. Key Principles Launching a startup and growing a business is hard. It’s supposed to be hard. Funding is an enabler. Don’t think funding is going to solve all your problems. Entrepreneurs think investors want big revenue, but what they really want is predictable and repeatable revenue. In an early stage company the revenue is never large, but if it’s predictable based on recurring revenue, repeat revenue or known lead generation funnels that generate consistent revenue, then you have a growth story to tell the investor. Build and test your funnel so you know it works and can tell the growth story versus telling the “we’ll be big someday” story – which nobody buys. Sweat equity is table stakes- not valuation metrics. You need a complete team to start a business- someone building it and someone selling it. No fair, everyone on the team is building it and no one is selling it. Being all-in on your startup is step one. Part-timers need not apply. Sell it first, build it second. If you can’t sell it in the first place, there’s no need to build it in the second place. Most startups over invest in their tech and then they search for someone to buy it. A better strategy is to sell it and then build it out with the customer’s input. Startups who purposefully avoid revenue generation and call it a strategic decision are going to find out what hard living is all about. It’s best to generate enough revenue to prove your model and business rather than keep it at zero and play the “it’s going to be big” game on valuations. If all you do is take, take, take – don’t be surprised to find your startup ecosystem to be small. Pay it forward. 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

As the business world moves to a service economy, everything becomes a service – even fundraising. Traditionally, those who start a business must raise their own funding. At later stages of the company, service firms provide investor relations programs but the cost is high and their services are targeted at investors in publicly traded stocks for the most part. The startup CEO, more than anyone needs support in finding investors, introducing the deal, and keeping the investor up to date with the progress. Closing the round is yet another challenge in chasing investors for signatures and checks. Brokers are often used at the Series B stage and later but rarely at the Seed and Series A stage as investors expect the startup CEO to lead the raise rather than outsource it entirely. TEN Capital innovates by providing “Funding as a Service” to early stage companies. We help the CEO raise funding by sourcing investors, making introductions, tracking interest, and following up with updates and investor documents. More specifically, TEN Capital provides: Warm introductions to investors Consistent update campaign to the prospective investors Coaching on terms sheets and due diligence documents Assistance in closing the investment – including chasing the investors for signatures and checks Tools including a data room Online and phone support for the duration of the campaign All for one monthly fee with no long term contract or backend fee. The CEO leads the fundraise but now has support for the difficult parts of the fundraise process – finding investors, making contact, following up, and closing the round. 

The key to raising funding from an angel investor is to establish trust and demonstrate competence. In the process you are able to build a relationship. You need to have multiple interactions and an ongoing dialog. The interactions lead to familiarity.  When I led angel networks in the early 2000’s I witnessed many an entrepreneur coming to the group and pitching. About ninety percent of them would go away and we would never hear from them again. We had no idea what happened and we would often wonder what became of their startup. A handful of those startups would come back and give us updates and show progress. Typically over a three to four month period. The investors had enough information to make a decision and they were the ones who raised most of the funding from the group. Those entrepreneurs were the ones who spent enough time to demonstrate their competence and establish a level of trust. Investors are always looking to learn more about the industry and how to invest. One idea is to share information that helps them in that direction. Bring new information back from a trade show to share with your investor contacts and offer news about the industry that is not readily known to the investors. You’ll find it easier to gain coffees if you’re bringing new information to the investor. 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

How to get a Lead Investor for your Deal I often have startups come to me saying they have five investors interested in their deal but no one wants to lead the deal. Leading the deal means taking responsibility for the initial due diligence and terms negotiations. There are syndicates in which investors will lead the deal and then take a carry on those who follow but for the most part, you need to find a lead. Asking an investor to lead your deals is tantamount to saying, “how would you like to do 40 hours of work uncompensated?” When you see how much work it is, it’s not surprising that most don’t jump at the chance. Convertible Note Instead of finding a lead, I recommend starting with a convertible note with friendly investor terms. There are many investors who want to be in the deal, but aren’t investing enough to put the terms sheet together. The key is to make it easy for them. Put together a convertible note (or SAFE) with the terms so it’s ready for signing. The Convertible Note doesn’t set valuation and doesn’t include most of the terms you’ll find in an equity raise so it’s simpler. Some investors don’t like convertible notes. They want valuation set and equity ownership established up front. For an investor who will invest more than $100K, we invite them to lead the round. It’s too much work for someone investing only $25K. They won’t find the time to do it right. You just don’t know when that lead investor will come in so you run the Convertible Note till they do. Once the lead investor sets up an equity terms sheet, all the Convertible Note holds convert over to the equity round. Please note: if you only want a loan and not an equity investment, then you should use a Promissory Note, not a Convertible Note. A Convertible Note implies you are going to convert to equity in the future. 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