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Red Flags in Startup Pitches: What Makes Experienced Investors Pass

Red Flags in Startup Pitches: What Makes Experienced Investors Pass

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    Tissue Culture and Cannabis

    2 min read Of the many emerging technologies in the cannabis market currently gaining steam in the North American market is called tissue culture. Tissue culture itself is not a new technology. Many fruits grown around the world use this same technology. Tissue culture means that growers are creating a seed that has known genetics. Using known genetics ensures that the apple or banana a customer buys at a grocery store in New York is the same as the apple or banana a customer would buy at a grocery store in LA. Tissue culture ensures that things like taste and ripening time remain consistent across the board. Most cannabis is grown using mother plants. At the end of each 4-month harvest, the growers clip the top of the plants. These clippings are planted as seedlings to produce the next crop, and so on. The problem with this is, you can’t determine whether the mother plant has consistent, stable genetics from one growth cycle to another. There has been so much genetic drift over thousands of years of growing cannabis. In turn, you can’t have an infused drink or chocolate bar without knowing that the genetics is stable. This is where tissue culture comes into play. Growers are looking to technology to ensure that the plant: Tastes the same every time Works the same every time Grows the same every time While the tissue culture trend is just starting to emerge in the cannabis space, and it will likely become a standard means of growing soon. Today, most consumers are no longer purchasing cannabis to smoke the flower. Instead, they are purchasing cannabis-infused products where consistency is critical. Due to this shift in the market, we are likely to see the cannabis industry turn more toward tissue culture so that suppliers can ensure that customers are receiving a consistent product. 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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    Deal-Flow is Crucial, but Where to Get it?

    1 min read When starting as an Angel investor, it’s essential to set up several sources to consistently find deals that fit your thesis and track those that meet your requirements; this is called “Deal-Flow”. It’s helpful to network with lead investors and build relationships with investors in general so you can share information about deals and provide/receive referrals.  Here are some sources to consider: Ping the members of the group regularly for deals they recommend. Avoid the ones in which they say, “I’m not interested but perhaps others are.” Look for the deals that members want to invest in. Identify investors outside the group who fund quality deals in the same sector and stage as your group and set up a relationship to share deal-flow. Follow up with your portfolio companies about deals they recommend. Consider other angel networks in the geographic area or sector area to provide deal-flow. Talk with service providers such as attorneys and accountants about deals they see needing capital. Join community groups that foster the sectors your group is interested in and have the members attend those group meetings. Review online portals for deals raising funding. Finally, establish a reputation for providing mentorship, feedback, and support to position the group as the go-to resource for startups. Find out how TEN Capital can help you source the right deals: http://staging.startupfundingespresso.com/investor-landing/ 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 Your Investment Thesis

    2 min read For investing in a startup, consider the future and what will be needed then; don’t just look at the world as it is today. Map the trends and extrapolate out and consider what will be needed five years from now based on the direction of technology, the markets, and other factors. From this, you can build a view of the future and inform your investment thesis and begin your preparation for investing in startups. Creating Your Investment Thesis There are too many deals to look at all of them. You’ll want to narrow the field by building out your investment thesis. There are a few crucial steps to take if you haven’t done so already. Step One: View 50 deals, then write down what you like and what you don’t. TEN Capital is a great resource to help you field deals regularly, show you how to review them, and what to look for. Step Two:  Follow up one to three months later to see how each deal is working out. Checking-in regularly will inform your investment thesis as you will see some deals progressing forward, some stall out, and others pivoting to something else. Step Three: Write out your investment thesis in full, including: Your observation about a macro trend in an area you care about The position of the company in the trend Characterization of the company that gives it a competitive advantage Conditions for investing based on price and other factors Example investment thesis statements include: “Healthcare is moving to the home.” “Companies providing technology-enabled services will succeed.” “Companies with recurring revenue and a CAC:LTV ratio of 1:8 are preferred.” “Companies with revenue above $500K and pre-money valuation below $5M are preferred.” It’s essential to write out your investment thesis ahead of time, as you’ll often return to it. Allocating Funds In general, it’s best to keep your angel investing to 3-5% of your discretionary investment funds. These are funds you can lose and not impact your lifestyle or other investments. Determine in advance how much you plan to invest. Use a five-year window. Once you have that number, know how you’ll access those funds for when you need them. Keeping these funds separated from the rest of your investments will make managing the process easier. 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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    The Importance of Diversity in Your Portfolio

    1 min read According to a Harvard Business Review study on increasing diversity in venture capital partnerships, the more similar the backgrounds shared by the investment partners, the lower the investment performance. Diversity, simply put, leads to better performing teams. Diversity of perspective breeds a startup that has a better understanding of the pain points that they’re trying to solve. The more a startup ensures that its team includes both women and minorities, the more likely it is to uncover the solution to the problem it set out to solve, and the more likely it is to yield a high performance. However, the fact remains that minority and women-owned businesses still struggle with funding when compared to their white, male, counterparts. While the investment space is working to shift this imbalance, the work is far from over and many still face an uphill battle toward equality. Minorities and women continue to face both structural barriers and biases when it comes to career paths. These individuals are expected to fit within a certain mold and stay within that mold. For example, less than 30% of the CEOs within the US are women. Statistically, however, there are more women in the US than men at roughly 97 men to 100 women. As Ola Gambari, COO of Hungry Fan explains: “It’s the idea of this preconceived notion that we have a lane, and we’re supposed to stay in it and, as a minority, if I’m not running a business focused on minority problems, I shouldn’t be running that business, neglecting the fact that I share all of the other pain points of other human beings in this society.” Instead, investors should be evaluating the business on its merits, not just the fact that it has minority founders. Again, it breaks down to recognizing that different perspectives matter and yield better results. As more investors embrace this knowledge, the more equality we’ll begin to see. 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 your Entrepreneur Ecosystem

    2 min read Building your Entrepreneur Ecosystem Your Checklist on how to build an Entrepreneur Ecosystem in your Area   Startups need networking, mentoring, and funding. A robust entrepreneur ecosystem fosters connections between the startup and a network of providers, mentors, and investors. Each type of startup: high-growth, tech, consumer product-related, healthcare, etc., will need a unique set of networks (people to hire and contract), mentorship (people who can guide and coach the startup), and funding (people who can invest in the business).   The following are a series of steps you can take to build a solid Entrepreneur Ecosystem in your area. Step #1: Map the Startups in Your Area The first step to growing your startup community is to identify the startups in your area. Start by mapping the location of each company. Then, you’ll want to capture the type of company, location, and stage of growth, categorize them by sector (healthcare, tech, consumer product goods), and then subcategorize by stage (seed, early-stage startup, late-stage startup). Having a solid list will give you a great place to start. Step #2: Map the Existing Startup Resources in Your Area The second step is to identify the startup resources in your area. Build a list of groups, organizations, funds, and other accessible resources, and then categorize each by offering (networking, mentoring, funding) and subcategorize by stage (seed, early-stage startup, late-stage startup).   Step #3: Choose the Type of Startup You Can Support Next, you’ll want to choose your entrepreneur type to support and be intentional about it. Understand the type of network they need, the type of mentorship they require, and, importantly, the kind of funding they need.   Step #4: Identify the Gaps in Resources The fourth step to growing your startup community is identifying the gaps between the resources needed and those available.  Identify the missing network, mentorship, and funding resources in the area.   Step #5: Recruit the Resources to Fill the Gaps Once you have identified the gaps, it’s time to recruit the resources to fill the gaps.   Step #6: Setup a networking platform to facilitate the connections The last step to growing your startup community is setting up a networking platform to facilitate the connections Recruit network resources. Having a platform will connect startups to providers, suppliers, customers, etc. It can also connect startups to advisors, mentors, and coaches through pitch sessions, online portals, and much more. 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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    The Challenges of Investing in the Impact Space

    1min read When it comes to impact investing, the truth is this: It’s harder to invest in the impact space than in the traditional venture space.  That is not to say that the traditional venture space isn’t hard. Of course, investing in the venture space is quite tricky on its own. However, impact investing holds a set of challenges unique to its sector. One thing that new investors interested in impact should keep in mind is that these are investments that take time. It is not uncommon to wind up making an investment and holding on to it for 5-8 years, on average. Fundamentally, impact investing is not for the faint of heart. It requires a tremendous amount of focus, and you should only be investing in areas where you think you can affect the outcome. Otherwise, the time you spend with it may not be worth it. It’s also essential to take your time and ensure that you’ve put in the work to make the entrepreneur and first five people of the team resilient individuals. After all, they are likely in it for the long haul, too, and it all comes down to emotional resilience. Make sure that the team has figured out how to take care of themselves through the process of starting a company. Many times, these early-stage entrepreneurs offer a lot of opportunities to investors, but if the individual hasn’t spent time on him or herself, there’s going to end up being corners that get cut. It is at this stage investors begin to see some of the messiness, especially the ethical hang-ups that can happen with new companies. There are a lot of opportunities around the world to open up markets for these individuals, but you have to make sure that they are well prepared for the ride. 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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    New Investor Risks

    1 min read As a new investor, entering into the world of investing can be an exciting time. Opportunities can seem limitless, and they are, especially as the world’s talent pool continues to expand in ways we’ve never seen before. When you’re just getting into the game, there are a couple of steps you can take to increase your chances of success. The first thing you should remember is: Networks are a priceless resource for countless reasons, especially for a new investor. One of the main advantages of a robust Network is having a place to ask questions. The more questions you can ask, the better. When you’re just starting out, you’re going to spend some time in a learning phase. Take this time to soak up all of the information you can; a good network will make all of that information available to you. All you have to do is ask and be open to learning. Another vital thing to keep in mind at the very beginning is: Don’t get overexcited. You might find a few companies with a solid pitch and great founders. The founders are excited, so you get excited, too. Inevitably, new investors who are too eager will write a check to startups who will, as most do, close their doors. This outcome is simply the nature of the space. A number of the startups you invest in will fail because, no matter how much you want them to be a winner, the startup world is a numbers game. Often, this leads to frustration, and many investors choose not to re-engage in the investment world because they feel they’ve “been burned.” However, you can minimize the potential risk. Instead of getting caught up in the excitement, try to take the first 6-12 months to familiarize yourself with the ecosystem. Ask a lot of questions and then write your first check. Continue to learn and ask questions along the way. Focus on building your portfolio slowly and with the correct education. In the end, this will help reduce the risk of failure. 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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    Space Tech: The New Investment Frontier

    1 min read For the first time in human history, 2020 has seen the launch of a commercial rocket carrying passengers into space. This would have been considered “science fiction” not long ago. Today, space tech is a lot less “fiction” and a lot more science. Even more importantly, investors are taking notice. The space tech and exploration sectors have seen an explosion of activity in recent years. Investors are flocking to startups that want to be on the cutting edge of a new era. Many investors now see countless opportunities in space colonization because it is no longer a matter of “if”, but “when.” Leaders like Elon Musk are pushing humans toward the next step of exploring the stars. This drive has created an ecosystem that dozens of companies are being built to support. We’re even seeing plans to build out hotels in space. One example is a company called Axiom. They provide crew missions aboard the International Space Station today, while building the commercial space station of tomorrow. Axiom will be the first private company to take control of building out the new international space station, something NASA typically controls. That said, with every new venture comes challenges. One thing investors have pointed out is that the next hurdle for commercial space travel is going to be building out a true communications infrastructure that safely allows for and regulates the ability of space travelers to communicate with each other and with those back on earth. As SpaceX has shown us, however, we are ready to leap out into this new frontier and explore the new opportunities awaiting us. Read more in our latest eGuide: 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 Data Room: What it is, and How to Build One

    A data room, sometimes referred to as a “due diligence box,” is a cloud solution made for the sharing and securing of sensitive business information. A data room should not be confused with a simple cloud storing service. When handling confidential information, you’ll need features such as rights management and Q&A. The goal here is to maximize your fundraising potential by being organized and demonstrating that you respect the investor’s time by being prepared. Having a well-organized folder is also an opportunity to show investors that you have a real business and are ready to raise capital. This data room contains vital documents about your business and is incredibly useful to your potential investors, so it’s essential to keep it both functional and secure. The materials in your data room should include:  Entity filings Patent filings Articles of incorporation Income statements Balance sheet Other documents detailing your business  Investors who want to invest will look for these documents so they can run their due diligence on you and your business. The more simplified you can make this process for them, the better. Spend some time putting your data room together and make sure you have all the necessary documents for your investors. Most importantly, be prepared and have these documents ready before you begin your raise. Continue reading in our most recent eGuide: How to Prepare for Your Fundraise   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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