Black Web 2.0 - Latest Comments in Start-up Funding Explained, Part 1

Re: Start-up Funding Explained, Part 1

Funding_Partners — Thu, 16 Dec 2010 17:10:02 -0000

Mike Green makes some excellent points in his article especially how he lays out the progression of funding. Recently. I read an article that said the average start up could be funded for about $10,000 dollars. One suggestions I have for everyone is have a good marketing strategy. If you can sell your products in high enough quantities the odds are you may not need funding from outside sources.

Re: Start-up Funding Explained, Part 1

amikegreen2 — Wed, 04 Aug 2010 03:50:32 -0000

OK. Let's look at this another way.

First, investors don't invest primarily in ideas. They invest in people, as in teams of people ... not typically just one person. So, if you have a good idea, you'd better be able to sell it to someone(s) who is willing to join you in bringing the idea to fruition. That's called recruiting. If you're a good recruiter, investors will be more interested in you and your team.

Second. Founders have to take the highest risk of everyone. Empty your pockets. No one is going to put their money at a higher risk than the founder. If you're not committed, how can you ask anyone else to be?

Next. Family & friends (some say FFF: family friends, and fools) will put their money out there ... along with the relationship they have with you. I stayed as far away from this option as possible. If you value your relations with family and friends, you will think long and hard before asking them for investment funding. One exception I made: I took my wife and kid for the wildest ride of their lives ... but only because my wife agreed. And since she's a real angel (not monetary), I've been blessed by her even in the most difficult times.

Banks and other financial institutions. To get a loan from any institution, including government-backed agencies, you need two things: good credit and collateral. If you don't have both in abundant supply, find another route. And even if you do, be careful. Most startups fail. If you have a loan hanging over your head and you fail, you lose all your stuff.

Angels: After you've bootstrapped up to the point where you have something to show, you've got traction, revenue, the business is running, you have a business plan, powerpoint presentation and a dynamic energetic personality, spend the next 6 to 9 months chasing angels. If nothing else, you will learn as much as I have about what investors are looking for. And you will never learn that in college. Angels will want from 10 to 30% of equity in your company. Angels want anywhere from 10 to 20 times ROI in 5 to 7 years. They will bring with them interest, support and perhaps expertise. They may also want a seat on the board.

VCs: When your business has hit significant milestones and is now ready to expand and ramp up significantly, VCs will likely be as interested in you as you are in them. They want to see potential to capture portions of huge markets (see billion-dollar spaces). They will also want a board seat, controlling interest and likely your job, Mr. (or Ms.) former CEO. If you can't demonstrate a 10 to 20 times ROI inside of 5 years, you shouldn't bother a VC. And one more thing if you're looking at VC funding, know the answer to, "What's your exit plan?"

Re: Start-up Funding Explained, Part 1

Angels Den — Wed, 24 Sep 2008 05:01:02 -0000

A great article!

The bit I thought is often misunderstood is that "If you simply have an idea that it is worth funding." - Its simply not the case. Good ideas may get funding and great ideas are most likely, of course. But you've still got to have the ability to SELL the idea to Angel Investors.

Re: Start-up Funding Explained, Part 1

Randy Carper — Tue, 23 Sep 2008 00:52:31 -0000

Thanks for the info but how can I get the funding to Build an experienced management team. I have had this problem from the start no money to hire that experienced management team. I started my first urban video sharing website in Feb 22 2004 then my next website stillhustlin.com Apr 04 2005. I posted my first videopodcast in late '05 to be like the first urban videopodcast in iTunes and I still can't find funding can I get some help please.

Re: Start-up Funding Explained, Part 1

JayReds — Mon, 22 Sep 2008 17:06:44 -0000

Excellent topic and, unfortunately, rarely discussed in minority communities. TechCrunch50 had an excellent forum on raising capital. I'll post the link if I can find the video.

Re: Start-up Funding Explained, Part 1

Dede @ Clutch — Mon, 22 Sep 2008 14:07:42 -0000

Great post guys! I look forward to the others in the series. Very impressed! Online entrepreneurs need a inside look on funding -- a book can only tell you so much.