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Rescooped by Kenneth Carnesi,JD from Startup - Growth Hacking
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Startups are Risk Bundles · Coding VC

Startups are Risk Bundles · Coding VC | e-commerce & social media | Scoop.it
Startup founders are sometimes surprised when they spend a year or two executing against their roadmap, make a lot of progress, and still have to struggle to raise more capital. Why wouldn't investors be interested in a company if it's much further along than it was last year? Why are the few investors who are interested only willing to invest at a lower valuation?
Unfortunately, all progress is not created equal. Sometimes moving forward gets founders closer to the goal of building a huge, profitable company, but sometimes it shows that they're on the wrong path, or that their goal is unattainable.

Via Pantelis Chiotellis
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Rescooped by Kenneth Carnesi,JD from Venture Capital Stories
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U.S. venture capital firms just gathered up the most money they’ve raised in a decade

U.S. venture capital firms just gathered up the most money they’ve raised in a decade | e-commerce & social media | Scoop.it

Many in Silicon Valley may be worrying more and more about how to transform their startup stakes into cold, hard cash. But that's not stopping institutionalinvestors from writing out some very big checks to venture capital firms.

Somewhat astonishingly, U.S. firms just closed on more capital commitments than they have since the second quarter of 2006, according to new data from the National Venture Capital Association and Thomson Reuters. In hard numbers, 57 U.S. firms raised $12 billion in the first quarter, a 59 percent jump in dollar commitments over the first quarter of 2015.

Institutional investors aren’t necessarily spreading the wealth, with the number of funds raised down 17 percent from this time last year.

Indeed, as you can see from this downloadable fund list, roughly half the new capital commitments in the first quarter were locked up by just four firms: Founders Fund, which announced a new $1.3 billion fund; Norwest Venture Partners, which closed on $1.2 billion; Accel Partners, which raised $2 billion across two funds; and Lightspeed Venture Partners, which sealed up two funds totaling $1.2 billion.

Close behind them,...  Read more: click image or title.

 

 

Learn more about funding, find great funding sources, get a free business plan template, post your funding request for free, and more: www.Business-Funding-Insider.com

 


Via Marc Kneepkens
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Marc Kneepkens's curator insight, April 12, 2016 9:18 AM

Plenty of money is still available for #VC funding. How will it affect #startups ? Will this money go to later stage companies, or is #earlystage and #seedfunding still attractive?

Rescooped by Kenneth Carnesi,JD from Internet Presence
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Tips for Startups on Raising Old Money and Crowdfunding - SiliconHills

Tips for Startups on Raising Old Money and Crowdfunding - SiliconHills | e-commerce & social media | Scoop.it

Old real estate and oil money in town invested in San Antonio’s Rackspace early on, said Stephanie Chandler, partner with Jackson-Walker.

It was one of the first cases of old San Antonio money backing a startup technology venture here, she said.

Now with Geekdom, a technology incubator and accelerator in downtown San Antonio, the goal is to get even more local investment into startups, Chandler said.

“Over the last ten years there’s a much more significant uptick in what families are doing,” in investing in startup deals, she said. “Five years ago, we didn’t have the Rackspace founders looking at deals.”

To read the full article, click on the title.



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Via Marc Kneepkens
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Marc Kneepkens's curator insight, February 22, 2014 6:17 PM

Here's a good look at an upcoming startup hub: Austin/San Antonio, and the funding situation for startups there as seen by an insider.

The new opportunities created by crowdfunding and the eagerness of 'old money' to play into new trends and profits. Combine that with the new requirements of equity crowdfunding, and you have a good and informative article.

Interesting read for any startup to see how 'smart money' thinks.

Rescooped by Kenneth Carnesi,JD from Venture Capital Stories
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Venture Capital is More Art than Science: 5 Secrets of VC Revealed

Venture Capital is More Art than Science:  5 Secrets of VC Revealed | e-commerce & social media | Scoop.it

The number one takeaway of the VC Unlocked investor training program was that there are lots of different paths to becoming a successful investor – and no one way is best.

This was great news for the diverse group of participants, who came to Silicon Valley from all over the world for an intensive two week course run by 500 Startups in partnership with Stanford Center for Professional Development.

The program, Venture Capital Unlocked: Secrets of Silicon Valley Investing, ran from Feb 8 – 19th, 2016.

On the last day of the program, participants reflected on the question, “Did we really unlock the secrets to venture capital?”

The answer was a resounding yes. Read more: click image or title.

 

 

FREE Business Plan Template here: http://bit.ly/1aKy7km


Via Arnaud Bonzom, Samuel Pavin, Marc Kneepkens
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Marc Kneepkens's curator insight, May 2, 2016 9:56 AM

#500Startups ram a 2 weel course at Stanford on becoming a successful #investor. Ever wanted to be a #VC ?

Rescooped by Kenneth Carnesi,JD from Angel Investors Funding
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What Angel Investors Are Actually Buying From Your Startup | Fast Company | Business + Innovation

What Angel Investors Are Actually Buying From Your Startup | Fast Company | Business + Innovation | e-commerce & social media | Scoop.it

How many times have you heard startups are hard and companies fail? You know the drill. Think about it: If angel investors were actually buying your company, they would be much more interested in its outcome. But they aren’t.

Sure, angel investors are taking a small option to buy future shares at a discount price--particularly since the vast majority of funding rounds nowadays are made through a convertible note--but in their eyes that’s just a byproduct; a consequence.

From an angel investor standpoint, you’re now competing with hundreds--if not thousands--of other startups. Every single one of them are valued between $3 million and $6 million--and in more rare cases, up to $8 million. Every. Single. One.

Let that sink in for a second. It’s like when you go to the supermarket, and you are surrounded by 20 different brands of cornflakes all priced the same. How do you decide which one to buy? The angel investor is viewing you and your startup as that brand of cornflakes on the shelf. So how do they make a decision? They take the following four things into account:

  1. Product
  2. Team
  3. Market
  4. Traction

Angel investors ask themselves the following questions while talking to you about your startup:

  • Do I like the team?
  • Am I comfortable with the market?
  • Does your startup have meaningful traction compared with the other cornflakes beside them?

If you want to maximize your chances of finalizing a positive outcome--or in other words, having them write you a big fat check--you better have a good answer to all those questions. Any angel investor doing their homework can reach any startup through AngelList, and can also collect third-party data on you and your competitor via tools like Mattermark.

Startup Success Is Unpredictable

So this is how they make their purchase decision, but what are they actually buying from you? Not your company . . . but rather access to privileged information. Think about it for a second--that’s why investors don’t care if you fail, but get pissed off if you don’t share what’s happening. It’s fine to screw up, but it’s not okay to hide it. Does this ring a bell? Here’s why.

Regardless of what the average investor may tell you, the reality is no one can predict who or what will become successful. Companies pivot. Markets shift. Founders split up. In short: shit happens.

When the most exciting companies start fundraising, they usually become oversubscribed very fast.

Look at three startups everybody knows: Uber, Airbnb, and Color. Uber started with an AngelList round at $5 million, and now is the hottest company on the planet. Color started off as the hottest company on the planet and vanished, regardless of a monster round. Meanwhile, Airbnb originally offered cereal and air mattresses before nailing down the model that made them worth more than the Hyatt--without owning a single room or hotel.

Another element to understand is timing. When the most exciting companies start fundraising, they usually become oversubscribed very fast. Some other companies fundraise for a long time and collect interest until they find a lead on which everybody wants to pile on, but at that point it’s the company that decides who’s in and who’s out. The actual window for investors to act upon is pretty small, and when it does open they’re forced to make a decision very quickly. If they don’t know you beforehand, then it’s very unlikely they will have the time to collect all the data they’d like.

Don't Hide Screwups; Be Upfront

Even if investors have known you and your startup for a while, they still have an issue--it’s very hard to see how a company is performing from the outside. A majority of founders don’t disclose monthly key metrics and their performance in time--if not from a very high-level standpoint. It’s like peering through the keyhole. Sure, they get a glimpse of what’s going on, but they cannot picture the whole story. And that’s a huge issue, because having access to information before others means being able to put more money at lower valuations. That's a win.

What’s the best way to get early access to data so you can determine the difference between an Uber and a Color? Being an actual investor. Here's the downside: lots of early bets will fail. But the upside? They’ll get privileged access to information, and they’ll be able to know--instead of guessing--who is really outperforming the other companies they have information on, benchmarking you against the other ones. Why is this important? Well . . . because of math, and because the real action is what happens next.

Put yourself in the shoes of an angel investor who has 20 investments. If you invested at a $5 million average valuation and 15 of them will eventually fail, four of them will exit for an average of $20 million, and one of them will instead make a $250 million exit. That’s a ballpark figure of around a 4X exit in four cases, and a 50X in one case. It’s a 64X return on a 20X investment; not bad at all if you can get it, and should not be taken for granted.

Even if investors have known your startup for a while, it’s hard to see how a company is performing from the outside.

But here's where things get interesting. If you double down at the following round of a best performing company that has a $25 million valuation, then that's an additional 10X return on a single--and a much less risky--investment.

That means you’ll have the opportunity to get a 74X return total on a 21X investment, or a 94X return on a 23X investment . . . which is way more exciting. It’s called pro-rata rights if you’re doing a priced round with preferred shares, but any good founder will give the same opportunity to his early investors anyway, regardless of the financial vehicle used.

That’s why angel investors don’t care if you’re screwing things up and failing, as long as you’re upfront enough to share that information with them, enabling them to benchmark the other companies with you. Not only that--they’ll also be more than happy to help.

--Armando Biondi is cofounder and COO of AdEspresso, a SaaS solution for Facebook ads optimization. He lived in Italy until relocating to San Francisco in 2012. He previously cofounded Pick1 and four other non-tech companies. He’s also an angel investor in Mattermark and 10 more companies, is proudly part of the 500 Startups network, and is also a former radio speaker.


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Via Marc Kneepkens
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Marc Kneepkens's curator insight, November 2, 2014 9:20 AM

Investor psychology. This is very revealing. Read to know what they want.

Rescooped by Kenneth Carnesi,JD from Venture Capital Stories
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How Venture Capitalists Make Investment Choices

How Venture Capitalists Make Investment Choices | e-commerce & social media | Scoop.it
In order to increase your odds for receiving funding, here are some criteria considered by venture capitalists.

It's easy to dislike angel and venture capitalist investors. For entrepreneurs looking to raise capital for their start-up businesses, these early-stage investors can be awfully hard to find, and when you do find them, it's even tougher to get investment dollars out of them.

But, think again: angels and venture capitalists (VCs) are taking on serious risk. New ventures frequently have little or no sales; the founders may have only the faintest real-life management experience, and the business plan may be based on nothing more than a concept or a simple prototype. There are good reasons why VCs are tight with their investment dollars.

To read the full article, click on the title.

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Via Marc Kneepkens
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Marc Kneepkens's curator insight, January 25, 2014 7:31 PM

Excellent article explaining VC funding and what it takes to be considered.

Richard Platt's curator insight, January 27, 2014 2:32 PM

In order to increase your odds for receiving funding, here are some criteria considered by venture capitalists