Your First Round Should Have an Investor-Friendly Valuation

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In raising funding, the first round is always the hardest.

Here's why it's so difficult:

There's often no product or revenue to prove traction.

The team, in most cases, is unproven.

The market is not yet well defined.

The ideal target customer has not yet been identified.

How the business will make money is not yet known.

The founder is inexperienced, as this is often their first rodeo.

The first round of funding should have an investor-friendly valuation.

Use family and friends' funding to raise at least half of the round.

Show investors how funds have already been raised.

It's a positive that family and friends believe enough in you to invest.

Invest your own money and show prospective investors that you are committed.

Show how the valuation will go up in the next round when you have more values in business.

Make the first round small so as not to incur too much dilution.

With so few values in the business, most investors will not pay a higher valuation.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
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Mitigate the Risks

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In a pitch, founders focus on the opportunity while the investors focus on the risk.

Founders who raise funding have successfully shown how they mitigate those risks.

Here are some key risks to mitigate:

Team risks -- show how the team works well together.

Cite a substantial project the team has already taken on and successfully completed.

Product risks -- show how the product works, and customers will pay for it.

Show the revenue from the product and how customers are happy with it.

Technical risks -- show how you have already solved the technical issues.

Describe the technical solution and the benefits that come from it.

Launch risks -- show how you have already solved the launch challenge.

This can be done by showcasing the results of the launch of the product.

Market risks -- show how the market exists and will engage your product.

Describe the market, including size, structure, and careabouts and list each segment you have already sold into.

Revenue risks -- show how the revenue will be sufficient to cover the costs of doing business.

Use unit economics to show how the product, which is already selling, is profitable.

The more risks you mitigate, the easier it is to raise funding.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

Keys to a Successful Preseed Fundraise

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Raising pre-seed funding is one of the bigger challenges in startup fundraising.

This round comes at the idea stage, so there are no metrics around traction or product-market fit.

Here are the keys to a successful pre-seed round.

The current team must have strong experience in the domain and a track record of growing and exiting startups.

The team must have a unique insight into solving the problem in the industry.

This will become the company's competitive advantage.

The insight must be compelling enough to create a business that can generate more revenue or run the business at a substantially lower cost.

The team must know the industry segment well and have enough connections to find customers, partners, and providers.

In pre-seed funding, the team becomes the proxy by which the investor will judge the startup, as all values of the business will come from the initial group.

Consider this in setting up your pre-seed fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.