How to Diligence a Crowdfunding Deal

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

Angel investors are familiar with startups raising funding who come through their normal channels.

Deals are often submitted on their software platform or referred by a trusted source.

In the world of crowdfunding, startups come through a new compliance channel called Reg CF.

The startup posts their deal on a software platform that allows anyone to invest using the Reg CF compliance rather than Reg D compliance.

Investors see an overview of the investment, a video describing how it works, and some documents for diligence.

The crowdfunding platform provides some diligence information.

Here's how an angel investor should diligence that startup:

First, the crowdfunding platform checked for compliance with the Reg CF requirements but has not necessarily performed the usual checks for investor diligence.

For example, the financials are not audited, so the investor must verify the financials provided.

Check the team to see how much experience they have and what role they currently play in the startup.

The product may look like it's ready to go, but the investor should verify the current status.

The deal has a valuation but is rarely stated in clear terms.

The investor should check to see what the proposed valuation is and if it is market rate.

Finally, the investor should check the terms of the offering to see what rights the investors have, if any.

Consider these steps in diligencing a crowdfunding deal.

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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How To Be a Good Startup Investor

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

Startup investors not only provide capital but also ongoing support to the startup.

Here are some key steps to be a good startup investor:

Research the market and provide actionable recommendations to the team about customers to pursue.

Provide ongoing support through the tough times as well as the bad times.

Build a relationship with the team and then grow it.

Give credit to the team for their hard work and avoid taking it for themselves.

Define their contribution to the team and set expectations with them.

Provide training to the team in their area of expertise.

Make connections to help break through the barriers that hold back sales.

Rally other investors around the fundraise on follow-on rounds.

Coach the CEO on how to connect with investors.

Connect the CEO with potential partners who can help drive sales.

Reserve funds for a follow-on investment when needed.

Consider these steps as a good startup investor.

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.

How To Make Your Pitch More Engaging

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

Founders raising funding must capture the attention of the investor.

Here are some key steps on how to make the pitch more engaging:

Include market research to validate the problem to be solved.

This touches on the target market, the competition, and customer needs.

Make clear the problem to be solved and the solution offered.

It helps to show how the product works at a high level.

Show the support for the business so far.

This includes traction in the current business with leads generated, revenue growth, and support from others, including partners.

Highlight the challenges in the space and the hurdles the startup must overcome.

Pitch Decks with nothing but rosy projections are suspect.

Investors appreciate knowing exactly what must be done to beat the competition.

List the skills the team needs to succeed.

It's often the case that the founder shows a list of people and claims they are a rock star team.

But most investors don't know the people and can only go by where the team has worked before.

List a key business skill, technical skill, and domain skill that the team has to show this is the right team.

Consider these points in making your pitch deck more engaging.

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.