Six Months To Build, Six Months To Sell

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

Building a minimum viable product or MVP is a key step in a startup launch.

After some market research, there's an ideation step on what to build.

The rule of MVPs is that it should take no longer than six months to build and no longer than six months to sell.

If you can't build it in six months, then you are scoping the solution too broadly.

It's best to reduce the features and functionality so you can go to market sooner.

It's the customer interactions that count, not the number of features in the MVP.

If you can't sell what you built in six months, then you built the wrong thing.

The key here is to sell it first, then build it.

Show the concept to potential customers and take pre-orders for it with some money down.

This will most likely be at a greatly discounted price.

Instead of focusing on the revenue, look for what the customer finds most valuable about the product.

Customers may say one thing, but paying money indicates what they really want.

Consider these steps in building your MVP.

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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Founder Dilution

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

Founders raising funding incur dilution.

Their ownership stake goes down as they raise more funding.

Founders start with 100% ownership.

Each round of funding dilutes them by 25% or more.

On average, founders own 60% after the pre-seed and seed rounds.

After a Series A, they own 45%.

After a Series B, they own 26%.

After a Series C, they own 25%

After a Series D, they own 11%

There are often two to three founders in a startup, so they split this amount.

Investors should consider the impact of dilution on the founder's ownership stake.

If they own too little of the company, they may not find the incentive to carry it to an exit.

Founders should consider funding strategies that are more capital-efficient.

For example, after one round of funding, the company could grow based on revenue and profits alone.

This may take longer, but it will reduce the dilution.

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

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Sizing Your VC Fund

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

In raising a VC fund, the size of the fund is a key component.

Here are the factors that impact the size:

The stage of startup.

The later the stage, the larger the fund size.

Sectors targeted.

Some sectors, such as life science, will require larger check sizes.

Percent ownership

The larger the target ownership, the larger the fund size.

Target number of investments.

The earlier the stage, the larger the number of investments to be made.

Follow-on funding.

Funds that follow on will need to raise more capital.

Size of team.

The larger the team, the greater the fund size.

Consider these factors in the size of your VC fund.

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

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For Investors check out: https://tencapital.group/investor-landing/
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How Investors Provide Mentorship at Scale

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

Startups seek out investors not only for funding but also mentorship.

Most pitch sessions are valuable not because they raised funding, but because they provided feedback to the founder.

The challenge for investors providing feedback is that it most often comes in a one-on-one format.

For investors to be effective across a large number of startups, mentorship must scale.

Here are some ways to scale mentorship for startups:

Record the sessions, including the pitch and the feedback, and post them online for other startups to watch.

Capture the founder's questions along with written feedback and post online.

Provide feedback in large group settings so other founders can benefit from it.

Capture pitches and feedback in online webinars and then post the results online.

Take the feedback from the above and compile it into an online training course.

Provide the training to groups of startups in accelerators and incubators.

Provide the training at startup events with large numbers of startups in attendance.

Capture the questions and answers into an online blog post.

Consider these steps in scaling your mentorship to the startup community.

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/
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In this episode of Investor Connect, host Hall T. Martin speaks with the CEO of World Tree, who highlights the company's mission to commercialize the fastest-growing hardwood species, the polonia tree, also known as the Empress Splendor tree. This species is non-invasive, nitrogen-fixing, and capable of regenerating from its stump, providing renewable lumber over 50 years. Key points include the increasing demand for lumber and the company's pioneering efforts in North America, where they cultivate and harvest these trees primarily in the southeastern U.S., Costa Rica, and Mexico.

The CEO explains how World Tree addresses deforestation and carbon capture, while also tapping into high-value markets like furniture, cabinetry, and musical instruments, underscoring the significant revenue potential and market demand for sustainable hardwood products. They delve into the company's financials, detailing a robust $17 million retail market funding to establish 7,000 acres and over $300 million worth of lumber currently in growth.

The episode also covers World Tree's expansion plans, including partnerships with institutional investors like Shell and Nestle, and ambitious goals to scale operations to 60,000 acres, which could significantly impact carbon offset and produce renewable, high-quality lumber. Potential investors are encouraged to explore opportunities with World Tree as they forecast substantial returns and explore nature-based project investments. Tune in to learn more about how World Tree is poised to shape the future of sustainable forestry.

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

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How To Analyze AI Startups

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

Artificial intelligence-based startups continue to grow and increase.

Investors funding AI companies should look for the following:

Market size.

New markets can be difficult to measure.

For brand new categories, calculate the number of users in the market and how much they will spend on an AI solution.

For existing categories, calculate the current number of users in the market and how much they will pay additionally for the AI component.

Value add.

How much value does AI add to the product?

Does it increase the revenue substantially or only marginally?

Does it give access to new users and applications or only increase functionality to existing users?

Moat.

How much of a competitive advantage does AI bring against the competition?

If it's only a small modification to an existing LLM, then it can be easily copied.

If it has been trained on a unique data set then it will have a greater advantage over competitors.

Distribution.

How well does the startup run a go-to-market strategy?

A fast penetration of the market will be a great advantage over those who take time.

Consider these factors in analyzing an AI startup.

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

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For Investors check out: https://tencapital.group/investor-landing/
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The Importance of Unit Economics

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

The unit economics of a startup determine its success.

The stronger the unit economic case, the higher the margins, the faster the company grows.

In analyzing a startup, measure the unit economics regarding customer acquisition cost and lifetime value.

Calculate it at the unit level to understand the health of the business.

Many venture-funded startups appear to be growing well, but this is often from infusions of capital from investors rather than growth from the customers.

The unit economics show how the startup is doing regardless of the funding.

It also works with early-stage startups where the top-line revenue is low.

By looking at the systems behind the startup, such as sales, service, and support, one can see if the basic systems are working.

The margin on each sale, the cost to acquire a customer, and the lifetime value give an accurate accounting of the business.

If these numbers look good, then the startup may be a candidate for investment.

Consider the use of unit economics in your startup diligence.

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/
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What Is a Fund of Funds

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

Unlike most venture capital funds that invest in startups, a fund of funds invests in other funds that invest in startups.

Instead of investing in multiple funds, an investor can gain diversification by investing in a fund of funds.

As with all good VC funds, there's limited availability for investors to join.

The standard return on a fund of funds investment is 10X.

There's competition among the limited partners to get in.

There are challenges with a fund of funds.

To reach diversification, most funds will need substantial resources to fund it.

The management fees can be expensive.

Some funds have mediocre managers and the resulting returns to show it.

As with all venture funds, the money is locked up for six to ten years.

Also, the power law still applies.

Only a small number of the investments in the fund will pay out to cover the overall expense.

Consider a VC fund of funds for your portfolio.

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.

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