July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The largest accelerator in Canada, the biggest seed investor in Europe, and one of the top seed funds in Australia are joining forced to put on one major demo day for 15 of their top startups Wednesday, May 1, in San Francisco.

“I think it’s a first … I’m not sure anyone has ever done this before,” FounderFuel’s Ian Jeffery told me yesterday when we chatted about the big demo day.

The three organizers include FounderFuel, an accelerator based in Montréal whose last demo day had a massive 800-strong audience; Seedcamp, which runs Europe’s most prolific seed funding program out of Google’s London campus; and Startmate, which helps startups grow in Sydney. Together, they’re doing something a little unprecedented: showcasing their best 15 startups on one day at one time, right in the heart of global startup central: San Francisco.

The event is on Wednesday, May 1 from 6 p.m. to 9 p.m., and registration is limited to AngelList members: Sign-up and investor authentication is all being done via AngelList.

“The best startups, while sometimes ending up in Silicon Valley, are increasingly formed outside of the Bay Area, and FounderFuel, Seedcamp, and Startmate each play pivotal roles at the epicenters of startup communities outside of the US.,” the group said in a statement.

Here are the participating startups, with brief bios provided by the accelerators:

FounderFuel Companies

Epilogger: The Center of Attention http://epilogger.com
Find photos, videos, blogs, and conversations from any event. Epilogger is the entire event collected from everyone automatically into one place. It claims it’s the web platform and app to experience the event before, during, and after. Epilogger is a growing community and the central destination for all content from any event big or small in your city and around the globe. Whether it’s that great conference, that inspiring movement or humankind’s next giant leap, it claims it’ll be there: “We are the event.”

InfoActive: Bring life to data http://infoactive.co
InfoActive makes it easy to create mobile-friendly, interactive infographics with live data. Drop live data streams into interactive infographics that scale to any device and double your engagement metrics with interactive, data-driven content. It won “Best Bootstrap Company” at SXSW 2013.

MyCustomizer: Empowering the Customization Revolution http://mycustomizer.com
MyCustomizer empowers brands and retailers to offer outstanding product customization experiences with a ready-to-use SaaS platform. Market leading brands sparked the customization revolution by investing massively in “design-your-own” online experiences. Whether they offer sports equipment, shoes,  suits and ties, chocolate, or even cars, MyCustomizer empowers businesses to join the revolution by seamlessly connecting brands, retailers, and consumers through a unique customization SaaS platform.

Also see: MyCustomizer: If mass customization is the future, here’s the tool to create it

OOHLALA: Energize your Campus experience! http://gotoohlala.com
The Mobile platform that connects post-secondary students with their campus.

Seedcamp Companies

Maily: Your kids first email http://maily.com
Maily is e-mail reinvented for kids. Children can create email using five tools adapted to their needs: pencils, brushes, photos, backgrounds, stamps, and their own words. Maily accounts are created and supervised by you, the parents. You decide who your children can communicate with. More than 50,000 kids are using Maily, and more than 600,000 Mailys have been sent so far.

Crowdprocess: Web-based supercomputing http://crowdprocess.com
CrowdProcess is an online market for supercomputing. It enables developers to process data on the web browsers of people who are visiting websites. CrowdProcess sells this processing power as a service, and it pays the websites’ owners. In summary, CrowdProcess does distributed computing on web browsers via websites.

QAMINE: Code analysis platform for the cloud http://qamine.com
QAMINE is an “automated software testing as a service” platform that analyzes developers’ commits without disruption to their workflow and with a one-click installation solution. With over 12,000 registered repositories (acquired in less than two weeks) and a concrete/revolutionary roadmap and vision for the future, it wants to become the world’s best code analysis tool for the cloud.

Blossom: Lean product management http://blossom.io
Blossom is a project management tool for building modern web and mobile applications. Unlike other project management tools that focus on managing vast amounts of tickets in the backlog, Blossom helps you to focus on the current iteration, who’s doing what, and what they can ship next. It introduces just-in-time production concepts from lean manufacturing to the world of software development. The ideal project management tool for agile companies that ship early and often.

Campalyst: Cutting edge social media ROI analytics suite http://campalyst.com/
Campalyst’s enterprise-level social media management suite empowers brands with the unique ability to connect monetary ROI to their social media efforts and fully understand how and why social media contributes to their bottom line revenue. No more buzzwords, no more guesswork, it promises; it provides actionable financial performance analytics built for the age of social media marketing.

Startmate Companies

BugCrowd: Crowdsourced security vulnerability testing http://bugcrowd.com
Bugcrowd is crowdsourced security for web and mobile apps. It runs managed bug bounties as a service for our customers. A bug bounty is where a group of friendly security researchers are invited to compete to find security flaws. If they’re the first to report a new bug, they receive a reward of cash and Bugcrowd Kudos points.

Edrolo: Great education = great teachers http://edrolo.com
Edrolo delivers high school students great grades when it counts. It has more than 2,000 paying customers in the U.S. and Australia, and its team members have left jobs at Google, Goldman Sach, and a successful startup because they believe great teachers should impact hundreds of thousands of students not hundreds. It finds the rock star educator for each subject, curriculum, and exam and partners with them to build on-demand video, quizzes, study notes, and more.

Goodcall.io: Convert and retail customers with a phone call http://goodcall.io
Good Call helps online businesses convert and retain customers with outbound phone calls. It’s a long proven practice that it has redesigned for web applications. Its customers create events in their web app that trigger outbound calls. An agent is notified, and an outbound call is made through the platform. Customers can use their own internal agents, or choose from our marketplace of outbound professionals. All calls and metrics are recorded and presented to its customers.

Kinderloop: Bringing the simplicity of Instagram to the lives of child care providers http://kinderloop.com
A web and mobile application that brings the simplicity of instagram to the lives of child carer providers worldwide. Care providers use the app to quickly and securely post video, photos, and news. Parents receive immediate updates.

Shiftr: Simply swap work shifts http://shiftrapp.com
Shiftr is an employee-facing mobile app for hospitality and retail enterprises. Its mobile app gives employees flexibility and involvement in the scheduling process while giving managers the information to make the right decisions quickly. Shiftr has traction in fast-food franchises and retail enterprises.

photo credits: davidyuweb via photopin cc, Eva Blue via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

AUSTIN, TX — WayWire, the video startup that counts super-hero Newark, New Jersey mayor Cory Booker among its founders, has confirmed to VentureBeat that LinkedIn co-founder Reid Hoffman is one of its angel investors.

WayWire is a video service that basically wants to aggregate videos from multiple source and give its users the ability to sort those videos into their own channels based on a particular topic. For example, someone could create a “wire” for entrepreneurs, linking to various broadcast news sources from major media companies (NBC, Fox, etc.), web media companies (AOL), and user-generated videos (Vimeo, YouTube, Vine). The idea is that people can curate the news better than the main stream media, which in turn will abolish the practice of news organizations telling you what’s important everyday.

Booker accidentally revealed Hoffman as an investor during a panel at SXSW yesterday, which was first spotted by Reuters editor Paul Smalera.

Hoffman isn’t the only big name to drop some money into WayWire. The startup, which was founded back in June 2012, has raised $1.75 million in funding from a long list of high-profile angel investors, including Oprah Winfrey, Google chairman Eric Schmidt, music entrepreneur Troy Carter, LinkedIn CEO Jeff Weiner, and others.

With such a star-studded cast of investors, I’d think WayWire would have more pressure to ensure that its service was useful. However, both Booker and co-founder Sarah Ross told me that this isn’t much of a concern as they push full steam ahead with a new beta version of WayWire that will improve upon the alpha version that launched back in August.

Photo by Tom Cheredar

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The average angel is 47 years old, makes $90,000 a year, invests in one out of every 10 deals he sees, shovels $37,000 into each deal, and lives in California.

The halo and the wings? Those are just for show.

Except for the double-Y chromosome part — which is something that Change.org’s Jennifer Dulski is trying to change — that’s all in a new infographic from Investor Pitches, the company that will help you put together the pitch deck that just might win you that $47,000 investment.

In addition, Investor Pitches says, the number of angel investors has gone up substantially from the early 2000s. In 2002, roughly 200,000 angel investors were prowling for deals. By 2011, that number jumped 60 percent to 318,480.

The number of dollars angels invest also jumped — and even faster. Angels funded 66,230 companies in 2011, compared to 36,000 in 2002, pumping $22.5 billion in entrepreneurship in America. That’s up 84 percent from $15.7 billion in 2002.

Here’s all the information in visual form:

photo credit: e³°°° via photopin cc

Tech incubator and seed fund 500 Startups is building its presence in the Big Apple with a new coworking space for entrepreneurs and  portfolio companies.

The news was announced today on Twitter by Shai Goldman, a New York-based venture partner at 500 Startups. An application form is already available for entrepreneurs, although the desks are not available until next month. To apply, you’ll need to be bootstrapped, seed or angel funded, or have raised a first round of institutional funding.

According to 500 Startups, spots are reserved for portfolio companies, but the office also has space for startups in the community. This coworking space is in the Flatiron district, where many startups and tech companies are settling. As TheNextWeb’s Harrison Weber points out, it’s a stone’s throw from coworking space and startup hub, General Assembly.

Interested in renting out a desk? It will set you back $500 per person for the month, and the place has room for a total of 40 people. Rent is reasonable, considering that it’s in the heart of Manhattan, but the real benefit is access to a network of fellow entrepreneurs and potential advisers. 500 Startups was launched in 2010 by prolific and outspoken investor Dave McClure (pictured above).

To check out the space, watch the video below.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

AngelList is hot, which I guess is appropriate for a heavenly investment vehicle.

The dating service for startups and investors announced today that it has helped startups raise over $12.3 million in December alone — a number it is now tracking live on its home page. AngelList said last month that, together with a partnership with SecondMarket, it would be enabling accredited (but not necessarily super-wealthy investors to micro-invest), putting as little as $1000 into startups.

Some might call that the ultimate spray-and-pray strategy, but others would say it’s a great opportunity for smaller investors to safely diversify.

Most of that $12.3 million is a result of an introduction online on AngelList, followed by a subsequent face-to-face meeting or at least live call: a fairly traditional and only slightly technology-augmented process. But a growing number is via AngelList’s brand-new “invest online” feature, which allows investors to make an investment decision — and an actual investment — entirely online.

In other words, Amazon.com for angel investments.

After making the new feature live just last week — which does require significant vetting of participating startups, and the participation of a venture capital firm to lead the investment — AngelList has already helped startups raise $600,000 online.

That’s impressive.

I remember talking to super-angel Dave McClure at Grow Conference this summer. When I asked him for his favorite startup, he answered AngelList. McClure backed up those strong words by launching 500 Startups’ new application process via AngelList just in September.

Now we know a bit more about why.

photo credit: pfala via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Six months ago I called the Director of Business Development for a well-respected angel group in California and told him about my company, CircleUp, an equity-based crowdfunding platform that would allow his angels to invest into private companies.  He had no interest in talking, saying “our angels wouldn’t be interested in something like this.”

30 days later, several of “his” angels invested through our platform (they had heard of CircleUp through word of mouth). As it turned out, his angels loved us because we gave them access to quality dealflow they would not have otherwise seen.

Crowdfunding has the potential to dramatically increase the ~$23B Angel investment market in the US and the ~$25-50B informal investing market (basically friends and family). It will lower the cost, in time and minimum investment size, to make early-stage investments, and thus expand participation in early-stage investing.  Heads of angel groups, many of whom are responsible for providing the group’s “proprietary” dealflow, and so-called “Super-Angels” will likely need to adjust their model with the coming disruption.

Some in the media have questioned whether that disruption will be good for investors and companies.  It will be.  More information and more choice will benefit smart investors and make fundraising more efficient for entrepreneurs.  Others have hypothesized whether this disruption will also extend to venture capital firms as well.

Over the past decade there has been a dramatic shift in the early stage funding landscape.  VC funds have raised larger and larger funds.  According to Tom Grossi of CNNMoney, a significant trend over the past decade has seen limited partners (LPs) to the VC industry concentrate “ever more capital among fewer firms with larger funds.”  As fund sizes increase, investors face two challenges. The first is a challenge of expected investor returns: Typically larger fund sizes come hand-in-hand with larger equity checks and later-stage investments, when businesses are less likely to provide out-of-this-world returns. The second challenge of fund size growth is that minimum LP commitment to the fund increases in tandem. Individual LPs who historically would have been able to participate in a small early-stage focused VC are now excluded because they can’t meet minimum thresholds of participation.

Largely in response to these trends, angel investing has grown significantly. But a market where only angels swoop in to provide necessary seed and early-stage capital is problematic.

The angel market is much less efficient than established venture capital. According to the Angel Capital Association, most angel investments happen locally – sometimes because of a desire to be close to the entrepreneur, but often because the deal was sourced through word-of-mouth, or even to support their local community. Sourcing is very difficult, in part because of the historical ban on general solicitation (lifted by the JOBS Act but not yet effective).  Angel investments have historically been conducted through personal networks (something that will shift with the JOBS Act’s lift on the ban on general solicitation). The typical Angel process includes lots of meetings and introductions – without a central location for buyers and sellers to come together.  AngelList is making a big push to bring the stealthy world of seed investing out into the public. We applaud them for this. But proprietary deal flow is still a hallmark of the industry, and leaves newer funders with less established track records in a weak position.

To summarize, angel investing is inefficient and rewards established players.

Crowdfunding solves this, by making it more efficient for companies to generate interest and source capital, and providing better access and deal flow for the vast majority of the angel investors who have yet to build their name in the industry. By creating a simple and open marketplace for early-stage fundraising, crowdfunding sites (like CircleUp) attract entrepreneurs who would rather focus on growing their business than on shaking hands at networking events.

More specifically, they also help CEOs in industries that are notoriously underserved by existing angel investing networks or venture capital firms.  Crowdfunding will allow more businesses a larger public platform, and it will provide more investors access to opportunities across industries and geographies. And all the while, it will minimize inefficiency and the knowledge gap between buyers and sellers of equity.  Our view, and that of our largest investor, Clayton Christensen, is that a disruptive innovation is one that expands participation in a market by lowering the cost to participate in that market. Crowdfunding does that to the Angel industry.

So should VCs be as concerned about crowdfunding’s growth as angels?

Not really. Where crowdfunding threatens the traditional Angel model through increased competition for deals and weakened proprietary sourcing, it won’t have an impact on VCs. Venture capital firms are traditionally focused on certain industries. More than 30% of Venture Capital invested in 2011 went into the software industry, and large portions of the rest go to healthcare, and biotech. What do all of these sectors have in common? The huge contribution of technological sophistication and intellectual property core to the business model.

Technology is attractive to VCs because of its risk/return profile. With relatively small capital investments, high performing talent, and a short amount of time, these businesses can quickly create significant returns for the fund. VC firms are actively looking for the next best technology start-up, seeking to put a dent in the large capital overhang that still exists in the industry.  Because of their deep pockets, and because they provide value-added services to their portfolio (recruitment, strategic advice, etc), companies in relevant sectors will, and likely should, always pick taking money from a VC firm over a crowdfunding site.  These firms have more resources to continue to help companies post close.

If a company went through an incubator or is accepted by groups like Techstars or Y Combinator, that company has made its way around Sand Hill.  It likely has the attention of hundreds of VC firms and thousands of tech angels.  If it can’t raise money from that group, it sends a signal to the market that some of the smartest guys in the industry have passed.  Sure, a tech company can come limping to a crowdfunding site afterward hoping to have a successful raise, but smart individual investors understand adverse selection, and know that they should pass as well. That’s why you won’t see many A-list technology companies trying to crowdfund. It just doesn’t make sense to go head-to-head with VCs and expect to land the better deals.

The democratization of early-stage investing through crowdfunding has the potential to level the playing field, disrupt the Angel industry, and in the process provide huge new benefits to entrepreneurs and  investors. It will likely make early-stage investing more efficient, and increase the total funded capital of start-ups.

But when it comes to Venture Capital, those technology businesses that are interesting to VCs will always take their money. And those tech companies that can’t get VC funding likely won’t get it from crowdfunders either.

 This is a guest post by Ryan Caldbeck, CEO of CircleUp, the largest equity-based crowdfunding platform in the US.

photo credit: onkel_wart (thomas lieser) via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

For the majority of accredited investors, putting funds in an early-stage startup is no better than pissing thousands of dollars down the drain.

In the past, angel investors have been multi-millionaires, even billionaires. They are classified as “sophisticated” or “experienced,” primarily because they can afford to pour $25,00o, $50,000 or more into over a dozen early-stage startups.

To succeed at the high-stakes, low-odds investment game, you’ll need a diverse portfolio of high-calibre companies.

The first-of-its-kind partnership

This month, SecondMarket and Angellist announced a partnership that lets accredited investors fund startups for small dollar amounts, as low as $1000. They have just completed the first trial.

“Entrepreneurs can now get access to more sources of capital, and there are more people with a vested, financial interest in seeing them succeed,” said Naval Ravikant, the founder of AngelList, a network and subscriber-base of angel investors.

The trial

“But the product itself is being tested,” Ravikant admitted. For this reason both AngelList and SecondMarket only invited 10 percent of their network to participate. These users were chosen at random.

The pair decided to raise $150,000 for a hot biotech startup, which had also already received funding from some of Silicon Valley’s most prominent venture capital firms.

The startup is on the cusp of closing $1 million in its first round. Its founders will benefit from this vast pool of investors from a marketing standpoint, but will not have to contend with multiple shareholders.

“The investors become grass roots advocates for the company,” Jeremy Smith, SecondMarket’s CSO, told me. “This could be tremendously beneficial for technology startups.”

Note that the barriers to entry will not be dropped in 2013. Next year, non-accredited investors are given the opportunity to fund private companies in exchange for equity. ”It changes everything,” said Smith. “But we are not sure this is a space we should be playing. Let’s focus on accredited investors [as] there is enough need.”

The challenges?

Ravikant told me the first problem was the amorphous timing, made more complicated when the startup succeeded in raising an additional $200,000 in funds from an external source.

“We are learning from this experiment,” said Ravikant. “We are redoing the interface and running it again for a couple more companies.”

The model is innovative when applied to tech startups (it’s not all that different to feeder fund structures), so it was not clear from the incipient stages whether it would work.

So, the results are in. It did not go by without a hitch: they had to consistently delay the funding deadline, the amount was lowered from $5,000 to $1,000, and the process of on-boarding investors was far from seamless. To qualify, investors had to sign up to both SecondMarket and Angellist, and both require a rigorous evaluation process.

But it worked. And this will fundamentally change the rules of the investment game in Silicon Valley.

This story was updated with comments from both SecondMarket and AngelList

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

One of the biggest mistakes seed-stage entrepreneurs make is asking for too much money.

If you are an entrepreneur, you have probably heard from countless advisors and pseudo-advisors that you should raise enough money for 12-18 months of runway, have a plan for use of these proceeds, and understand what milestones are needed for profitability or another round of financing. You probably also have heard that startups almost always require more capital than called for in an original business plan. So, raising more money typically makes sense.

But just because you want to raise more money doesn’t mean you should ask for it.

Investors tend not to be as bold as entrepreneurs. If you have invested in a couple angel deals, you’ve likely been burned at least once. A classic mistake angel investors make is backing an entrepreneur early and then having him or her fail to raise the rest of a round. That’s one reason a lot of angel investors are gun-shy.

Most investors secretly love to be in an oversubscribed round.  An oversubscribed round makes an early-stage investor feel smart and validated.

So what does this mean for you? If you want to raise somewhere between $750,000 and $1 million, but think it might be hard to get to the top of that range, ask for something less and aim to be oversubscribed.

Which sounds better?  (This is not a trick question.)

1. “I am raising $1 million. The good news is that I have $250,000 committed and a little more than that soft-circled (verbally committed). I would love to have you participate for any amount you would like.”
2. “I am raising $750,000.  I have $250,000 committed and most of the rest of the round soft-circled.  I would love to have you participate and would try to make room for a small investment if you are interested.”

The first pitch isn’t bad.  But I guarantee you that many angel investors will move on as soon as they hear $250,000 committed on a $1 million target.  The second pitch creates more of a sense of urgency even though not much as changed. The second one says, “This train is leaving the station. Hop on if you want to get a seat.”

Now, here are two important caveats. First, setting a lower target is different than misleading about dollar amounts raised or other elements of the financing.  If you say you have a certain amount committed and then an investor later finds out you don’t, that’s a red flag. You can be strategic about marketing your financing without sacrificing your integrity. Second, this method works less well with venture capitalists who have large dollar amounts that they need to put to work.  In that case, having only a small amount of room may preclude an institutional VC from investing.

If you are targeting angels and super-angels, the strategy of lowering your target may enable you to raise more money, quickly.

Greg Gottesman is a managing director of Madrona Venture Group, where he has been since 1997. He loves early-stage investing and currently serves on the boards of BuddyTV, Cheezburger, Decide.com, Rover.com, ThisLife, WildTangent, Startup Weekend, and a number of others. He also pens the blog StarkRavingVC.  Greg can be followed on Twitter @greggottesman.

Seed money image via Shutterstock

We all know that tech investment needs more women, and Natalia Oberti Noguera thinks that female philanthropists are ripe for the training.

We recently had Noguera into the VentureBeat office to chat about overarching issues of women and technology. In this video, she discusses what her project, the Pipeline Fellowship, is doing to improve the gender split in the industry and visibility of women leaders and role models in technology.

The Pipeline Fellowship trains women who already give money charitably to nonprofits and other organizations to start making angel investments. These women are introduced to early-stage startup financing through a program of education, mentorship and hands-on practice. Fellows in the program commit to investing in a woman-run, for-profit startup at the end of the training.

As customer and agile development reinvent the Startup, it’s time to ask why startup board governance has not kept up with the pace of innovation. Board meetings that guide startups haven’t changed since the early 1900s.

It’s time.
Reinventing the board meeting may offer venture-backed startups a more efficient, productive way to direct and measure their search for a profitable business model. It may also offer angel-funded startups – which because of geography or size of investment typically don’t have formal boards or directors – the ability to attract experienced advice and investment outside of technology clusters (i.e. Silicon Valley, New York).

Here’s how.

The combination of Venture Capital and technology startups is only about 50 years old. Rather than invent a new form of corporate governance, venture investors adopted the traditional board meeting structure from large corporations. Yet boards of large companies exist to monitor efficient strategy and execution of a known business model. While startups eventually get into execution mode, their initial stages are devoted to a non-linear, chaotic search for a business model: finding product/market fit to identify a product or service people will buy in droves at a sustainable, profitable pace.

In the last few years, our understanding that startups are not smaller versions of large companies, made us recognize that startups need their own tools, different from those used in existing companies: Customer Development – the process to search for a Business Model, the Business Model Canvas – the scorecard to measure progress in the search, and Agile Engineering – the tools to physically construct the product.

Yet while we’ve reinvented how startups build their companies, startup investors are still having board meetings like it’s the 19^th century.

From a VC’s point of view there are two reasons for board meetings.

1) It’s their fiduciary responsibility. Once a startup gets going, it has asymmetric information. Investors get board seats to assure themselves and their limited partners that they are duly informed about their investment.

2) Investors believe that their experience and guidance can maximize their return. Here it’s the board that has asymmetric knowledge. A veteran board can bring 50-100x more experience into a board meeting than a first time founder. (VC’s sit on 6 – 12 boards at a time. Assume an average tenure of 4 years per board. Assume two veteran VC’s per board=50-100x more experience.)

From a founder’s point of view there are three reasons for board meetings.

1) It’s an obligation that came with the check.

2) Founders who have a great board do recognize the uncanny pattern recognition skills that good VC’s bring.

3) An experienced board brings an extensive network of customers, partners, help in recruiting, follow-on financing, etc.

What’s Wrong With a Board Meeting?
The Wrong Metrics. Traditional startup board meetings spend an insane amount of wasted time using Fortune 100 company metrics like income statements, cash flow, balance sheet, waterfall charts. The only numbers in those documents that are important in the first year of a startup’s life are burn rate and cash balance. Most board meetings never get past big company metrics to focus on the crucial startup numbers. That’s simply a failure of a startup board’s fiduciary responsibility.

The Wrong Discussions. The most important advice/guidance that should come from investors in a board meeting is about a startup’s search for a business model: What are the business model hypotheses? What are the most important hypotheses to test now? How are we progressing validating each hypothesis? What do those numbers/metrics look like? What are the iterations and Pivots – and why?

Not Real-time.  Startup board meetings occur every 4-6 weeks. While that’s great when you showed up in your horse and buggy, the strategy-to-tactic-to implementation lag is painful at Internet speeds. And unless there’s rigor in the process, because there is no formal structure for follow up, tracking what happened as a result of meeting recommendations and action items gets lost in the daily demands of everyone’s work. (Of course great VC’s mix in coffees, phone calls, coaching and other non-board meeting interactions but it’s ad hoc and not always done.)

Wastes Founders Time. For the founders, “the get ready for the board meeting” drill is often a performance rather than a snapshot. Powerpoints, spreadsheets and rehearsals consume time for materials that are used once and discarded. There are no standards for what each side (board versus management) does. What is the entrepreneur supposed to be doing? What are the board members supposed to be contributing?

The Wrong Structure. If you read advice on how to run a board meeting you’ll get advice that would have felt comfortable to Andrew Carnegie or John D. Rockefeller.

In the age of the Internet why do we need to get together in one room on a fixed schedule? Why do we need to wait a month to six weeks to see progress? Why don’t we have standards for what metrics VC’s want to see from their early stage startup teams?

For angel-funded startups, life is even tougher. Data from the Startup Genome project shows that startups that have helpful mentors, listen to customers, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth. If you’re in a technology cluster like Silicon Valley you may be able to attract ad hoc advice from experienced investors. But very little of it is formal, and almost none of it approaches the 50-100x experience level of professional investors.

As there’s no formal board, most of these angel/investors meetings are over coffees. And lacking a board meeting there’s no formal mechanism to get investor advice. Angel investments in mobile and web apps today are approaching the “throw it against the wall and see if it sticks” strategy.

And for startups outside of technology clusters, there’s almost no chance of attracting Silicon Valley VC’s or angels. Geography is a barrier to investment.

So given all this, the million dollar question is: Why in the age of the Internet haven’t we adopted the tools we build/sell to solve these problems?

(Next week: What changes should be made? Add your thoughts below in the comments.)

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Doug Collom is vice dean and an adjunct lecturer on venture capital and entrepreneurship for Wharton | San Francisco. He submitted this story to VentureBeat.)

There really isn’t a one-size-fits-all formula that can be followed for optimizing the chances of attracting professional investment.  Each company is different and faces challenges and issues that can be overcome only through creativity, perseverance and resolve.

There are, however, some elements that are so basic they cannot be ignored.  Most institutional venture investors either expressly or intuitively address these requirements whenever they evaluate a business plan for a potential investment. Here are four to be especially aware of.

Is it a company or is it a product? – With the dramatic level of innovation that’s taking place through startups in the social media/Web 2.0/online business arena, this question is increasingly important.  Implicitly, investors want to know the product development – something that can go in a variety of directions.  For example, can the product be developed to include additional features and functionality that will effectively redefine the offering in the eyes of the customer?  Can the product be adapted to address the needs of more than a single vertical market?  Is the product so compelling that the emphasis in the business plan shifts to the customer acquisition strategy?

The mobile application market is a good example of a product category that, in general, doesn’t offer a sufficient foundation to support a company.  Individual app developers typically don’t require much capital or labor to be successful, and they don’t require professional investors.  In contrast, there are online gaming companies—Zynga, Playdom, Social Gaming Network and others—whose product roadmaps concentrate entirely on the rapid development and production of new “hits”.  Businesses like this require all the resources and disciplines of a full-fledged company to support their growth objectives.

How big does the market have to be to attract investment? – After the dot-com bust, the anecdotal answer to this question was $1 billion -  or at least an annual growth rate that would get you close to $1 billion quickly.

In 2011, there is far more latitude, depending on the business plan of the company.  With the advent of open source software, online development tools, cloud computing, and the ability to reach massive customer markets instantly through the Internet, startup companies have become much more efficient in product development and customer acquisition, and can more rapidly get to proof of concept and positive cash flow than ever before.

As a result, companies with online business models, for example, may not require nearly as much capital as they once did. Moreover, angel groups aren’t swinging for the fences the way the mainstream institutional VC firms do.  Instead, (to continue the metaphor) they’re frequently only looking to hit singles and doubles, and may be quite content to realize exits in the range of $10-$100 million.

Is prior management-level experience required? – Obviously, it doesn’t hurt.  In particularly tough times, prior executive experience in managing a VC-backed startup may be a non-waivable requisite.  Management experience of any kind is always a positive factor, since it directly relates to the credibility of the management team in the eyes of the investor.

Obviously, there are many amazing startup companies that have been built by founders with no previous experience, and lacking this experience should not deter an entrepreneur who believes he or she can build a great company.  There are effective ways to work around the experience issue if it is an impediment to getting an invitation to present before a VC firm.  Teaming up with a co-founder who does bring the necessary experience, finding a mentor who carries personal credibility, or organizing a board of advisors with relevant experience and expertise are all ways of addressing the issue.

Do you need to have customers or even first revenue? – There is a lot of dialogue around the need to “bootstrap” early stage companies to the point where a product has been developed and commercially released.  This is particularly true of social media, gaming and other online business companies.  In seeking to access professional capital, it comes down to supply and demand.  Professional investors will look to tangible indicators of success and validation of the business model in evaluating a company’s prospects.

These might include website traffic, conversion rates, your ability to launch a beta and more.  Without anything but an idea to show, very few companies get funded to any meaningful degree.

For more traditional “brick and mortar” companies, the ability to get to “proof of concept” through bootstrapping methods is much more difficult.  It is also likely that the amount of all-in professional capital necessary to support a company in this category to an acceptable exit—including the amount of so-called “seed stage” funding—is substantially higher than for a social media or gaming company, for example.  As a result, there may be a lower expectation that founders will be able to bootstrap to get to professional funding, but the emphasis will be commensurately higher on the other investment basics, including size of the market, likely market impact of the technology, barriers to entry, credibility of the management team and the like.  As a result, the bar to funding for companies in this category is fundamentally as high.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)

A reader asks:  We’ve gotten commitments for a seed investment of $600,000, and the lead investor advised us that to save time and money on legal fees we should use the Series Seed documents, which he said are just fill-in-the-blank forms, with no negotiations.  Have you heard of the Series Seed documents and, if so, do you think this makes sense?

Answer: The so-called “Series Seed” documents are a stripped-down set of preferred stock financing documents, which were designed for seed investments by Silicon Valley lawyer Ted Wang (with an assist from venture capital firm Andreessen Horowitz).  The goal, as Ted notes on the site, was to “[create] a simple set of documents for early stage investment.”

The problem Ted was attempting to address was how to get shares of preferred stock into the hands of investors in a seed investment without having to draft and negotiate a full-blown set of Series A documents, with all the bells and whistles (and associated legal fees of $50,000+).  In short, Ted has solved this problem – and for this I tip my hat off to him.  Moreover, a number of investors have been quite vocal in their support of the Series Seed documents and have begun utilizing them, particularly in Silicon Valley.

But the issue, of course, is whether the documents are fair from the entrepreneur’s perspective.  If entrepreneurs are going to be required to simply sign form financing documents with no negotiations, they obviously must be comfortable with what they are signing.  So let’s examine the terms of the Series Seed documents.

The good news - The good news for entrepreneurs is that the number of documents (and pages) for a preferred stock financing have been reduced dramatically, including the removal, among other things, of anti-dilution provisions, registration rights and a legal opinion.  Preferred Stock financings are thus much quicker and cheaper.

The liquidation preference is also 1X non-participating, which is very pro-entrepreneur (see my post here for an explanation). Additionally, the company’s obligation to reimburse the investors’ lawyers is a flat fee of $10,000.

The bad news.  The bad news is that, unlike in connection with the issuance of convertible notes, the founders must give-up certain control rights to the investors, including a Board seat and veto rights with respect to certain corporate actions pursuant to protective provisions.  For a $600,000 seed investment, this may not make sense and is the fundamental problem with using fill-in-the-blank forms.

Other issues include the four-year vesting requirement and the 30-day no-shop provision (which some VC’s, like Fred Wilson, do not require).

The bottom line is that if you are a “hot” startup with strong negotiating leverage, you’re better off issuing convertible notes to avoid these issues and to kick the valuation issue down the road to the Series A round.

The pendulum has recently swung dramatically in the entrepreneurs favor (particularly in Silicon Valley), and most of the hot startups are issuing convertible notes in seed rounds, not equity. For example, in January of this year, Yuri Milner and SV Angel announced that their Start Fund would offer all Y Combinator companies $150K in convertible notes.

The Series Seed documents may be a good starting point. However, agreeing to close on a set of form documents without negotiation may not be in your best interest — particularly if you have a hot startup.

Startup owners: Got a legal question about your business? Submit it in the comments below or email Scott directly. It could end up in an upcoming “Ask the Attorney” column.

Disclaimer: This “Ask the Attorney” post discusses general legal issues, but it does not constitute legal advice in any respect.  No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  VentureBeat, the author and the author’s firm expressly disclaim all liability in respect of any actions taken or not taken based on any contents of this post.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

New financial regulations proposed by the U.S. Securities and Exchange Commission will fall most heavily on super angels, a lawyer who specializes in the industry told VentureBeat this week.

Angel investors are wealthy individuals who put money in startups, often providing a company’s first funding. Super angels, unlike regular angels, also manage other people’s startup investments — putting them in a different class from regulators’ perspectives.

Jeff Bloom, partner and chair of the venture capital and private equity fund formation group at tech law firm Fenwick & West, said that although most of the new rules will not have much impact on venture-capital financings overall, the fastest-growing segment of the venture capital industry is definitely taking notice.

Higher regulatory risk is just another reason for super angels to back off their torrid pace of investments, as higher startup valuations threaten to diminish their rewards.

“Angel investors that were considering raising a discretionary fund [could now choose to] remain independent or to invest in a club format instead,” said Bloom.

Under the new proposed rules, venture-capital funds will for the first time be subject to public information reporting requirements. That’s something that has never before been mandated and which will demand funds adapt their back office functions in order to handle the day-to-day work of meeting those benchmarks.

Super angel funds, which typically have been able to run with very small or completely outsourced back-office teams, will feel a definite sting from those new rules.

Similarly, Bloom added that the additional reporting requirements likely to be required by the SEC will place a burden on newer, smaller funds.

“[They] will have to manage more administrative overhead, [which is] very difficult in a smaller fund,” said Bloom. “So perhaps some relief after public comments will help on that front.”

Still, the SEC clearly did its homework, said Bloom, because although new rules requiring registration and disclosure will affect chunks of the VC industry, the majority of the new proposed regulations probably will not have a material negative impact on the venture-capital “ecosystem” as a whole.

With the SEC still defining the venture-capital fund exemption from the Investment Advisers Act of 1940, most traditional venture capital funds will remain exempt from registration under the proposed rules if adopted in their current form.

“The SEC has developed rules that work well for historical practices in the industry and is soliciting very specific commentary for purposes of making the exemption conform as closely as possible with current industry standard practices. That is a real positive sign that they want to ‘get it right,’” he added.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Jeff Bussgang is a General Partner at Flybridge Capital Partners. This column originally appeared on his blog Seeing Both Sides.)

In his best-selling book “Blink,” Malcolm Gladwell made famous the natural human reaction of quickly judging other people.  This behavior is especially true of VCs and angel investors. The first few minutes of an interaction are crucial.

The way an entrepreneur starts an investor pitch meeting can actually determine their success in that meeting.  Those first 10-15 minutes, where the entrepreneur presents himself or herself – before they even present the idea – establish not only credibility, but the right to continue to pitch to an engaged audience.

Yet, it is amazing to me how few entrepreneurs start investor meetings crisply and confidently.  The formula for the start of the meeting is almost always the same – you are trying to answer the simple question on the mind of the investors:  Who are you and why are you here?  But when asked to review their backgrounds, entrepreneurs often fumble through incoherently, or ramble on tangents that aren’t relevant to the situation.

So, how should you start an investor meeting?  It’s as simple as ABC:  Always Be Credible.  Investors are looking for credibility: Can we trust that you have a uniquely good idea or insight? Are you capable of executing on it? And are you the real deal or full of bluster and BS?

When you talk to investors and ask about this opening gambit from entrepreneurs, you hear a consistent pattern about why they like a certain entrepreneur they’ve invested in. When you distill the inputs into a coherent pattern, here are the top three things entrepreneurs should do:

Be genuine and personable – Let your personality show, professionally of course.  At some point in the introduction, say something that makes you smile, which will make those around you smile.  If you don’t engage your audience, they’ll jump to their Blackberries.

For example, ZestCash CEO/co-founder Douglas Merrill is a charming character and, even putting aside the shoulder-length hair and tattoos, you can’t help but smile when he introduces his background (raised dyslexic in Arkansas, followed an unlikely path of earning a Princeton PhD, leading Google engineering and IPO in his role as CIO for 5 years, and now has developed a vision to transform short-term consumer credit by blending online data with traditional underwriting techniques).

Be crisp and on point – The most compelling background speeches are crisp, straightforward and demonstrate relevant links to the opportunity at hand.  SaveWave CEO/co-founder Dave Rochon, for example, gave the following brief narrative when pitching investors:  “I worked at Catalina Marketing for 10 years in sales and launched their Internet couponing business, then joined Upromise the year it was founded and built the grocery business for 10 years, serving for three years as president after the acquisition by Sallie Mae. I now want to transform the online and mobile grocery coupon business.”

Dave’s Series A round was way over-subscribed by folks like First Round, Ron Conway, Roger Ehrenberg, Founder Collective and I think it’s in no small part because his background and delivery were so crisp and relevant.

Keep it short. I find that the more impressive the entrepreneur, the shorter the introduction.  The worst situation is when, 20 minutes into the presentation, the entrepreneur is still bragging about some random product they launched in a completely irrelevant industry sector.

By that point, the VCs are already hitting their Blackberries and wondering how they can end the meeting gracefully.  Worse, still: You run out of time to actually pitch the big idea.  Meandering introductions are the death of a pitch.

Wondering what you should avoid when you launch a pitch? Here are three things:

Do not exaggerate. Assume that everything you say will be thoroughly checked out in due diligence.  If you claim credit for a company where you played a small role, it’s bad form.  I recently called the CEO of a company that an entrepreneur bragged they had led during the pitch.  When the CEO told me they were a minor player and left after a brief two years, I stopped spending any more time evaluating the opportunity.

Remember, investors are professional BS detectors.  Err on the side of underselling your background because the BS alarm bells may ring in the first few minutes of introduction and spoil the rest of the presentation.

There’s no “I” in team. When entrepreneurs talk about themselves in grandiose terms in their introductions, it’s usually a sign of egotism.  When entrepreneurs talk about the teams they built and the smart people that somehow they were able to convince to join them in their cause, it’s a sign of great leadership.  Guess which of these two profiles investors are more attracted to?

Don’t name drop. Some investors are notorious namedroppers, so this is a bit of the pot calling the kettle black, but investors get very turned off when entrepreneurs name drop in their introductions.

We don’t need to hear every famous person you’ve met or pitched or worked with.  Establishing a few common points of contact is a good thing.  Acting like you are best friends with folks who wouldn’t recognize you if you bumped into them in the grocery store on a Sunday afternoon is not recommended.

Remember, be credible, humble and specific and you’ll do fine.  Take the 5-10 minutes time to establish that initial credibility, and then move on.  Investors like to back great people, so spend as much time thinking about how to present yourself in a compelling fashion as you would your idea.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)

A reader asks:  My co-founder and I recently launched a new web venture, and we’re running out of money.  We are trying to raise about $250K, but we don’t have any friends or family who can afford to invest – and we don’t know any angel investors.  Can you give us some advice as to what we can do to raise money?

Answer: You’re hardly alone in this predicament. While it’s tough convincing investors of the value of your venture, sometimes it’s nearly as hard to find potential investors in the first place. Here are three different approaches to help out.

Network. Network. Network. – The best advice I can give you is to hustle and build relationships in order to get “warm” introductions to investors. These can be anything from an introductory phone call to an email from a middleman the investor trusts and respects.  The ideal middleman (or woman) is a successful entrepreneur whom that investor has backed.

After that introduction, arrange a meeting with the investors and try to get them excited about your venture.  Gagan Biyani, the co-founder and President of Udemy, explains the process in his solid post, “Udemy’s $1M Fundraising: Lessons Learned about Pitching Investors from a First-Time Entrepreneur” and specifically notes that:

I went to every conference I could and literally killed myself while there.  I attended tons of networking events and met as many entrepreneurs and investors as I could. While at events/conferences, I rarely ate dinner because I was too busy schmoozing and grabbing business cards.  During the weekdays, I’d spend hours e-mailing potential [investors] to start using Udemy. . . .

It takes tenacity and resourcefulness – qualities that every great entrepreneur possesses.

Seek an advisor.  You could also apply to one of the growing number of startup mentorship programs, which typically provide not only coaching and counsel, but also a little seed capital.  For first-time entrepreneurs who have little experience, money or contacts, these programs can offer a “win, win, win” opportunity.

Y Combinator, founded in 2005 by startup guru Paul Graham and author Jessica Livingston, is the most successful and high-profile mentorship program and runs two three-month sessions per year in Silicon Valley.

TechStars, founded by investors David Cohen and Brad Feld, offers a similar three-month program once per year in four different cities: Boulder, Boston, New York and Seattle.  Startups receive up to $18,000 in seed funding for a 6 percent equity stake, intensive mentorship and the chance to pitch to investors at the end of the program.

There is a great list of other programs here.

Apply to an angel group.  Another alternative, if you have a product and/or traction, is to apply directly to an angel group online.  Some of them (such as AngelList) will make introductions to angel investors on your behalf; others (such as Open Angel Forum) will require you to present to angels in person, if you’re accepted.  One quick warning: watch-out for scam angel groups that require you to pay to apply and/or present to them.  Indeed, as Jason Calacanis, a successful entrepreneur, has pointed out, charging startups to pitch investors is “predatory” and “low-class.”

There is a comprehensive list of angel groups (divided by regions) here.

Startup owners: Got a legal question about your business? Submit it in the comments below or email Scott directly. It could end up in an upcoming “Ask the Attorney” column.

Disclaimer: This “Ask the Attorney” post discusses general legal issues, but it does not constitute legal advice in any respect.  No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  VentureBeat, the author and the author’s firm expressly disclaim all liability in respect of any actions taken or not taken based on any contents of this post.

The statistics released by Dow Jones VentureSource showed that during the first three-quarters of 2010, angel and VC co-sponsored deals put $282 million into 68 separate deals.

That’s a significant uptick year-over-year, when the same period in 2009 saw only 59 co-investment deals garnering a total of $236 million.

Technology or online networking startups are seeing the bulk of this investment, said Dow Jones, as the white-hot environment for web-based social media continues to draw both investors’ interest and their infusions of money.

“As venture capitalists scout younger companies, especially in the consumer and Internet spaces, we are seeing them tap into and co-invest with angel groups,” said Jessica Canning, global research director for Dow Jones VentureSource.

The Dow Jones data showed that over the last quarter, investors been particularly keen on business and financial services, and put more than $1 billion dollars into software companies alone.

Renewable energy also has caught the eye of many VCs, as “renewable energy deals continue to drive investment in the energy industry,” said Dow Jones.

The recent stats showed that median size deal has grown slightly, weighing in at around $5 million since the beginning of 2009, as VCs choose where to put what cash where they think they are most likely to turn startups into powerhouses.

Still, angel investors continue to account for a relatively small part of over all investment across the market: Dow Jones’ statistics—which they’ve been compiling since 2007–said total co-investment rounds accounted for only $282 million of the $5.5 billion venture investors put to work in the third quarter.

Those numbers could likely skyrocket in the coming few quarters, however, with has many investors panting on the sidelines for many currently privately-held companies like Facebook and Twitter to take their businesses public.

[DJU4]The median deal size for angel/VC co-investment rounds through September 2010 is $1.93 million. This is slightly below the $1.99 million median in 2009.

“For the last decade plus, we have been trying to get more people into our tent,” said Ira Ehrenpreis of Technology Partners at the Renewable Energy Finance Forum (REFF) West, a cleantech conference which took place late last week in San Francisco.

In the last year, the opportunities for cooperation between angels — wealthy individuals who invest their own money in startups — and venture capitalists — professional money managers who back growth ventures — have only increased, Ehrenpreis and others argued. As venture capitalists have pulled back from riskier early-stage investing, they have encouraged angels to fill the void.

“In our portfolio of 20-plus companies, we took classic early-stage risk in two deals. We need something tangible that we or our partners can evaluate. There is a role for super angels willing to take risk,” said venture capitalist Tim Woodward of Nth Power.

But angels, even so-called super angels who are especially active investors, should also beware. Green technology investing is much more capital-intensive than the information technology investing to which super angels are accustomed.

“The super angel model got created around Web companies that can be built around $5 million or $10 million of capital,” said Woodward. “If you can write a check for a million, you still own a lot of the business. If you can write a check for $1 million and [the business] needs $50 million, you may not own enough to make the transaction worthwhile. (Super angels are) absolutely needed, but I am not sure they will stay in this sector that long.”

Angels and their checkbooks are more than welcome in the green field, in other words — but there are reasons why angel-scale cleantech investments haven’t taken wing.

Yoni Cohen is a JD-MBA student at Yale Law School and the Wharton School at the University of Pennsylvania. Born in Israel, he is a former college basketball writer for Fox Sports. Follow him on Twitter at @cohen_yoni.

Are you a “green” executive or entrepreneur? If so, sign up now for GreenBeat 2010 — the year’s seminal conference on the smart grid — November 3-4 at Stanford University. World leaders in smart grid initiatives will debate how the new “Super Grid” is creating huge opportunities in cars, energy storage, and renewables. GreenBeat 2010 is hosted by VentureBeat and SSE Labs of Stanford University. Go here for full conference details and to apply for the 2010 Innovation Competition. Early-bird tickets are available until October 15th.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Pete Bodine is a managing director at Allegis Capital. He submitted this story to VentureBeat.)

The right level of communication and information flow for a startup changes as it evolves and is always challenging, but it’s imperative to have a communications strategy for shareholders at all stages of a company’s development.

In the earliest stages, communication is pretty easy and straightforward.  With just a founder or two and a few angel investors, regular communication is natural. You don’t even have to think about it because it happens with ease. But as time passes and venture capital rounds increase your investor base, the amount of communication with shareholders tends to become less frequent.

For a while, that’s not a problem. But things can – and will – change.

Let’s say another company wants to acquire yours and you suddenly need approval from the majority of your shareholders, some of whom aren’t up to speed about the company’s progress.  At this point, those communications with your shareholders that used to be so easy may become extremely challenging.

As a manager, you might be comfortable that an acquisition is the right way to go. But if you need 80 or 90 percent of your shareholders to agree with you and haven’t kept in touch with them, it won’t be easy to convince them. Shareholders, at that point, are disinterested and may not believe the transaction will materially benefit them.

Unfortunately, it’s often too late at this stage to start educating them about why this is the right course for the company.  And you may lose the deal because of poor communications.

Communicating well with shareholders doesn’t mean you need to provide detailed business plans and forecasts to everyone on a regular basis. But annual or semi-annual updates to your board are a good idea, regardless of your size.

One of the best communicators around is Amazon CEO Jeff Bezos. This 1997 letter he wrote to shareholders is a marvelous example of how to talk to – and with – investors.

Among other things, he said Amazon may make decisions and weigh tradeoffs differently than other companies because of its emphasis on the long term, an uncommon view for a CEO for that timeframe. Then he went on to describe the company’s priorities in nine bullet points – not 50. It was a concise and effective way to get his point across.

Further, he didn’t exaggerate how well things were going and he wasn’t afraid to discuss Amazon’s challenges. It’s a philosophy that’s worth emulating, since this type of communication will pay dividends in the future. When your startup hits a speed bump – and startups always do – your investors will absorb the news much better.

In your communications, you don’t have to be this detailed and you certainly don’t have to incorporate all the financial data points that Bezos did. But he did elaborate on his company’s direction and vision – and that’s what your note should do as well.

While your startup might be a small shop now, it’s important to developing a strategic communications policy early. If you’re one of the lucky ones who eventually sees your company go public, you’ll be required to communicate with shareholders – and you’ll know what you are doing.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Will Herman is an entrepreneur who has founded or held senior roles in several tech companies.This story originally appeared on his blog.)

I often run across early stage companies in a real quandary about how much money to take in their first round of funding. That is, the round just beyond the Ramen noodle eating/avoid starvation round that is usually funded out of their own pocket (or, if you prefer, the round that really gets things going once you’ve established a team and product viability).

The advice they often get goes something like this: Build a spreadsheet outlining fixed and variable costs over the next year or more. Estimate headcount, salaries, rent, capital equipment needs, etc. and, voila, you’ll have your number.

That’s fine, of course, but the spreadsheet should be the end result of the planning process, not the process itself. In my experience, there are certain high-level guidelines that should be used to determine how much money should be taken.

Using these, you’ll ultimately have the data you need to plug into a spreadsheet and generate a cash flow estimate – one used for planning AND tracking cash flow – based on the high-level needs of the company and with an eye towards future investment rounds.

My thoughts here hold true whether you’re pricing your round or, for the most part, if you’re doing a convertible note. I should also state that this post looks at the question primarily from the entrepreneur’s point of view, although is certainly aligned with the thinking of investors as well. As always, your mileage may vary. This is my opinion and it’s worth exactly what you’re paying to read it . . .

Take enough money to securely get you to a step up in valuation -  I’m not talking about some marginal increase here, but a real increase in valuation – double, triple or maybe even more. What creates that? Usually the achievement of some significant milestone. It’s great if that’s revenue or profit, but a large number of active users or even a major product release are good milestones to increase the perceived value of your company.

It depends on what you’re doing. A web service is going to have different metrics than an enterprise software company which will have different  metrics from a hardware company, for example.

Take enough money to move quickly, but assume that you will not move as fast as you think you can - Don’t starve the company. Make sure you take enough money so that when you look back over any preceding month of operation you don’t say, “I could have done so much more with $X more.”

Additionally, take into account that things will not always go as well as you’d like and, while you’re moving fast, you need to leave some space for stumbling on your way. Map it out as you see it, then add a dash of conservatism.

Take enough money to hire the key team members you need – that’s where your leverage is – Never, ever rob yourself of great human resources. Success begins and ends with the level of people you add to the team.

Valuation is less important than you think it is – I know… This is a hard one to buy into. If your valuation sucks, make sure you’re following the previous guidelines, swallow hard and take the same amount – the amount you actually need.

If you are truly uncomfortable with how much of the company you’re trading for cash, go out and look for an investor who will give you a better valuation – but don’t try to do your startup on the skinny, it’s already going to be hard enough to succeed.

Keep in mind that your odds of succeeding are not highly correlated with the amount of stock you retain.

Leave yourself some runway to close the next round – Many young companies forget this when planning for the uses and needs for cash. It’s unlikely that you’ll have someone at your door ready to write a check the day you run out of money. You wouldn’t want to hand over such leverage to someone anyway. Make sure you have enough money to fund you through the time and effort to get the next round closed – at least 90 days; 120 to be safe.

Admittedly, it’s not a science. In the end, the most important part is to get the money you need and to get moving. Time is your biggest competition and it works tirelessly 24/7 to kick your ass.

Try not to get caught in abstract notions about valuation. Do a sensitivity analysis; it’s likely to be less important than you subjectively think it is. That’s not to say it’s unimportant, but you should think about what the valuation being offered really means in terms of what you take away from the company given various scenarios.

Ask yourself what it is you want to achieve, personally. If the valuation doesn’t seem right after that, move on and find someone else to invest. Otherwise, take the money you need and start executing. And don’t forget the spreadsheet. It really is a good tool.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Will Herman is an entrepreneur who has founded or held senior roles in several tech companies.This story originally appeared on his blog.)

I did my first angel investment in 1994 and I’m now in the process of wrapping up my 31st (individually, that is, not as part of a fund). It’s also my third in the past six months. I’ve probably done about 30 more as a limited partner in seed funds and incubators along the way as well.

All in, that probably makes me a second tier angel investor, at least in terms of deals done. Third tier if you count the “super angels” who have knocked off hundreds of deals in shorter periods of time. That said, I was recently “voted” as one of Boston’s best angel investors – though I think that says more about Boston’s investment community than it does about me.

I invest because I have a blast doing it. It’s about 75 percent of the fun of running the company yourself with only 5 percent of the stress. I get to meet smart, energetic people with great visions and boundless energy. It keeps my head in the game. And when I can add value (in addition to money) and help a startup weave it’s way through product, market and management mine fields, I avoid feeling like the least productive member of society for another day.

The difference between a second tier the first tier guys and investor like me (other than brains and talent) is the first tier investors actually work at finding investments. I’m dangerously more passive about it, reacting to the investment opportunities that come to me.

I get to see my fair share of potential deals, but by selecting from a smaller set I not only miss loads of opportunities,  my comparative perspective is likely skewed – the best companies I see may be among the worst potential investments out there.

Fortunately, I’ve been moderately successful with this type of investing. A little over one third of my investments have provided reasonable returns over time with a few big successes doing most of the financial heaving lifting for my “fund.”

While I don’t have any absolutes when it comes to investing, I do have some guidelines that I loosely attempt to adhere to, at least when they’re convenient. Some of them are general and are similar to those used by many angel investors. Others are more personal and, for one reason or another, I’ve picked up over time as a result of my investment experiences.

The general ones:

• “Drill more holes” – I once heard the CEO of Shell Oil speaking with analysts at a conference. When asked how Shell was going to diversify in the coming year, the CEO responded with the statement, “we’re going to drill more holes.” Investing in many companies is the only way to balance the risks of markets, teams and competition. Maintain a relatively large portfolio.
• Invest in stuff you understand – Bright shining objects attract attention (“we have the basis for a cure for cancer”), but the more you know, the less shiny those things often look. If you can’t judge the team, market and product thoroughly, it’s probably not a wise investment.
• Keep some powder dry for subsequent rounds – While the best return in a successful investment comes from investing earlier, holding some cash back to see how the company does and to play alongside institutional money that comes into the company can mitigate some risk. It also ensures you’re playing on the same terms as the rest of the investors.
• Everything looks good during the honeymoon – Don’t make assumptions that the problems you see will go away or that things, in general, will get magically better. They won’t. While making an investment, you’re probably seeing the company in its best light. Things will likely get worse before they get better.

My Personal Guidelines:

• I don’t like convertible debt – The investor takes on an inordinate amount of risk with a convertible note which he/she is generally not compensated for. Think about a note holder who waits 18 months before a conversion is triggered with an equity investment at a higher valuation. For a small percentage (8-10 percent), the “investor” takes all the risk in funding the company without participating in most of the potential uptick in valuation. Some strange debt instruments are being created now to fill this and other holes, but for all their complexity, the company should just do a seed round.
• Team over idea – Ideas are cool, but quality teams are cooler. A great team can make a mediocre idea soar or morph it into a better one over time. Often, mediocre teams struggle to create success even when they start with a great idea. I have to believe that the team can knock the ball out of the park. Only then do I consider the idea itself. As a corollary to this, I need to trust the CEO. Surprisingly, I find this to be a real issue from time to time.
• There has to be a grownup involved – For all the energy, drive, brains and talent in most startups, there’s often a dearth of wisdom. Someone needs to be involved to provide it and be a sounding board for the startup team. This person or these people should be on the company’s Board of Directors. They can come from inside or outside of the investor group (inside preferable).
• I hate leading a round – Someone has to be in charge of representing the investors in the seed round. Negotiating the fine points of the deal, working with lawyers, getting everything signed, communicating every step of the way, etc. I hate doing it, but once in a while, I draw the short straw. I like investing along side seed or angel funds as a result. They’re pros and do it all the time. It’s not even heavy lifting for them. Most importantly, they’ll do all the herding of the investment cats required. It’s often a real pain in the ass.
• You can’t and don’t even want to try to tie up every loose end – As much as you’d like everything in the investment to be taken care of and completely thought out, it ain’t gonna happen. Things change along the way.  The investor and founding team need to feel like they will make adjustments together as warranted.
• Friend’s before business – This is a personal rule of mine that I’ve broken more than once. Fortunately, it’s never backfired on me. I take both my friendships and my involvement with companies seriously. As such, the potential for conflict is high if I mix them – things never go the way you plan. There are always going to be situations in which the investor needs to support either the company or the management team. Can you support the company over your friend? Your friend over the company? Why even put yourself in that position?

This is hardly a definitive list, of course, but hopefully it’s a starting point for anyone wanting to get involved in angel investing and for anyone looking for an angel investment.

Not surprisingly, investors aren’t happy about it, saying it’s “insane,” “frankly ridiculous,” and aims to “destroy Silicon Valley.”

There are three changes that should have a particular effect on angel investors, a catch-all category which includes everyone from friends and family members who invest in a startup, to unaffiliated wealthy individuals, to side investments made by venture capitalists acting on their own.

First, Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.

Several investors have written pointed critiques of the bill:

• Fred Wilson of Union Square Ventures said startups will be “hit by shrapnel” from the bill.
• Robert E. Litan of the Kauffman Foundation, which researches entrepreneurship, wrote, “It is difficult to know why these provisions are in a much larger bill whose primary aim is to address the fundamental causes of the recent financial crisis.”
• Mike Masnick at tech policy site Techdirt described the restrictions as “somewhat horrifying.”

Investors offered more criticism on Twitter, with Slide vice president Keith Rabois tweeting, “Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?”

Rabois, an early PayPal employee and angel investor, has a strong libertarian/anti-regulatory political stance, but liberals hate these restrictions, too. Chris Sacca, an angel investor and former Googler who campaigned for Obama, also tweeted that people who “care about startups and making sure they have access to capital” need to sign a petition against the investing regulations.

I asked Sacca for more details about his opposition. In a voicemail, he said:

Obviously, I’m deeply concerned about Senator Dodd’s proposal to place these restrictions on angel investing. I think angel investing is undeniably one of the largest engines for job creation as well as innovation and competitiveness on the global scale for the United States. There’s no doubt about it that the restrictions that he’s proposing would absolutely chill investing.

Specifically, one of the things we need to take into account is while 10 years ago it may have taken years to build a company, companies are now built in a matter of weeks. So this 120-day waiting period is frankly ridiculous. I have companies with tens of thousands and hundreds of thousands of users that are built in a matter of weeks. They’re generating actual dollars of revenue, creating jobs, investing in real estate office space, capital equipment, etc. If they had to wait 120 days to actually apply for the ability to obtain financing it would absolutely just crush that market.

I think this is a very short-sighted proposal. It seems far afield from the problems that the banking committee is actually trying to address.

This outrage may not be futile, either. A source in the Senate Banking Committee told PEHub that the committee is talking the complaints seriously.

You can read a summary of the bill here.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Jason Cohen is an angel investor and the founder of Smart Bear Software. He contributed this column to VentureBeat.)

As someone who has both sought venture capital and distributed it, I’m lucky to have a pretty unique perspective on what works and doesn’t work.

As I mentioned in the first part of this list, the mistakes don’t seem to change over time. And people who make them often walk away not only empty handed, but clueless about what killed their chances of getting funding.

What follows are four additional problems I see all the time:

Have a big monthly burn.

This depends on the type of business, but most software companies nowadays can be built with almost no expenses except wages – and even then, the founders should be taking a nominal salary until there’s revenue.

Huge expenses at the beginning are scary because expenses only go up. An angel-funded business lives and dies on how fast you can get to profitability, so big expenses means you’re already behind.

This is especially true of founders’ salaries. An angel wants to fund a company, not put money directly in founders’ pockets. If the founders aren’t willing to put in money now (in exchange for far more money later of course!), that’s already a bad sign that either they’re not committed to the venture or that they’re not in a good place in their personal lives to be taking a chance on a startup.

So how do you address expenses?

• Break out: wages, overhead, COGS at least. I don’t want to see every line-item, but wages show founder’s draw, overhead is the biggest barrier to profitability, and COGS helps me understand how many customers you need before you’re not burning cash. If any one of those is out of whack, then we can dig in.
• Explicitly talk about how founders will be deferring cash for themselves. The more committed you are, the happier I am. Once the company is profitable, I don’t care if the founders make good money.
• If you do need to spend big money, justify. For example, is this one-time R&D that gives you an unfair market advantage? Good. I this for inventory? Good. Is this for in-house servers because you don’t trust Amazon? Bad. Is this for A+ office space because you think it will impress customers? Bad.

Pretend this isn’t risky.

You’re at the earliest, riskiest stage of a business. Every choice is suspect, every plan is really a guess – and there’s a great chance the angel is going to lose all her money.

Pretending otherwise comes off as naive (at best) or ignorant (at worst).

There’s a difference between being confident in your ideas and in the clarity of the market opportunity, and coming off like this is going to be easy.

Remember, angels know this is a crap-shoot, and we’re here anyway! So of course it’s OK that it’s risky. The thing I want to hear from you is what you’re doing to address risk. The worst thing you can do is ignore that it exists, because then I think you don’t know the risk exists – and that means you won’t attack it. And there’s no way I invest in that.

Here’s how you can address risk while still giving the investor confidence:

• Here’s your mindset. Angels are gambling, yes, but there are different kinds of gambling. Money on the roulette table is a pure, random guess, and the house wins more often than not — that’s not the kind of bet we want to make. Instead, I want you to be a card-counting shark playing at a blackjack table with a single deck. Sure, you can still lose, sure there’s plenty of luck, but you have an unfair advantage, and I’ll bet on that. So when you’re addressing risks, think “unfair advantage” and “luck, but with a bias,” not “it’s out of my hands.”
• List the known risks so I can evaluate them. In my experience, no matter how massive the risks are, if you’re honest about them I’m very likely to believe they’re a good risk, just because I can see you’re honest and you have both eyes open.
• Show me how you’re addressing risk and reducing risk, rather than how there isn’t risk. Show me how you intend to deal with the unknown or uncontrollable, not “how in control” or “in the know” you are.
• Show me you’re open to new ideas. When we talk about risk I’ll probably have ideas too. Some of them will be stupid, but some will be useful. If we can brainstorm and categorize those, I’m comfortable.

Don’t interview me.

Most pitches come off as begging. You need money and you’ll do or say anything to get it.

But answer me this: If you don’t act like you’re valuable and that I should be thrilled for the privilege of giving you money, then why should I believe you’re valuable and that I should be thrilled for the privilege of giving you money?

This is a two-sided interview. And if you can’t walk away from this arrangement, you’re not in a negotiating position, and I can tell.

Here’s how to do it:

• There’s a difference between confidence and arrogance. The latter is a turn-off, the former is a turn-on.
• Tell me which other investors you’re talking to. Make it at least appear you’re in demand. But remember angels often know each other or can find each other, especially in the same city, so you can’t lie about anything. So don’t lie – talk to lots of angels at once.
• Interview the angel investor. Ask things like:
  • What else have you invested in? (Then follow up later; are those are good companies?)
  • Tell me your philosophy on startups. (Make sure this matches your own)
  • What companies have you founded and run? (If “none,” this person probably won’t be of much use.)
  • What will you bring to my company besides money? (Usually this answer will feel unsatisfactory to you; that’s because usually angels don’t have much to offer. If you just want money only, that’s fine of course, but if you’re expecting more — like direction or advice — grill them here. If they say “I have connections,” that’s crap. You don’t need introductions, you need action!)

Don’t have an exit strategy.

It’s too early, of course, to say exactly how this company is going to make us both rich, but I want to know the ways we can get out of this deal.

Remember, the angel is here to make money. Changing the world, thrilling customers, getting an ego-boost – that’s for founders. Investors need money, only. So you have to address how that’s going to happen.

Some founders want to be “king” instead of “rich;” no exit strategy means you might be one of those. That’s fine for you – nothing wrong with that! – but it’s not good for the angel.

Here’s what I want to see in your exit strategy:

• Explain the type of company who would purchase you, why they would and list some names.
• Give me various ways to get out, not just one.
• Tell me that if you get profitable and for whatever reason stock isn’t liquefying, that the investor has an option of just getting a good return on her money. This is usually in the form of a balloon loan or convertible warrants — in your pitch I don’t care what the mechanism is, just tell me that you’re up for that option too. After all, not all companies should or will be sold, and if you can give the investor a good return and you get to remain “king,” that’s wonderful for all parties.
• Don’t tell me about valuations or multiples. Angels already know about these things, and they probably know more than you do, which means you’re walking into a mine field. If you’re too low, your company looks worthless. If you’re too high, it makes you look silly and naive. The truth is that valuation is highly variable, and that’s OK! That’s what the angel is getting himself into, so don’t worry. Stick to the paths to success rather than absolute dollars.

Photo by SD Dirk via Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Jason Cohen is founder of Smart Bear Software. He contributed this column to VentureBeat.)

I’ve started three companies, and now I’m an angel investor. So I’ve been on both sides of the table.

There are lots of good articles out there about pitching, and surely everyone who pitches me has read some of them. Still, a few problems appear over and over again. If you’ve ever had to sort through resumes and cover letters, you’ve seen this effect: People tend to have the same misconceptions and therefore make the same mistakes.

What follows are four problems I see all the time, each of which makes me roll my eyes and sometimes even terminate the conversation early.

Be dismissive of the competition.

Let me guess what your feature-comparison chart looks like. Probably pretty close to the illustration to the right, huh?

You have all the checkmarks, they have few. Even when your competitor has a checkmark too, your implementation is still better. There’s nothing they have that you don’t. Oh, and they’re more expensive too.

When I see this chart, all I know is: It’s a lie.

The point of “competitive analysis” isn’t to say: “I’m better than everyone else.” Rather, it’s to define your niche in the market and explain how you own that niche better than everyone else.

Need to be further humbled? Here are some things not in your little feature-comparison chart:

• Those competitors probably have more customers than you.
• Those competitors probably have more revenue than you.
• Your potential customers have possibly heard of one of these competitors but almost certainly never heard of you.
• Those competitors are already ahead of you in discovering, defining and attacking the market.
• People rarely buy on the basis of “most features.”

So what should you do instead?

• Define the segment of the market that’s being underserved. Part of this is admitting what part of the market is being well served, and who is serving it.
• Admitting where your competitors are strong earns you the credibility to point out where they are weak.
• Explain how there’s a portion of the market being missed rather than having to displace a product. Once you have your own niche you can talk about creeping into another niche.
• Explain how having fewer features or different features makes for a product that’s more exciting or versatile or more relatable or usable or viral.
• Give testimonials of people being “fed up with” the competitor and how they’ll run into your arms.
• Explain how it’s not possible for competitors to compete on your terms. Maybe the competitor’s business model uses channel sales, so by using a direct model you can compete on price. Or perhaps the competitor has $30m paid-in-capital so they must roll the dice on big market plays while you can be smaller and safer. It’s also possible the competitor maintains a “big company” image to land enterprise sales, so they cannot copy your folksy small-business cool persona. Give concrete examples.

Have five-year projections.

I don’t care what you’re projecting – seats, customers, revenue, profits, market growth – it’s all crap.

That’s right, it’s crap. You made it up, and you know it, and now you’re insulting me by expecting me to believe it.

Oh wait, you say it’s a “conservative estimate?” No, the conservative estimate is that you burn through all your cash in nine months and start taking on consulting gigs to delay a return to a “real job” in corporate America. (Not that I blame you.)

But, really, this is good news! You don’t have to invent crazy models that no one believes. You can focus on useful stuff instead.

Like what?

• Show how fast you can get to cash-flow-positive. After that you’re not burning money, and that’s the hardest part of your journey, so address that first. If the rest takes longer, that’s ok.
• Explain how revenue will outstrip expenses as you get customers. That’s something you have more control over, and that makes it clear that as you grow, you have a sustainable, profitable company.
• If you must give projections, at least make a range, and make the distance between max and min widen the further out you go. And maybe stop at two years? If you can’t be profitable within 24 months, either it’s a bad business idea or you need to raise big VC instead of angel money.
• Actually say, “I would show you five-year projections, but we both know those are crap. Let’s talk about how I’m going to make this business profitable.” Just that one sentence alone sets the tone of the conversation.

Gloss over your strategy for customer acquisition.

Here’s the typical slide I see for customer acquisition strategy:

• Google AdSense
• Ads on selected relevant web sites
• Blogger outreach
• Social Media presence (blog, Twitter, Facebook)
• Co-branding
• Partnerships

Yes, these are ways to get customers, but here’s the problem: Every company on Earth tries these things – and most fail anyway. Therefore, this list is uninspiring – and it isn’t enough.

Anything that everyone else does is boring and unconvincing. There’s no competitive advantage. There’s nothing there that makes me more likely to think you will pull this off.

Of course it’s true that, to some extent, marketing has to be “trial and error,” or better yet “experiment and measure.” And it’s ok to say that, and it ok to list some traditional modes, but this isn’t sufficient.

After all, if all your strategy is “We’ll try stuff until something works,” I have no reason to believe something will ever work!

So here’s what you should do:

• Internalize that your route to getting customers is critical to your success. Admit that to me and yourself — this is one of those things that makes or breaks the entire venture! Spend real time in your pitch on this subject.
• Be specific. Specifics are compelling and paint a picture in my head that I can get behind. Examples:
  • Not just “Blogger outreach,” but “We’ve done a few guest-posts on mommy-blogs and given the comments and traffic that seems to be a good outlet for us, so now we’ll expand in that area with more posts, ads, etc.”
  • Not just “Facebook presence,” but “We’re using a Facebook application platform that’s been proven to work in such-and-such parallel business and we think we can duplicate the mechanism.”
  • Not just “Community outreach,” but “The founders have lined up speaking engagements at these five local groups and we’re hoping that after collecting feedback and testimonials from that we can branch out into neighboring cities.”
• Something creative. If I haven’t heard about this marketing technique before, that’s probably a good thing. At least you’re not just doing what everyone else is, which in this day and age is already an advantage.
• A viral product. If “viralness” isn’t baked into the product itself, you’re already behind. Especially if it’s a web-app. If you can show how the app helps spread itself (i.e. invites, sharing, integrating with social media crap, only works with a friend, affiliate program), that helps me see how X customers leads to X+1 customers.

Do what you think you “should” do instead of what feels right.

There’s a ton of advice on raising money. Don’t take any of that advice just because you read it somewhere.

Yes, including this article! Yes, including this tip too. (Wait a minute…)

Seriously, be yourself. Filter all advice through your own lens. Think of this like you’re getting married — if you’re not yourself, not honest, how will you hook up with an investor that gets you, likes you, and believes in your core motivations and values?

Now go out there, tell the truth, be real, and raise some money!

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Dharmesh Shah is a serial software entrepreneur and angel investor.)

As a tribute to the very funny VC Non-Admissions and the follow-up Founder Non-Admissions, I offer to you my own take on this – from an angel investor perspective. Sorry that mine aren’t in a cool presentation form with pictures and such. I don’t have that kind of talent.

10 Things An Angel Investor Will Never Say

1. I really want to support entrepreneurs – but just those that are going to make me money.

2. I dread having to explain your business idea to my spouse (who can veto any deal).

3. I don’t really have enough stake in your company to spam my network on your behalf.

4. I was lying when I said that some of my best friends were VCs. Even VCs aren’t best friends with VCs.

5. I have no idea what the hell you’re talking about 50 percent of the time. What’s a socially-semantic mobile platform for non-virtual currency mean? (Oh, it’s an iPhone/Facebook payment app).

6. The other 50 percent of the time, you have no idea what you’re talking about. Anti-dilution provisions in a termsheet are not about beer.

7. How the public market did last week does impact my decision-making.

8. I like to invest in cool startups because it helps make up for high school.

9. I don’t understand what half the things in the funding agreement mean either, but I’m betting that most of them are to protect me, not you.

10. I really didn’t put the check in the mail the day I said I did. I was golfing that day. I sucked.

11. I’m in it to mostly have fun. If I wanted to do unpleasant work, I’d have my own startup.

Image by platinumblondelife via Flickr.