Angel and Venture Capital Investing, Part Three: Top Mistakes Companies Should Avoid When Pitching for Capital

In the final installment of our three-part podcast series called "Angel and Venture Capital Investing," show hosts Evelyn Ashley and John Monahon, along with Mike Siavage of Trusted Counsel speak with Brad Feld, an American Entrepreneur and co-founder of the venture capital (VC) firm Foundry Group in Boulder, Colo.

In the final installment of our three-part podcast series called "Angel and Venture Capital Investing," show hosts Evelyn Ashley and John Monahon, along with Mike Siavage of Trusted Counsel speak with Brad Feld, an American Entrepreneur and co-founder of the venture capital (VC) firm Foundry Group in Boulder, Colo.

The amount of capital in the marketplace today has reached extraordinary levels. However, just because there’s new-found money more readily available for entrepreneurs doesn’t mean that VC firms are handing it out like candy. Start-ups come, and start-ups go. In fact, more than 50 percent of companies receiving VC investments still fail. 

Statistics like this allow VC firms to be particular about where they invest their money and compel them to do everything in their power to ensure the right fit when it comes to their investments―for both sides.

In the final installment of our three-part podcast series called “Angel and Venture Capital Investing,” show hosts Evelyn Ashley and John Monahon along with Mike Siavage of Trusted Counsel speak with Brad Feld, an American entrepreneur, author, blogger, and co-founder of the venture capital firm Foundry Group in Boulder, Colo. Brad has been an early-stage investor and entrepreneur for more than 25 years. He began financing technology startups in the early 1990s first as an angel, and later as an institutional investor. He was an early investor in Zynga, MakerBot, and Fitbit. Brad has also directed his knowledge and intent to make entrepreneurs smarter by authoring and coauthoring several books about entrepreneurship, venture capital, and startups. His most recent book is his third edition of “Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist.”

“An important part of growing, building and evolving companies involves doing it in a way that has, maybe to be cliché about it, a lot of emotional IQ,” said Brad. “Real engagement and real involvement with the people, and a view that you're working with each other as partners rather than antagonists is an important part of how we think about working with companies. Our strategy isn’t about investing in every great company. Instead, we want to pick 10 companies a year we think could be great.”

During the course of the podcast, entrepreneurs will learn about the:

  • Importance of the 60-second pitch
  • Top mistakes business founders make when pitching for capital
  • Benefits of using a professional advisor and legal team well versed in VC deals
  • How to prepare for and what to expect in your first meeting with a VC firm
  • Impact of obsession vs. passion

Learn about the other nuances involved with pitching VC firms by streaming the conversation in its entirety in the player below, or download it to your mobile device via iTunes. Don’t miss a single episode, subscribe to our show “In Process Podcast” on iTunes to receive this episode as well as future episodes to your smartphone.

Angel and Venture Capital Investing, Part Two: Increasing Capital for Women-Managed Businesses to Launch Them to Success

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According to CNN, “2018 will be the year of women.” Just last year, “feminism” was named as Merriam-Webster’s word of the year. And TIME’s Person of the Year for 2017 was collectively represented by “The Silence Breaker,” the women (and some men) who came forward with stories of sexual harassment and assault that helped force nationwide #MeToo movement.

On the business front, women’s entrepreneurship has been on the rise in the United States for the last two decades. According to American Express’s “The 2017 State of Women-Owned Businesses Report,” there are an estimated 11.6 million women-owned businesses in the United States that employ nearly 9 million people and generate more than $1.7 trillion in revenues. And this trend is expected to continue.

In the second installment of our three-part podcast series called “Angel and Venture Capital Investing,” show hosts Evelyn Ashley and John Monahon of Trusted Counsel speak with Bernice “Bernie” Dixon, former President of the Atlanta Technology Angels and Founder and CEO of Launchpad2x, a non-profit intensive boot camp and master-class program that focuses on leading women entrepreneurs in the Atlanta metropolitan area to accelerate their businesses to achieve their goals. 

Bernie only had male mentors throughout her early career days. “When I left Hewlett Packard, I realized there weren’t a lot of women in private industry, in technology, and even in Silicon Valley. So I vowed that I was going to do something about that if I ever had the opportunity to get out of the corporate world. I committed to being part of this new economy and maybe even doing something to move the needle for women,” Bernie said. Years later, she has unquestionably moved the needle for numerous women entrepreneurs. 

In just six years, Launchpad2x has graduated more than 120 female CEOs from its programs. And the average age of these women is 40. Ninety-four percent are still in business―well over the national average of 20 percent. Additionally, these businesses have an average growth rate of 200 percent per year. Lauchpad2x has an estimated $200-million economic impact to Atlanta. In post-program surveys and in-person feedback, Bernie hears this over and over: “This program has been transformative. My perspective has changed from owning a business to being a CEO.” 

During the course of the podcast, entrepreneurs and investors will learn about:

  • Bernie's early influences
  • The benefits of affiliating yourself with angel investor groups
  • The mission of Launchpad2x, program specifics and expansion plans
  • The three things that women should do now to be more successful as entrepreneurs
  • How any business executive can create more opportunities for women in the workplace

Trusted Counsel is a proud sponsor of Launchpad2x. Be sure and stream the conversation in its entirety in the player below, or download it to your mobile device via iTunes. Don’t miss a single episode, subscribe to our podcast show “In Process Podcast ” on iTunes to receive this episode as well as future episodes to your smartphone.

To learn more about Launchpad2x or to make a donation, please visit www.launchpad2x.com

Angel and Venture Capital Investing, Part One: The Term Sheet

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In this first episode of a three-part series called “Angel and Venture Capital Investing,” Trusted Counsel’s Mike Siavage reviews the term sheet, a summary document of key terms in contemplation of a financing―along with other elements for entrepreneurs to consider.

Here are three of the top questions from the full interview with Mike:

Prior to the term sheet, what should a company do to raise money?

What I tell my clients is that there are various stages of investment in your company, and they come from various places. You’ll typically need $30,000 to $50,000 just to start a company, to pay for good advice and then to acquire the people for the management team. So funds will usually first come from your friends and family, people you know in your own network (who are supporters of you)―and from your own pocketbook.

Traditionally, the second phase to raise money is through angel investing. Angel investors are a little bit more sophisticated about putting money into companies, and they’ve done it before. Typically you will not want to set a valuation in this phase.

Next, the entrepreneur will want to go back to the angel investor for another round of raising funds. I usually advise the entrepreneurs with companies who are doing that angel round on a convertible debt instrument (a debt or loan instrument that an investor gives to a company with the intent that it will convert later to equity and not be paid back as a standard bank loan would be) to produce their own term sheet because a lot of times angels will ask you directly, “What are your terms?” It looks professional on the side of the entrepreneur to have something to provide the angel, and it’s typically a convertible debt term sheet.  

The last stage is a standard venture capital investment. You get to this stage when your company actually has revenue, a history and a future. The VCs will normally do that term sheet, although it’s quite standard and most of its terms could be argued on what’s commercial at that stage of the investment.

What should a company not try to negotiate in the term sheet?

Registration rights. Registration rights mean that those who invest in your company have a right to participate in a public offering― if you have a public offering. Well, you don't usually get to a public offering with your Series-A round. There's usually going to be a Series B and Series C and D and E. One aspect of that is that the registration rights are going to change in those further-on rounds. So, you might as well not fight about them right now, anyway. Secondly, investors are not going to spend much time with you telling them that you want to only give them two S1 registrations in a year―because I'm not sure they even understand their own term sheets, from that perspective.

After a company obtains a term sheet, what’s the timing to getting the Series A done?

Well, there's going to be diligence usually after that, so probably a month of diligence, and then a look at the documents and finally negotiating the documents. I’d say two to three months.

Additionally, investors and business owners will learn about:

  • Timing for term-sheet preparation
  • Finding and picking the right angel investors
  • Terms of convertible debt
  • Other resources available for entrepreneurs and investors

Learn about the other term-sheet questions Mike addresses by streaming the conversation in its entirety in the player below, or download it to your mobile device via iTunes. Don’t miss a single episode, subscribe to our show “In Process Podcast” on iTunes to receive this episode as well as future episodes to your smartphone.