Join us Thursday April 2, 2015, for a lively evening of conversation with representatives from the most prominent angel investor groups in the Seattle area:
Alliance of Angels, Dan Rosen
Element 8, Lars Johansson
Founder’s Co-op, Chris DeVore
Keiretsu Forum Northwest, Sherry Zins Calvert
Puget Sound Venture Club, Gary Ritner
Seattle Angel Conference, John Sechrest
Seattle Angel Fund, Josh Maher
TiE Angel Group Seattle, Haresh Ved
WINGS, Tom Kadavy
ZINO Society, Kenny Byrne
Moderated by me, Bryan Brewer, founder of Funding Quest.
Presented by the Venture Lab group of the MIT Enterprise Forum Northwest.
Click here for details and registration link.]]>
In this short video I explain the concept of the Minimum Fundable Company™, and give you some tips on how this concept can help you raise money for your startup, and also help make it happen sooner.
Over the past fifteen years or so, I have helped many startups on their way to funding … helped them with their investor pitches, business plans, funding strategy, and so forth. I’ve helped hundreds of startups. I’ve probably seen upwards of a thousand investor pitches. And I’ve helped my clients raise tens of millions of dollars in investment for their startups.
Over this time I’ve noticed that companies fall into three different categories along the Fundability Curve.
Up here at the high end of this curve are the highly fundable companies. These are the ones where the CEO has a track record, where they already have connections with investors, and they usually have no trouble getting funded.
Down here on the lower end of the curve, are where most companies are that are seeking funding, and they’re just not fundable. They’re just not fundable … yet. They don’t have enough of the right stuff to attract attention from investors, or perhaps they have some glaring red flags that are going to kill their deal regardless of fundable the company seems.
However, many of these unfundable companies grow and improve over time. They build their product, they flesh out their management team, they structure a deal for investors, and they move up this curve into the area of the potentially fundable companies. They cross that threshold where investors will now pay attention to them, and they become what I call a “Minimum Fundable Company.”
This is similar to the Minimum Viable Product (MVP) concept, which is designed to help startups get feedback from the marketplace sooner rather than later. Just like that, the MFC concept helps you get in front of investors sooner rather than later.
So how do you know if you have a Minimum Fundable Company? It’s a question that clients and other startups have asked me over the years, so I developed a test. It’s basically a 20-question “fundability scorecard,” which is what I called it before, and it asks the basic questions about everything that investors are interested in your company, and you rate yourself on this scale. I have dubbed it the Minimum Fundable Company Test, or MFC Test™ for short.
The MFC Test is structured around what I call the Five Factors of Fundability.
The first factor is startup viability. This has to do with how well your solution matches the problem that you’re trying to solve, and what kind of market validation you’ve got so far, and what is your business stage? Are you all the way up to having customers already … or not?
The second factor of fundability is your business model. This is things around your revenue model, your gross margins, the size of the market that you’re going after, and how fast that market is growing.
The third factor of fundability is market strategy. This is basically, how do you get customers? And what’s your cost of customer acquisition? What kind of partnerships or other deals do you have in place that will help you enter the market well. And what about your competitive strategy? What kind of competitive advantages – in terms of intellectual property or other aspects – do you have that will allow you to compete effectively in the marketplace?
The fourth factor is the management team. Here you rate yourself according to the experience of the CEO or other cofounders, the breadth and depth of your management team, as well as a board of advisors.
The fifth and final factor of fundability is the deal. What does your profitability look like? What are your financial projections? How fast are you going to grow? What’s the percentage of ownership for your deal? What’s your exit strategy? How soon can investors expect to get their money back and at what rate of return?
I give each of these five factors equal weight and suggest that you need to score pretty close to 50% in each of these five factors in order to consider yourself a minimum fundable company so that you can go out there and start raising money.
The MFC Test is designed to work for startups that are the typical high-growth company, where the investors expect to get their money back when there’s a liquidity event, typically an acquisition. It will also work for cash flow businesses, where the investors receive quarterly dividends or distributions from the company that will be a part of what their return is all about.
It’s also designed to work for companies that are seeking money from angel investors as well as the new equity crowdfunding that’s just starting to happen these days.
There are three key benefits to taking the Minimum Fundable Company Test. First, you can find out where you need to improve your fundability. This is probably the most important. If you take this test, figure out where your deficiencies are, and what you need to do to improve, so that you can get across that MFC threshold and get in the game of raising money from investors.
The second benefit is that you will get a sense of any of these red flags that might pop up that will kill your deal regardless of how fundable your company is.
And finally, the benefit is that you take this test and improve your fundability, and get in the marketplace sooner and get in front of investors to start that process of raising money.
Two quick points about the MFC Test.
If you take the MFC Test, and I hope that you do … (It’s free, just sign up and create an account so you can come back and view your results later or take another test) … First, answer honestly. There’s no point in inflating your own score just to see if you can get a higher number. If you give honest answers, this test is designed to help you see where you can improve your fundability so that you can actually move up that fundability curve and get in the game of pitching for investor dollars sooner rather than later.
Second, also understand the test is necessarily imprecise. I’ve tested this tool with hundreds of entrepreneurs and a number of investors. I’ve gotten feedback and refined it. And most people who have tried this already generally agree: It gives you a pretty good idea of what your fundability is.
As founder of Funding Quest, I’m dedicated to helping entrepreneurs like you accelerate your path to startup funding.
The MFC Test is scheduled for launch in the fall of 2014. But today you can go to www.mfctest.com and sign up with your email so that you can be notified as soon as the test becomes available and be one of the first ones to try it out.
I wish you all the best in your quest for funding. Thanks.
Founder, Funding Quest
Funding Quest, Minimum Fundable Company, and MFC Test are trademarks of Funding Quest, LLC.]]>
So here’s my question: Why not you?
What’s keeping you from getting your slice of the pie?
I can tell you this: You don’t have to be what I call a “highly fundable” company to get angel investors to finance your business.
To me, a highly fundable company is one in which the co-founders have a track record of startup success and have built relationships with active investors.
Most startups don’t have these kinds of credentials, and yet a fair number of these “potentially fundable” companies get funded.
(Data sources: Center for Venture Research; Halo Report.)
These potentially fundable companies – often led by first-time entrepreneurs – do two essential things on their road to funding success.
First, they create a business that has enough of the right fundability elements to attract the attention of angel investors. The business’s “fundability score” won’t be perfect, but the essential ingredients are present. The business will make sense as a believable story.
Second, they execute a sales campaign to sell stock (or convertible debt) in their company. They persevere in their quest to find angel investors who believe in them and their business story. They close the deal.
And they continue to gain additional traction during the fundraising process, thereby further increasing the fundability of the company.
These are the keys to success that I have observed for the past 15 years by helping hundreds of startups navigate the fundraising process.
I’ve distilled these keys to success into a single day of training: my Funding Quest One-Day Workshop – How to Get Angel Investors to Finance Your Business, which I’m offering on Tuesday June 10, 2014, as part of the Keiretsu Forum Academy programs.
Attend this workshop and you will:
Your ticket price of $247 includes lunch, snacks, and workshop binder with extensive course materials. Click here to REGISTER NOW! (Includes a MONEY-BACK GUARANTEE.)
Plus there is a new Two-Day Option: For only $150 more you may register for an additional day of training on June 3, 2014 that covers:
(Only a limited number of tickets are available for the Two-Day Option.)
Raising angel funding is a sales process, and you need to understand how the game is played. Don’t miss this chance to accelerate your path to startup funding.
Attendance is limited to the first 25 people who sign up.
Click here to register now!
I hope to see you there.
EVENT: “Is Angel Funding Right for You?”, presented by Bryan Brewer
WHEN & WHERE: Thursday April 17, 2014, 11:30 am to 1:30 pm, Law Offices of Davis Wright Tremaine, downtown Seattle
(Lunch will be served.)
HOW: Join the Startup Funding Seattle Meetup Group and RSVP from that site. (Advance registration is required.)
Angel investors finance more than 60,000 U.S. companies every year. It’s a tempting option to fund your startup, but is it right for you and your business? This presentation gives you an overview of angel funding and describes the pros and cons of all aspects of the process. You’ll learn what angel investors are looking for and how to best position your startup for funding. Also included is a discussion of the pros and cons of other sources of funding for startups. There will be plenty of time for Q&A. Presented by: Bryan Brewer, founder of Funding Quest™ and director of the Keiretsu Forum Academy in Seattle.
This meeting includes lunch, courtesy of Joe Wallin, attorney at Davis Wright Tremaine. Limited to 35 attendees.]]>
Click to register now. Admission is $25, and this popular event may sell out. Moderated by Rebecca Lovell, Startup Liaison for the City of Seattle.
Angel funding is very alive and well in Seattle, and 2013 looks to be on a similar pace with the previous year, when the groups reported more than $50 million invested in almost 150 companies.
How can you get a slice of this pie?
Next Tuesday, April 8, 2104, in my Funding Quest One-Day Workshop – How to Get Angel Investors to Finance Your Business, I cover the details of the five steps in raising angel funding:
This popular workshop will help you avoid costly pitfalls, blind spots and common mistakes so you can increase your chances of getting funded … and make it happen sooner!
REGISTER NOW for the Funding Quest One-Day Workshop to be held Tuesday April 8, 2014 in Seattle]]>
This myth, which is really more of what I would call an “over-generalization,” has been repeated often in the last several years. The notion originated from angel investors who would prefer to see a startup team spend their resources to build and test their minimum viable product, rather than writing a 25-page business plan that will inevitably change. In these cases, it’s perfectly reasonable for an angel to invest up to six figures in a good team based solely on a pitch deck (and perhaps a demo).
In other cases, for a startup that has a version one product and is seeking to raise larger amounts, most investors expect to see a more traditional business plan. This document serves as the basis for performing the due diligence on the company, a critical step that strongly influences investment decisions.
One entrepreneur recently asked me, “When do I need a business plan?” My answer: “When a prospective investor asks you for it.” Be prepared.
In my Funding Quest One-Day Workshop – How to Get Angel Investors to Finance Your Business – one of the many things I cover is how to use various documents, including business plans, executive summaries, investor pitches, financial projections, terms sheets, et al, to effectively navigate the process of raising money.
The next Funding Quest One-Day Workshop will be held Tuesday April 8, 2014 in Seattle. REGISTER NOW and save $50 before early bird registration closes March 31st.
Best wishes in your quest for funding!
I usually hear this lament from entrepreneurs who are having trouble getting traction in the local investment community. True, there is much more money available from Valley investors. But there is also much more competition for those dollars.
When you look at the data, you find that there is actually plenty of angel money in Seattle and the Pacific Northwest. Two things to consider:
First, for 2012, the local angel groups in the Seattle area reported that their members invested more than $63.1 million in 146 deals that came through these groups. (You can download the full 2012 report here.) There may be some overlap with the number of deals, but the $63.1 million is the total that members reported to their groups.
The local numbers for 2013 are likely to be about the same, and you can find out these details at the MITEF Venture Lab event on Thursday April 3, 2014 in Seattle called “Meet the Angels,” which will feature representatives from nine local angel groups. (Note: this annual event usually sells out.)
WANT TO LEARN HOW TO RAISE ANGEL FUNDING FOR YOUR STARTUP?
Register now for my Funding Quest One-Day Workshop to be held Tuesday April 8, 2014 in Seattle. REGISTER NOW and save $50 before early bird registration closes March 31st.
Second, two major reports on angel funding nationwide are also revealing. For 2012, the Center for Venture Research of the University of New Hampshire reported a total of $22.9 billion in angel funding across the U.S. The Halo Report, published by the Angel Resource Institute, reported that 6.3% of U.S. angel dollars were sourced from the Pacific Northwest region in 2012. The result: $1.44 billion of angel funding from the Northwest.
Here are several conclusions you might draw from this information:
Again, register now for my Funding Quest One-Day Workshop: How to Get Angel Investors to Finance Your Business on April 8, 2014. In the Workshop I cover specific tactics about how to find and connect with angel investors. Space is limited.
Best wishes in your quest for funding!
* I found no data on 2012 deals from the handful other angel groups in the Pacific Northwest.]]>
Here’s what two recent attendees have said about this premier educational program that covers ALL the details about raising angel funding:
“I want to express my gratitude to Keiretsu Forum Academy for the excellent Building a Fundable Company course. I’m the founder of a video game startup company that needed to develop a new strategy to succeed after two years of stagnant sales. This course brought a full-spectrum approach with experts in marketing, sales and investment that helped me re-pivot my plans and product to align with success.”
“But it didn’t end there. The Keiretsu Forum connections in the Seattle entrepreneur and investor network meant I got access to mentorship and networking opportunities, which proved vital in building out my plans and product. Just two months after the completing the course, we have announced our new product and are already getting more press attention and excitement than anything we’ve previously had.”
“I’d gladly recommend this course to any entrepreneur looking to get a jumpstart on their new venture.”
– Charles Cox, Founder/CEO of 4gency, LLC
“When I first heard of the Keiretsu Forum Academy, I was skeptical that it would provide enough new material to make it worth my while. I’ve had a front seat with a successful start-up through IPO, done some angel investing on my own, and was able to help successfully secure VC funding during difficult times in Silicon Valley. But when I saw the impressive lineup of guest instructors, I decided it might make a good refresher. It exceeded my expectations and was well worth the time and tuition. The instructors were uniformly excellent. The wealth of experience, professionally delivered material, and spot-on relevance make the course a valuable investment for any early stage entrepreneur.”
– Morgan Brown, CEO, Whole Water Systems
If you are serious about raising angel funding, register NOW for this essential training starting March 18, 2014.
You’ll gain confidence that you’re following best practices (which will appeal to angel investors), you’ll expand your network with invaluable contacts, and you’ll save time and money by not having to go back and fix first-timer mistakes.
March 18 – Ramping Up Your Startup. Covers CEO roles and responsibilities, the best strategies for forming your company and compensating team members, and the practicalities of managing your accounting and finance.
March 25 – Building Business Momentum. Expands your knowledge about marketing strategies, growing sales, and protecting intellectual property (a key issue for investors).
April 1 – Preparing for Funding. An in-depth look at what investors really want to see in a deal, including valuation, term sheet, and exit strategy.
April 8 – Funding Quest™ Workshop. A one-day intensive about the process of raising angel funding, including tips on finding investors and how to close the deal.
The entire Building a Fundable Company package includes:
Click here to Register NOW to join a group of like-minded entrepreneurs on the fast track to angel funding.
Hope to see you there!
Here’s what some attendees have said about past workshops:
“I found this workshop to be overwhelmingly informative.”
— Ebba Lucander, CEO of Simply Good Shopping
“Bryan did an excellent job. I’d recommend it to anybody.”
— Jim Bilbao, CEO of True Home Benefits
“You don’t get this information in one spot in a day anywhere else.”
— Morgan Giddings, CEO of DailyDollar, and Winner of the Seattle Angel Conference award of $165,000 in May 2013 (three months after taking this workshop)
Thanks to attorney Alex Modelski and the other folks at Ater Wynne for hosting this workshop.
Because of space limitations, attendance is limited to the first 30 people who sign up.
Click here for more details about the workshop.
Click here to register.]]>
Play the video below to hear comments from people who attended an earlier workshop:
Click here for more details about the workshop.
Click here to register.]]>