Why Startups Get Funded
2
Are We Hindering Venture Capital?
- Altounian, "Austin generates loads of seed money to fuel young businesses but lacks the Series A, Series B and late stage funding sources"
- Bagdonas, "Dark Ages of Venture Capital"
- Suster, "With more money (and new non VC entrants) venture financings have obviously increased. Angel & Seed deals have grown fastest but dollars have scaled massively into a smaller number of later-stage deals"
- Rice Baker Institute, "Venture Capital in Texas declining."
Why Should Your Startup Get Funded
1. Why you? Why you care.
2. Why the market will want it and why it will work.
3. Why you need venture capital.
4. Why this is an opportunity for investors.
My name is XXXX XXXX. I am the creator of XXXX and a co-founder of XXXXXX. The first app is something I think could be a billion dollar company someday. The second app is something I believe has very solid potential, it’s a space that people aren't doing much in and we have the potential to dominate it. We have some pretty great ideas on how we can make XXXXX a million-dollar company.
As you can see, we have a lot on our plate and it would help us out greatly to be able to talk with someone who knows their stuff. I’d love to talk more and see if you can help us get some funding
Why Startups Get Funded
Start with Why
Creating ROI, not Repaying Funding
WHAT you do: products or services.
Some have figured out HOW to do it. This sets them apart from competition and makes them special.
Few know or communicate WHY they do it. Why is not about making money; that’s the result.
“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
Simon Sinek
What is Venture Capital?
Creating Opportunity
Creating Customers or Finding Them?
Capital invested in a project in which there is a substantial element of risk, typically a new or expanding business.
“Because the purpose of business is to create a customer..." - Peter Drucker
The utmost importance of a risk taking entrepreneur is not finding customers but creating them and thus securing the means to do so.
Angel Investment
Equity Crowdfunding
Debt Financing
Venture Capital
Friends and Family
Credit Cards and Ramen
Bank Loans
Crowdsourcing
Something is Amiss
So VC is not always VC
Startups are Hard
Angels typically invest smaller amounts of money (thousands to hundreds of thousands of dollars) earlier in the life of a company, at lower valuations, taking on more risk.
VCs typically invest larger amounts of money (hundreds of thousands to tens of millions of dollars), at a somewhat later stage and higher valuations, with slightly less risk.
Heading into 2016, 50% of VCs tell Upfront Ventures that they will slow their pace and Floodgate indicates that they won't invest in any more Austin based companies like Favor, Homeaway, or Instacart because of a hostile Austin City Council