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Episode 010 Show Notes
What we won’t be covering today:
Bootstrapping
Loans
Startup Fundraising Terminology
Types of Investors
VC - Venture Capital Fund
LP - Limited Partner
Angel Investor - Wealthy individual who invests in businesses.
Angel Groups or Syndicates - A group of Angels who all go in on a deal together.
Private Equity - Firms that usually buy-out the entire company and have control of it after that.
Crowdfunding/Crowdsourced Funding - Kickstarter/Indiegogo. Regular people get a discount on pre-ordered product.
Friends and Family - You already know who these people are.
Fundraising Rounds
Seed Funding - The initial money needed to get off the ground.
Series/Round A - First round of stock offered to investors. There are professional Angels and VC’s who specialize in this type of early funding.
Series/Round B - After certain milestones, you can do a second stage round of funding. VC’s usually get involved in this round.
Series/Round C - To meet additional milestones a company might engage in a C round or even D, E, F, etc...
Valuation
Internal Valuation - A pre-determined valuation formula to purchase a founder’s equity if she dies or leaves.
Pre-money Valuation- Valuation before you receive funding.
Post-money Valuation = pre-money + funding
Closing Thoughts
Investors will usually want you to have an exit strategy. They either want a plan to see the company or to go public (IPO).
Is your company investable? Think about it from the investor’s point of view. How will they get their money back?
Determine your ideal investor. Like a customer avatar.
Helpful Links From The Episode:
Angel List
Interview with Sean Kelly about Crowdfunding and The Startup Spirit
The Full Ratchet: Capital Ecosystems Interview with Eric Gasser
Resources
Forbes: Terms You Must Know Before Raising Startup Capital
Paul Graham: Startup Funding
Yahoo Business: Most Common Funding Types Explained
Forbes: Startup Jargon Words You Need to Know to Raise Money
Tech Republic: Startup and Venture Capital Terms You Should Know
Investopedia: Private Equity Vs. Venture Capital
