Secrets of Seed Funding

Chances are the odds are against you.

Only one company in 50 or even a 100 actually will find funding, according to a panel of CEO’s and Angels talking about the secrets of seed funding. To make matters worse there is a catch.  Not all angels are perfect for your company.

Its really tempting to say I got one fish on the hook, but if it is not someone you can’t enjoy you are stuck with your choice whether it is good or bad for your company, one of the panelist said.

Several panelists speaking at DCWeek included: Angels: John Lapides, Shadowpoint Capital Dan Mindus, New Vantage Group Frank Ball, New Dominion Angels Errol Arkillic, National Science Foundation CEOs: Mathew Baker, CEO, Bid 4 Assets Steve Woda, CEO, KidSafe Bonnie Rishell, CEO, ROI2

Their advise for start-ups: choose your investment partners wisely.

Fundraising is an investment in time. Their advise is to start early.

If you want to raise money in a year you need to start building your relationships now. It will take you longer than you think. People expect the funding process to take a month or two. You need to count on the fact that it will take you more than 6 months to go through the process.

One of the secrets to helping to close that deal and bring angels in to invest in your company is to have a compelling event. That event will be the deadline needed to force them to make a decision. You will need to force something to happen to make the closing occur. Sometimes without the event you will not be able to get the investment you are looking for from angels.

Investors want to invest in assets that are undervalued. Your job is to show how big your company give them compelling reasons to want to invest in you. One of the ways to find investment is to show that your business plan is strong enough to continue to grow without angel investment. Nothing makes vc’s salivate more than a company that doesn’t need the money.

You will have to know your numbers inside and out. Investors will want to know that you have a Plan A,B,C,D an E. They will ask you several what if scenarios that they see other start-ups run through, and if you cannot provide answers you will appear to not have the details ironed out.

Be sure to demonstrate your passion and cold-eyed realism about risk and realities you face. Let the investor know you understand the odds you are facing and convince them that their investment in you will pay off.

Investors are not interested in being your partner for life. They are interested in an exit strategy so they can move on and cash out.

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