entrepreneurs

3 Questions Startups Need to Ask to Survive the Pandemic

3 Questions Startups Need to Ask to Survive the Pandemic

It’s a rough situation for everyone right now amid the global pandemic: businesses are closing, the gross domestic product of countries is falling, people are getting laid off, and paranoia is spreading all around. But, more specifically, what does this mean for startups? What will the outcome be for businesses that have just recently begun to blossom, only to be hit with this storm? In order to help as much as possible, we’ve compiled some of the three most important questions that CEOs of startups should consider in light of this pandemic.

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Figure 1: Global Debt in 2020

1. What to do if the recession lasts 18+ months?

In our Spotlight Show on YouTube, we talk to Keith Ippel, a prominent impact investor who shares his insights into the current situation of the recession and what kind of shadow it casts upon smaller businesses and startups. One of the key things that he mentioned was that it was optimistic to assume it would take 18 to 24 months for our economy to truly recover or at least gain some semblance of what it used to be.

Let’s first try to be optimistic: consumers will start to gain more confidence in their speeding and the economy will go back to the way it was in about 18 months — the amount of time that the Great Recession of the late 2000’s lasted. In this case, the best approach is to attempt to reduce costs — be it variable or even fixed. Cutting variable costs can mean laying off some employees temporarily or even cutting back on production to cut the cost of raw materials. In Figure 2 below, it’s shown that about 87% of businesses will first attempt to reduce any workers they have on overtime or lay off employees. As for fixed costs, even though it’s not as clear and may be more of a hassle, some simple ways include finding ways to renegotiate rent to another facility or lease the equipment used in production.

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Figure 2: Most Popular Ways for Businesses to Reduce Costs

Okay, now for the more pessimistic outlook. What if things don’t go back to normal in 24 months and it takes more than this? This will bring us to our second question: should startups change their business model to ensure the survival of their business?

2. How should I change my business model?

Given the constantly evolving situation of the world, it should be clear that our business model should evolve too, as to stay stagnant is to fall behind in this economy. For example, FlyBe, a UK regional carrier, recently filed for bankruptcy, as they were a smaller privately-owned business that made revenue solely from travel, and we all know the heavy restrictions and reluctance to do that nowadays. For most startup CEOs, it is crucial that they adopt an abundance mindset that prepares them to face the hardships of the next day. However, while it is important to be optimistic, it is equally important to investigate how one’s customers and revenues have changed. If startups sell their goods or services to other businesses and are therefore in a B2B market, have any customers closed their operations? How has this affected their revenue? These answers will maybe prompt them to rethink their partnerships. Likewise, if a startup is in a B2C market by selling goods and services directly to individual consumers, have their sales declined? What kind of reaction do they have from their consumers about the goods or services that they’re providing? Once CEOs have figured this out, the next best step would be taking this data and accommodating it into their startup’s metrics to get a better idea of exactly what damage (or benefit) the virus has done. An example of a successful shift in platform for a B2C company is Green Vanity, a luxury cosmetics retailer that prides itself on being responsibly sourced. When Nikki Hunter, owner of this business, realized that she was operating at a loss to keep her shop open, she eventually switched to exclusively an online platform. She was able to make the most out of her situation and successfully adopted a solution that allowed her to thrive — something a lot better than barely surviving.

3. What are the courses of action for my potential investors?

Smaller businesses and startups are often hit hard by recessions such as these, as they’re not qualified for emergency relief funds and struggle to make revenue and the transition to virtual platforms may not be available. However, venture capitalists and angel investors find themselves in a similar predicament: what should I do? In most episodes on our Spotlight Show, we get a better idea of what venture capitalists are going through by having a comprehensive interview with them. Two of the biggest factors they are concerned with these days are liquidity and impact. Some startups are now focusing on ways to combat the coronavirus, whether it be about bulk area sanitization technology or improving the quality of standard technologies such as oxygen supply machines. But, on a smaller scale, most smaller businesses will attempt to help the situation in any way they can. Let’s take the example of The Table Café in Kelowna, B.C. When the virus started to take its toll in March, the restaurant’s revenue decreased by about 40% — a considerable amount in the restaurant industry. However, Ross Derrick, the owner of this place, managed to come up with an idea to give back to his community as well; he ran a campaign that would charge customers about $18 to purchase a meal for not only themselves but also for a health worker on the front lines. Now, this didn’t exactly help with the revenue stream, but this generous act gained publicity and eventually, more and more people showed up to support this business.

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Figure 3: The Table Café

After startups have asked themselves these questions and gotten a good idea of their next steps moving forward, the next thing to do would be to find ways to implement them into their business operations. The sooner startups can get started on this, the better they can prepare for the recession — whether it lasts 18 months or 3 years, CEOs and their businesses will be ready for it all.

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5 Steps to Find the Right Investors for Your Startup

5 Steps to Find the Right Investors for Your Startup

Finding the right investors for a startup is difficult and a critical stage for any startup — even the smallest amounts of capital could prove to make a difference. These initial investors in the growth process of a startup will prove to have an impact that resounds for years to come, be it through capital, advice, or connections. Thus, knowing how important this stage is, here at VenturX, we have simplified the process into five of the most important steps to follow in order to find that perfect investor.

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The Importance of Finding the Perfect Investor For You

Invest in Yourself and Create a Cap Table

To begin, let’s start with personal finances: are you confident that your startup can be financially sufficient? If so, then the first step is to begin investing in yourself, or “bootstrapping.” Invest in yourself, your knowledge, and your health, and as Paul Clitheroe, founding director of InvestSMART says, “Your career is the engine of your wealth.” Many successful businessmen or businesswomen of today understand that enhancing one’s own skills and abilities are necessary to survive in an economy that is constantly changing.

Another key step before beginning to raise external capital is to plan a capitalization table. With reference to our article, “All You Need to Know About Capitalization Tables,” this is “a spreadsheet for an early stage venture or a start-up that lists all the company’s securities, their holders and the price paid by the investors to hold these securities.” Essentially, this will help in organizing what sort of equity stake — the percentage of the business owned by the owner of some shares of stock from that company — founders want to have. Visualizing a cap table will be crucial to show potential investors and stakeholders and their level of control over certain assets and can allow for them to forecast potential payouts and leverage control in the future. This will guide entrepreneurs and their startups to having a clearer vision of what they want from investors, a crucial detail when seeking investment.

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Ideal Ways to Raise Capital Depending on Company Stage

Narrow the Investors You’re Interested In

“Investing is laying out money now to get more money back in the future.” — Warren Buffet

Essentially, investors also expect to get a return from their investment and knowing the different types of investors their differences can be crucial in making or breaking a pitch to someone.

During the researching process, it’ll become clear that investors also specialize in terms of what they invest in, whether it be a certain business model, an industry, or they have a specific demographic they want to cater to. For example, in our Spotlight Show featuring Keith Ippel, he provides some valuable advice.

“You need to equally discuss impact and your business model, your financial structure, and your revenue model.” — Keith Ippel, Canadian Impact Investor

Overall, it’s clear to see that, while it’s important to focus on “impact”, other factors should not be neglected in a pitch.

Within the startup community, there are two major types of investors to look out for: angel investors and venture capitalists. It’s crucial to know the differences between them and know what they’re looking for because after all, it could make or break a pitch. Angel investors are individuals who usually invest in early-stage startups and it is said that they reject 75% of the investment proposals they receive. This means that their approval is not one that is readily given, although if an idea manages to pass, it has a significantly higher chance of being successful. On the other hand, venture capitalists are employees of larger venture capital firms and, instead of investing their own money, they invest other people’s money in the form of a fund into companies. They usually invest a larger amount of money into startups, so it’s important to know if a company will scale substantially and quickly. Ultimately, it’s ideal to decide on if the target audience will be angel investors or venture capitalists —there are pros and cons to each, and it depends on what your investment strategy is.

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Researching Investors Can Narrow Your Scope

Network Strategically and Innovatively

Now for the hard part: reaching out to these investors. The first thought that comes to peoples’ minds when they think about reaching out is usually by cold emailing or cold calling. These are effective ways and if one has enough perseverance and persistence, it could work out in their favour. However, it is a tedious method and there are other ways to network strategically as well. One possible way would be going on online platforms and pursuing connections through there. Some of the most popular ones include Angel Investment Network and AngelList. It’s through these platforms where you can get a better idea of how versatile some investors can be and where one can exhibit their startup to the world. Another way to show off a startup amid experienced investors would be by going to an industry conference or summit. It is here where you can build some lasting relationships with investors and gain advice and insight from their perspective or access to their own connections. In any case, the key is to nurture investor relationships, as there’s no such thing as a bad connection.

Be Specific with Your Pitch

This next point may seem obvious, but it’s one of the most important ones on this list. Before going to anyone about an idea, it’s paramount to be prepared, whether it’s through a pitch deck or a presentation. The best presenters are those who can make the other party feel special as well as earn their trust — it takes a considerable amount of effort to convince investors, as they look for hardworking individuals. It would also be valuable to research the investors’ existing portfolio companies; having this network in your roster can be a benefit in the future. The visuals are also as important as the content itself, so it’s best to invest in an aesthetic slide deck that will compliment a business proposal. As for the presentation itself, it goes without saying that it should be practiced and run through multiple times before the real deal. The key point of the entire presentation should be clear, as well as the questions it intends to answer: What problem is this solving? Why should this program be solved? Why is this the best solution? Lastly, in the end, make sure that the value proposition and the ask are clear as well, as these are the raisons d’être of the work a startup has done to prepare for this. Time is truly one of the most precious resources one can have, so as an entrepreneur, don’t waste your own time or that of your investors and be prepared.

Learn from Others

Last, but certainly not least, is to learn from as many other founders and investors you can. Raising capital is a daunting experience, especially for first-time entrepreneurs, and it can be extremely valuable to hear the opinions of those with more experience. Other founders can provide you with investors or advisors from their own networks which would help leverage one’s lack of experience. Additionally, when talking to investors, it can be incredibly enlightening to hear what they think of pitches and their “do’s and don’ts” when it comes to raising capital. On our Spotlight Show, you can gain access to the knowledge of many prominent investors who each adhere to a different industry and could possibly help.

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Learning From Others Is Beneficial

Ultimately, picking investors that are critical to success is a timely process that needs a lot of care and delicacy. There are obviously so many other factors that will come into play when finding an investor for a startup, but these five steps would be the most important ones to consider:

1. Invest in Yourself and Create a Cap Table

2. Narrow the Investors You’re Interested In

3. Network Strategically and Innovatively

4. Be Specific with Your Pitch

5. Learn from Others

And remember, finding a good investor doesn’t always have the reward of capital being granted; in other instances, it can come in the form of experience and advice, something that can often be just as valuable.

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5 Ways the Coronavirus Affect Startup Investment

5 Ways the Coronavirus Affect Startup Investment

March 2020 is unlike any other time in history not just for startups but for everyone in the world. We enter uncharted waters and here is what our team observed…

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1. Investor Crawl-Back

Unfortunately there are high net-worth investors who lost a lot of money in the market when things started crashing and layoffs happened everywhere in the world. Just like entering the last Bear Market, some investors are faced with uncertain times for themselves. Consequently, startup funding has started to disappear at some firms and contracts are left unsigned.

2. Startup Valuations Get More Conservative

YC’s demo day was the first one done after the lockdown occurred in Silicon Valley, it was clear to see that valuations dropped since the last year’s cohort. This was favourable to investors who still had funds left to invest. The unfortunate thing was that not all accelerators were equipped to take things digital instantly, so some did not have real virtual demo days and only slide decks were sent to venture capitalists. As a result it is taking a bit longer to do due diligence and close deals.

3. Governments Hand Out Money

Even though there were hand outs of relief funds, not all startups qualify. In most cases, they were not meant for ‘tech startups’ but those who got it showed immense support for the rapid relief fund across social media. The tricky thing is it is difficult to establish how long these would last and who got it and who didn’t.

4. Venture Capital Firms Postpone Fundraising and Reinvest in Existing Portfolio

(As we work in early stage startup investment at VenturX, we can only state what we know about this stage.) Because it might take longer with unforeseeable circumstances when it comes to raising the next fund, the schedules have shifted to focus on their existing portfolio companies (those that they already invested in). In other words, some are halting their fundraising and reinvesting their remaining funds to their current startups in order to give them a bit of relief until the next fundraising round. This would ensure their runway of cash will not run out during the lockdown period.

5. How do Their Clients Cope?

Not only are the questions at pitches about the startup’s business model but also about their clients. Who are your clients? Have they been able to remain open during the lockdown? If they are not open and there are layoffs in their industries, how can they pay you? How will you be able to maintain revenue and growth during these times?

It all goes to say that we need to shift our mindset as as we enter this new normal.

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3 Most Common Legal Mistakes When Building a Startup

3 Most Common Legal Mistakes When Building a Startup

Launching a Startup

Launching a startup can be a very exciting yet hectic venture. While enthralled in building your company and generating ideas for a product, it’s easy to forget one of the most challenging components of the entire process: the legal side. This is often the trickiest part for entrepreneurs because navigating the multitude of complex laws and corresponding paperwork involved in starting and building your company can be quite difficult and time-consuming. As a result, it’s very easy for entrepreneurs to get caught in the middle of a heated lawsuit over a simple mistake, the consequences for which are often very severe. Here are three of the most common legal mistakes entrepreneurs make when building a startup.

1) Picking an Unoriginal or Semi-Original Name for Your Company

Who’s Here

When creating a startup, it’s important to carefully choose the name of your company and consider its potential legal ramifications. Every entrepreneur knows that your company’s name needs to capture the purpose or function of your product so that potential consumers will know what your company is about. It’s also well known among entrepreneurs that what kind of entity you choose for your business must be factored into your company’s name. This matters because it affects how much personal responsibility you bear for your company and its financial obligations, such as unpaid debt and taxes. But there’s another component to naming your business: ensuring that your chosen name is entirely original. This part of the naming process is where many startups who find themselves in trouble regarding their chosen name go wrong. Entrepreneurs want the name of their company and product to be as catchy, clever, and intriguing as possible. However, if you do not do your research to confirm that your company and product’s names are completely original, larger incumbents may notice and drag you to court. Unfortunately for you as an entrepreneur, they are very likely to win simply because they are much larger and have better legal teams, even if they do not have a particularly strong case.

In 2010, Brian Hamachek developed an app called Who’s Near Me Live, which enables users to chat and call others based on their current location. However, Stephen Smith and his company, myRete, who developed Who’s Here back in 2008, did not like the name of Hamachek’s new app and made it known to him. In order to avoid a lawsuit, Hamachek decided to change the app’s name to WNM and make sure all references to his app called it WNM. This appeared to resolve things for about a year, until Smith filed a federal lawsuit against Hamachek for trademark infringement. He then gave Hamachek a choice: either shut down WNM or hand over all of your assets. Hamachek refused and litigation continued for several years while Hamachek continued to make offers to Smith in order to reach a settlement.

Although WNM was ultimately able to survive the lawsuit, Hamachek felt the heat of the entire ordeal. He lost out on tens of thousands of dollars in legal fees, which he otherwise could have put towards his product. Additionally, due to the length of the litigation surrounding trademark infringement, Hamachek had to spend hours on end every day for several months dealing with the lawsuit instead of spending it on further developing and improving the app. It is also worth noting that Hamachek consulted with Smith when developing Who’s Near Me Live to ensure that his app’s name was distinct and he still wound up in legal trouble. Therefore, when it comes to naming, complete originality is a must.

2) Not Being Fully Transparent with Investors and Shareholders

Closed financial records

When starting a business, entrepreneurs often will set goals in terms of sales (in units and/or dollars), revenues, profits, and annual growth. Some startups find that sales are slower than expected, they have a serious cash flow problem, or maybe they just want to keep more of the revenue they earned. Many entrepreneurs who engage in this behavior did so under the belief that they and their company would be able to benefit by hiding certain information from third parties, such as investors and shareholders. However, more often than not, their lack of transparency catches up to them later on in the process. As hard it can be to admit you have a money problem, it is crucial that you are upfront with investors and shareholders about where your company stands because the consequences of withholding pertinent information are much more severe than being transparent about your money problem.

In 2016, Domo, Inc., a fast-growing computer software startup based in Utah, found themselves in hot water when Jay Biederman, a company shareholder from Delaware, requested financial documents in order to determine how much his shares of the company were worth. Domo was able to remain a private company and thus avoid mandatory disclosures. It looked like a lost cause for Biederman, until he found out that Delaware state law required full financial disclosure if the plaintiff could prove that they owned shares of the company. Since Biederman had proof he owned 64,000 shares, Domo was forced to open its books. Financial records revealed that after a $200 million investment by a private equity firm, the company was valued at $2 billion and the shares Biederman bought earlier for 32 cents each were now valued at $8.43 per share. Afterwards, Domo had to cough up the amount they had cheated Biederman out of when they withheld financial documents.

As the Biederman vs. Domo, Inc. case demonstrates, attempting to hide financial records and mislead shareholders and investors, either intentionally or unintentionally, is something to avoid at all costs, particularly as you seek a new round of funding. Having a pending lawsuit under your company’s belt serves as a giant red flag for potential investors. This is particularly true if the case involves a lack of transparency, as this may permanently destroy investors’ ability to trust you. Losing the trust of investors may also mean losing your ability to receive additional outside funding, which could prove fatal for your startup.

3) Copyright, Patent, and Trademark Infringement

Trademark infringement

When starting a business, you need to take the necessary steps to protect yourself from unfair and/or predatory competition as well as infringement. To do this, your company will require legal protection, such as copyrights and patents for your products or trademarks for your brand (logos, slogans, etc.). Securing legal protection for your company and its products can take months or even years to obtain and is quite expensive, especially for patents, which can cost as much as $15,000. On the other hand, it is very easy to unintentionally infringe upon a name or product already legally protected. Therefore, you need to ensure that all your company’s products as well as slogans, logos, and content on your company’s products and website are entirely original in order to avoid copyright or trademark infringement. If anything of yours is too similar to copyrighted, trademarked, or patented content, even just a couple phrases on your company’s website, you may quickly find yourself in the middle of an infringement lawsuit.

Michael Glanz, founder of HireAHelper, Inc. knows this to be the case. In 2008, U-Haul sued Glanz and his company, alleging trademark infringement. U-Haul pointed to two phrases used on HireAHelper’s website, “moving help” and “moving helpers” and claimed they were too similar to two registered trademarks of U-Haul. Despite Glanz’s attempts to settle with U-Haul, they refused and brought him to court. After three years, U-Haul finally agreed to settle the case for an undisclosed amount, though Glanz claims the terms were almost identical to the ones he proposed at the start of the ordeal. While HireAHelper was able to survive and later continue to grow, significant financial damage was inflicted upon Glanz and his family as well as co-founder Pete Johnson.

When all was said and done, Glanz owed $250,000 in legal fees, Johnson had to sell his home and move in with Glanz and his family, and Glanz’s parents had to push their retirement back by an entire decade. As damaging as the consequences were for Glanz, they could’ve been far worse. Had U-Haul taken them to court and won, Glanz and his family could have had their personal earnings wiped out, which would have resulted in Glanz losing his home just after having a newborn and would have all but certainly been the nail in the coffin for HireAHelper. Due to U-Haul’s size compared to HireAHelper’s, the former would almost certainly have won the case had a settlement not been reached.

Conclusion

Startup growth

When you’re creating a startup, the legal side will likely be the most challenging part to deal with. The three cases discussed in this post demonstrate just how perplexing business law can be, but also how easy it is to run afoul of it. In all three cases, the end results were heavily damaging for the entrepreneurs involved and a settlement of some sort was the only thing standing between the legal system and their entire business. Taking the time upfront to ensure that you know and understand all relevant business laws and that you and your company are in compliance with all of them is a necessity in order to avoid these expensive but preventable legal pitfalls. Avoiding these mistakes will allow you to focus your time and attention on the health of your business and will increase the likelihood of success and stability of your business in the long run. Are you a startup seeking funding during Seed or Series A? Check us out here!

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About VenturX

VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.

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How To Adopt An Entrepreneur Mindset 

How To Adopt An Entrepreneur Mindset 

Entrepreneur Mindset is KEY

Mindset

“Entrepreneurs have a mindset that sees the possibilities rather than the problems created by change.” For the past few years, I’ve pursued the answer as to how are entrepreneurs different from the rest of us? It’s apparent that more and more young people are starting to build their own businesses. Tobi Lutke, who founded Shopify in 2006 used his experience as an entrepreneur and a software developer to launch Shopify and it is now a billion-dollar company.

According to FOUNDER INSTITUTE, employees don’t become successful entrepreneurs simply by starting a company; they must also embrace an entirely new way of thinking to adapt to and thrive in the unpredictable world of start-ups. Are you an employee who’s looking to make a transition to becoming an entrepreneur, keep in mind the following five key mindsets you’ll need to adopt before taking the leap.

What Are The Entrepreneur Mindsets?

Mindset

1. Reach Out To The Customer First

Though it may seem to many like product development should come first, master bootstrapper Greg Gianforte insists that is the wrong approach. When it comes to reaching customers, public relations can either be a company’s best friend or its worst enemy. Building the foundation for a strong customer/business relationship comes from mutual trust and respect.

Greg Gianforte focused on the tech sector where his experience was strongest. But instead of starting with a prototype for a product or service and then seeking funding, he started by getting on the phone with potential customers. That led to conversations about what kind of product they would buy. After a month of phone calls, Gianforte spent about 60 days coding the product his customers said they wanted. He claims his company, RightNow Technologies, was cash positive from the beginning. The business makes cloud-based software for large consumer businesses and was sold to Oracle in 2011.

2. Network To Build Business

Many entrepreneurs talk about the importance of networking, but few are as specific about how and why networking is important as Jason Nazar, co-founder, and CEO of Docstock.com. Today, studies have shown that up to 80% of jobs are never advertised — they are filled by word of mouth. So it’s who you know and who knows you that matters. You must develop relationships and connections within your network to have more opportunities to advance your career. Attending meetings and social events hosted by your professional association is a great way to connect with people in your field. Always have a goal in mind when networking. People always say that a plan without a goal is just a dream. Networking events should be part of your overall plan to ensure you get the most out of your valuable time. If there is no connection between your strategy and your actions, there is a problem. Want to explore various networking goals? We got you covered here.

Nazar says he owes his success — particularly the founding and growth of his current company — to his networking efforts. He says he used networking to raise $4 million in startup funds. He says he also used it to locate a co-founder and build the majority of his organization.

3. Keep Control Of Your Vision

It is important to have vision and purpose because it helps make our decisions that create our lifestyle. Discovering your vision isn’t that hard. I’m sure you are like me, wanting to achieve and accomplish certain things during our lifetime, and for most of us, the passion we feel deep down ignites us and brings our hopes and dreams to the surface. If you have trouble discovering your vision, ask yourself this — What are you deeply passionate about? What type of work do you find engaging and truly enjoy? At the end of your life, what will be the greatest accomplishment?

Jack Ma, also known as Ma Yun, is the founder and guiding hand behind Alibaba, a giant Chinese-based wholesale eCommerce site. Despite its popularity and financial success, Alibaba’s road to acceptance outside China has not been easy. Ma believes in his vision for his company to get the job done. Now Alibaba is one of the largest companies the world has ever since.

4. Take Ownership

When you begin to do the work and take ownership over your life, you start to realize the power of time management, control, and autonomy. You live life on your terms this way.

Oprah Winfrey had experienced plenty of success as a broadcaster and even in the entertainment industry before ever launching the Oprah Winfrey Show in 1986. But it wasn’t until after taking ownership of her syndicated talk show from ABC that Winfrey’s entrepreneurial skills began coming into focus. Her production company would eventually produce other TV and film projects.

Winfrey’s entrepreneur mindset eventually led her to launch a magazine and even her own TV network.

5. Focus On What’s Good For Your Business

You can’t grow a business until you have a focused vision of where you want it to go. The overall strategy is the big picture and the ultimate direction as well as the purpose of the business. To achieve focus on a daily level, consider the following: The Pareto Principle (80/20 Rule). It states that 20% of your actions and inputs will create 80% of your desired outcome. The key here is identifying and focusing on the 20% that is actually achieving the 80% of your desired outcome and not falling in the trap of working on the 80% that’s only achieving 20% of the desired outcome. The 20% you do choose to work on should mostly work towards improving the one metric you chose to focus on.

From bestselling albums to a nightclub, a clothing line, a sports franchise and more, rapper Jay Z is known not just for his music but also for his business acumen. His success is based in part on his focus. It includes a refusal to spend his time on anything that does not expand his entrepreneurial ventures.

Cultivating an Entrepreneur Mindset

Mindset

Do you see yourself having these mindsets? Channel these qualities into your business and be persistent. Or pick a trait to which you aspire and see how you can put that trait to work in your professional life.

Mindset is crucial. In the words of Oprah Winfrey, “The greatest discovery of all time is that a person can change by merely changing his attitude.”

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About VenturX

VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.

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The Role of Due Diligence 

Why is Due Diligence Necessary?

Due Diligence

“Due diligence is both an art and a science.” According to Investopedia, Due diligence is an investigation or audit of a potential investment or product to confirm all facts, that might include the review of financial records. Due diligence refers to the research done before entering into an agreement or a financial transaction with another party.

Because of the due diligence, your investors may come to a different or more nuanced understanding of the opportunity and seek to renegotiate the initially agreed terms or even decide to decline the investment.

Types of Due Diligence

Due Diligence

There are various types of due diligence given that every circumstance is different and there’s no formula for it. Mainly, there are four basic types of due diligence which include commercial, financial, tax and legal due diligence.

Commercial Due Diligence reports analyses company performance, the likelihood that the business will meet its targets, and highlights potential problems that may occur as a result of an acquisition. This report provides the potential buyer with in-depth knowledge of the target company and the market in which it is positioned. It is designed to enable the prospective buyer to make an informed decision, and highlight any potential risks associated with the target business.

Financial Due Diligence typically, the scope would include an analysis of the historical quality of earnings, quality of net assets, working capital requirements, capital expenditure requirements, financial debt and liabilities, and forecasted financial results. In short, it focuses solely on the financial health of the company.

Tax Due Diligence is a comprehensive examination of the different types of taxes that may be imposed upon a particular business, as well as the various taxing jurisdictions. To put it simply, it could be viewed as an extension of the financial due diligence, where the focus is on identifying potential additional tax liabilities arising from non-compliance or errors.

Legal Due Diligence covers a wide scope of legal matters, including proper incorporation and ownership, contractual obligations, ownership of assets, compliance, and litigation. It aims to confirm the validity of the rights being acquired by your investors and the absence of legal risks which could undermine the value of the investment.

How Long Does Due Diligence Take?

Duration

According to David Braun, CEO of a Capstone (they specialize in M&A) generally, on average due diligence should take between 30 and 60 days to complete. It is the optimal time to complete a thorough evaluation of the business without letting the process drag on. Why is this such a long process? Read on!

Due Diligence Process

Process

Before the Due Diligence, gather your internal and external team of lawyers, accountants, advisors, and investors. The internal and external team will come together to discuss an opportunity, and terms of investment. Key terms discussed are usually laid out in a non-binding document such as a Term Sheet or a Cap Table. These usually are discussed through a virtual data room whereby information is typically secured hence ensuring only approved viewers get to access the confidential documents. Virtual data rooms can be created virtually and many firms provide them. Datarooms.com, Drooms, etc. are just some of the few that provide safe due diligence with information like this. Need help in generating a Cap Table? Or don’t know what to include in your Term Sheet? We got you covered!

During the Due Diligence, there is a lot, when I say a lot, I meant a lot of information requesting and receiving. So be prepared for that! That aside, there will be on-site visits at the target business by the due diligence team. During the onsite visit, the due diligence team gets to interview with various management team members from various functions; they will discuss the findings as well as draft out a report on the findings. The report is then sent to your investors and further negotiation on changes to the term could take place. Overall, since it is not a one-man show; it involves various stakeholders and hence there is no doubt due diligence process is such a long process.

Conclusion

Process

To ensure a smooth due diligence process, I would advise every business to do a lot of research and do your own due diligence first, so you can answer all the questions raised by your internal and external team. Usually, a framework or checklist would come in handy when you want to do your own due diligence and they can be found here. It goes beyond the basic checks you would normally make and it’s safe to say that if you find it to be relatively straightforward, you probably didn’t do it right. On top of the checklist, follow this article on Due Diligence in 10 Easy Steps. Check out our article on What to include in an Investment Package, it will come in very handy when you do your own due diligence.

According to our experiences, some potential red flags that you should look out for when doing your own due diligence are and not limited to the following — Make sure your business’ contracts are fully disclosed, your business is not in the middle of any litigation case, and check the local laws to make sure there aren’t any violations. You should always try to overcome the red flags or the difficulties faced before the actual due diligence.

No matter what, always remember that due diligence is your best opportunity for investors to understand the risks involved in your business before signing a long term relationship hence, be prepared to do everything to minimize the risk. Are you a startup seeking funding during Seed or Series A? Check us out here!

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About VenturX

VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.

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Top 10 Questions from Investors 

Top 10 Questions from Investors 

questions from investors

questions from investors

If you’re raising money for your company and wanting to pitch to angel investors and venture capitalists, then it is essential for you to know and expect what questions will be asked and how you should approach these questions. More often than not, they will ask you the same questions over and over again which will help determine why they should choose you. Make sure you are taking notes on the questions from investors so that you can score during future meetings.

For the past 2 years, VenturX has been actively participating in pitching to investors and of course, we have compiled the top 10 questions your investor will ask you and how you should approach these questions.

Top 10 Questions and How to Approach Them

Q&A

1) Where do you see the sales trend over the next 1–2 years?

This is an open-ended question. To approach this question, you must give a broad response and even touch on a variety of issues that could prove valuable to the investor’s decision-making process. The time frame will give the investor a good gauge of the opportunities as well as the risks involved over a short term. You need to provide as much proof that your answer is not full of just speculations (ie. we have 5 signed letters of intent for the next 4 months, we already have $100,000 in purchase orders that we just need to fulfill, etc.)

2) Who are the competitors in the industry?

The investors want to know who the potential competitors in the market and they expect you to know them in detail. They would also want to be alerted with any new products or services that may appear in the market which could impact your company. You should already have a concrete plan on how to deal with these competitors and focus on what makes you so special over them before your pitch.

“If an entrepreneur tells me that they don’t have ANY competitors, that is a red flag! They didn’t do their homework!” — Marvin Liao, Partner at 500 Startups, San Francisco. 

3) What obstacles are you currently facing?

No doubt every business is prone to failures and weaknesses, they are part of the equation of growth and they are often where all of the great learnings come from. The investors want to know what are the vulnerabilities in your company. However, keep in mind that identifying the problem is only answering part of the question. It is more vital to convince them how are you going to overcome these problems in both short and long term and convince the investors you have what it takes to overcome any potential obstacles.

4) How is your business performing?

Your investors are interested in how your business is performing. You should give them an introduction to Key Performance Indicators (KPIs) and other non-financial metrics that are going to affect the company’s growth. For software companies like us, KPIs include the lifetime value of a customer, customer acquisition cost, and monthly recurring revenue. Whatever your key metric is, it’s usually unique to your specific business. For more info, check out one of my favourite books “Lean Analytics” — by Alistair Croll and Benjamin Yoskovitz

5) How do you track trends in your market?

Due to the nature of start-ups, especially tech-based start-ups, things change very quickly. Investors would like to know if you are aware of your industry, as well as how you find data to stay on top of industry trends. Before pitching, be prepared to share how you find data about your customers and industry, as well as how you can leverage this information to improve your business to stay on top of the game.

6) Can you tell me a story about a customer using your product?

This should not be a surprise as it should already be included in your pitch. According to our experiences, the best pitch usually is the ones that open with a story about how your products and services are helping customers. We would advise using real names to be as specific as possible to describe how your services have transformed your customers and get rid of their “pain.” Hence, be sure to craft an excellent story on your customer and let that tell a story for you!

7) How can I connect with some of your customers who have used your product or service?

If your investors ask this question, you are on the right track! They find your pitch interesting and begin what’s called the due diligence process. During due diligence, they want to know a lot more about your target market/customers. Some insights you should provide to your investors are: who they are, how you know who they are, how did you find them, what do they think about your product or service, how often are they using it, on what scale, how you interact with them, etc. This would be a good place to use metrics that we guide our startups with such as Conversion and Engagement.

8) How would you predict your market will be like in five years as a result of using your product and service?

This is a great opportunity to tell a story on the growth of your company. Predict or picture how your customers’ future as a result of using your product or service in five years’ time. Prove to your investors that you are able to envision and think critically about your product and how your customer will evolve over the next 5 years.

9) What if five years down the road we think you’re not the right person to continue running this company-how will you address that?

Don’t be surprised when they ask you this question. Yes, it is rude and odd but often times, particularly with high growth start-ups, funding CEO does not remain the CEO who scales the company beyond the start-ups’ phase. This is the part where you convince the investors what kind of entrepreneur you are. The reason they asked this question is that more often than not, many founders’ ego get into the way of a company’s growth and they refuse to step down for the good of the company. It is important to address this issue and prove to the investors you do not have such “quality.”

10) How much equity are you offering?

This question usually comes at the end and if it does, it should tell you that you are on the right track and your investors are interested in the deal. The investors would like to know how their shares will be allocated and how it will be diluted assuming there are future rounds of funding such as Series rounds or even IPO when your company has matured enough. A good way to answer this would be to provide data such as generating a Capitalization Table and show them how much shares and how will that change down the road. If you need help generating a Simple Capitalization Table for your pitch, fear not, check out our article on Cap Table 101.

Pitch

That should be the top 10 questions you should expect your investors to ask during your pitch. It should have covered all grounds, if not I’d love to hear from you any types of questions that aren’t covered in this article — please post them in the comments down below and don’t forget to give us a clap if you enjoy reading this article. Interested in knowing how will VC invest in 2019? Our article got you covered! Are you a startup seeking funding during Seed or Series A? Check us out here!

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About VenturX

VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.

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How to Understand Your Term Sheet

How to Understand Your Term Sheet

What is a Term Sheet?

Term Sheet

A Term Sheet just to be specific is an agreement between you as an entrepreneur and an investor — a series of terms you think that matter. Some key values of the term sheets include what the valuation of the business is, how much investment the company is getting and for what percentage. Early Term Sheets are for entrepreneurs who are raising seed and angel capital, which is what we will focus on this article. Personally, I like to keep them simple, not a lot of bells and whistles, not a lot of rules.

However, Term Sheets can vary depending on what type of funding round you are in, and how much is at stake, as well as who is involved. If you decided to go for Series A & B rounds, your Term Sheet is going to get more complicated which includes who’s going to be on the board and how many board seats are there, what happens when the board voted for you as a CEO to step down. Yes, I know right, if it’s not for the movie I recently watched, I always thought the CEO represents the top of the ladder and they exercise full control over the company.

There is a great set of templates available online put together by Fenwick & West (National Law Firm) and Andreessen-Horowitz (Silicon Valley VC Firm).

Breaking Down the Term Sheet

Term Sheet

Pre-Money Valuation

According to Investopedia, Pre-Money Valuation refers to the value of a company not including external funding or the latest round of funding. Pre-money is best described as how much a startup might be worth before it begins to receive any investments into the company. This valuation doesn’t just give investors an idea of the current value of the business, but it also provides the value of each issued share.

To calculate the value of your shares for the current round using Pre-Money Valuation, it’s not rocket science. Let me walk you through this, assuming the Pre-Money Valuation is at $3,000,000, we will divide that by the existing number of shares (10,000,000 for example)=price of shares at which new investors will buy. Hence, $3,000,000/10,000,000=$0.30. Each share would cost $0.30.

Post-Money Valuation

On the other hand, post-money refers to how much the company is worth after it receives the money and investments into it. Post-money valuation includes outside financing or the latest capital injection. It is important to know which is being referred to, as they are critical concepts in the valuation of any company.

To put it simply, Post-Money valuation is Pre-Money valuation + Amount Raised. Let me walk you through the calculations, given the same amount of Pre-Money valuation as the previous example, at this round your company raised $1,000,000 and hence your Post-Money valuation would be $3,000,000+$1,000,000=$4,000,000.

However, if the calculations get more complicated as the company grows, this is a great online Post-Money valuation and Pre-Money valuation calculator to generate the numbers for you.

Preferred vs Common Shares

When a business wants to raise money by attracting investors, it can do so by issuing stock: common stock or preferred stock. There are many differences between preferred and common stock. The main difference is that preferred stock usually does not give shareholders voting rights, while common stock does, usually at one vote per share owned.

Common stock allows its holders to make a profit through rising share prices and dividend payments. Holders of common stock also get to vote on corporate issues, such as electing new directors to the corporation’s board. For example, Detour Gold Corp. interim CEO Michael Kenyon resigned 3 months ago following a vote by shareholders and hence the company took an entirely new direction because of common stock shareholders.

However, should the company end up in bankruptcy, holders of common stock are last on the list to get their money back. Putting it simply and plain, if you hold common stock and the company goes bust, you are unlikely to get any of your capital back. For more in, see The Motley Fool.

Preferred stock also represents owning a share of the company, but it works a bit differently than common stock. Preferred stock pays a predetermined dividend, whereas the dividends paid to common shareholders tend to vary according to the company’s fortunes. Dividends on preferred stock are often larger than those on either common stock or the company’s bonds. Holders of preferred stock do not get a vote on company matters. And if a company’s assets are liquidated, the preferred stockholders get to redeem their shares before common stockholders do, giving them a better chance of getting at least some of their money back.

For most investors, common stock is a better deal. It’s slightly riskier than preferred stock but will usually show a slightly higher return as well. If you want to enjoy the potentially high returns of a stock investment but want to minimize your investment’s volatility or your exposure to company-specific risk, the preferred stock might be a better choice. Preferred stock may also be better if you’re looking for a source of income you can depend on, as the dividends paid on such stock are fixed. But whichever class of stock you choose, be sure that it’s an investment you’ll feel comfortable holding over the long haul.

Participating or Non-Participating Preferred

Non-participating preferred typically receives an amount equal to the initial investment plus accrued and unpaid dividends upon a liquidation event. See more at STARTUP COMPANY LAWER. Holders of common stock then receive the remaining assets. If holders of common stock would receive more per share than holders of preferred stock upon a sale or liquidation (typically where the company is being sold at a high valuation), then holders of preferred stock should convert their shares into common stock and give up their preference in exchange for the right to share pro rata in the total liquidation proceeds. Non-participating preferred stock is favoured by holders of common stock (i.e. founders, management and employees) because the liquidation preference will become meaningless after a certain transaction value.

“Participating Preferred” also typically receives an amount equal to the initial investment plus accrued and unpaid dividends upon a liquidation event. However, participating preferred then participates on an “as converted to common stock” basis with the common stock in the distribution of the remaining assets.

Participating Preferred stock is favoured by investors because they will receive a preferential return over both low and high exit transaction values.

A perfect example by founders workbench to illustrate what is going on is the following. Assuming company A has one series of non-participating preferred stock with a liquidation preference of $6 million representing 50% of the capital stock of Company A. If Company A were to be sold for $10 million, the investors would receive $6 million (as the $6 million investment amount is greater than the preferred’s 50% share of the $10 million sale proceeds) and the remaining $4 million of proceeds would be distributed to management. Company B also has one series of preferred stock with a liquidation preference of $6 million representing 50% of the capital stock of Company B, but its preferred stock is participating. Upon the same $10 million sale event, the investors would receive $8 million (the $6 million liquidation preference plus 50% of residual $4 million of sale proceeds) and the remaining $2 million of the proceeds would be distributed management. Thus, in the same $10 million sales, the difference between participating vs. non-participating preferred resulted in a $2 million shift in economics away from management to the investors, which represents one-half of the return that management would have received had the preferred stock been structured as non-participating.

Potential Red Flags in a Term Sheet

Red Flag

After breaking down various important key terms in a Term Sheet, let’s dive into what red flags to look out for in a Term Sheet.

1) Review Period

Some Term Sheet will include a Review Period that allows them to pull the Term Sheet after it’s been signed. Including this is like saying your investors assume there’s a high chance that the deal will fall through, which is ironic since it’s counter to investor norms. That being said, reputable investors would not issue a Term Sheet with a review period if their business diligence is done and they are confident towards the deal.

2) Change in Management

As discussed earlier, your board of directors could replace the CEO if they deemed the CEO to be not a fit. However, these can be done without specifically including it to the terms. If this term appears in your Term Sheet, remove it. Investors would rarely willing to invest in a company where they immediately hope to remove to CEO, and of course, frankly speaking, this is quite rude as well.

3) Guaranteed Exit (within 5 years)

Last but not least, guaranteed exit. This basically means the founder legally commit that they would find a buyer for investors’ shares within 5 years. Startups have unproven economic business models. More likely than not most startups are still experimenting or pivot in the initial years. It is unknown how long this could take because it differs from case to case. 5 years is perhaps when they figured it out what worked and what does not. Lots of opportunities for capital to be returned will arise organically over the life of your company and hence if the investor wants an exit within 5 years, no doubt this is a huge red flag to look out for.

Conclusion

Image result for term sheet for startup
Investor Meeting

As you can see, the Term Sheet can be really quite scary and exciting for new startup founders. If you are pursuing Seed or Angel round funding, Term Sheet is usually less complex and provided by the investors whereas if your company is more mature in the future and decided to go for Series A & B funding, the Term Sheet is usually created by the company. Are you a startup seeking funding during Seed or Series A? We are here to help!

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About VenturX

VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.

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Differences between SAFE and Convertible Notes

Differences between SAFE and Convertible Notes

Investment

With convertible notes slowly becoming a thing of the past, in recent years startups are beginning to embrace Simple Agreements for Future Equity (SAFE) as an alternative to raise funds. Despite being similar as both are tools for raising funds, there are many outstanding differences between them and we will dive deeper into them in this article.

What are Convertible Notes?

Convertible Notes

According to FundersClub, convertible notes are an investment that is structured similarly to a loan. A convertible note is a type of debt which might convert into equity in the future. Debt, I’m sure most of you out there are familiar with this term, if not put it simply — When I borrowed money from you, I have to pay you back in the future, but with interest. A convertible note is a type of debt but slightly different as instead of paying you back with interest in the near future, we change that into equity and offer you part of the ownership. Sometimes we like to call convertible note debt-like since it’s similar to debt with slight variations.

What is SAFE?

SAFE

SAFE was introduced by the Silicon Valley accelerator Y Combinator as the new big boy in town for startups to have more options, or even to replace convertible notes when it comes to raising capital. To put it simply, SAFE is a warrant to purchase a stock at a later priced round, and hence is basically a contract. The main difference SAFE differs from convertible notes are maturity date, interest rate, and conversion to equity.

Maturity Date

Maturity Date

While SAFE is not a debt and hence does not have a maturity date, convertible notes do have a maturity date.

Upon reaching the maturity date, entrepreneurs face tough decisions on whether to pay back the principal of the convertible note, with interest or convert the debt into equity for the investors. Most would opt for the latter option as paying back the principal amount with interest could be difficult for startups, especially at an early stage.

Interest Rate

Interest Rate

As discussed earlier, since SAFE is not a debt, but a warrant/contract, it does not carry an interest rate hence keeping things simple and founder friendly. While SAFE does not carry an interest rate, convertible notes, on the other hand, carry an interest rate (simple and not compounded) between 5–8%.

For example, if the interest rate was 5% in a $100,000 convertible note seed financing and Series A funding round occur a year later, the investors would convert an additional $5000 ($100,000 x 0.05).

This may not be considered important for a short-term investment but may create financial problems if it’s long term and since there is maturity date for convertible notes, this might post as a bigger problem to entrepreneurs. The interest rate, however, could be a way to incentivize startups to raise rounds on a timely basis. That being said, there is a maximum interest rate that may be charged on a loan depending on which state, this is known as Usury Laws by State.

California for example (for obvious reasons), according to Law Office of Melissa C. Marsh, ” Pursuant to California law, non-exempt lenders (the average individual) can charge a maximum of: (i) 10% interest per year (.8333% per month) for money, goods or things used primarily for personal, family or household purposes and (ii) for other types of loans (home improvement, home purchase, business purposes, etc.), the greater of 10% interest per year, or 5% plus the Federal Reserve Bank of San Francisco’s discount rate on the 25th day of the month preceding the earlier of the date the loan is contracted for, or executed. In other words, the general rule is that a non-exempt lender cannot charge more than 10% per year (.8333% per month) unless there is an applicable exemption”.

Conversion to Equity

Conversion to Equity

While both SAFE and convertible notes do offer a conversion into equity, there are differences since they do not call for the same terms of conversion.

SAFE only allows for conversion into equity at the next round of financing. Meaning, if you decided to opt for SAFE during the seed round, conversion into equity option is only available the following round, meaning Series A round. Hence SAFE does not carry a multitude of conversion events.

Speaking of which, I almost forgot to mention during the next funding round, SAFE can be converted even when you raise any amount of equity. Many have argued that SAFE is very easily manipulated because, without minimum amount raised to trigger conversion, you could simply raise $8000 the next round and trigger the conversion.

For convertible notes, besides allowing a conversion during maturity, it does have an option to convert at the current round, and future round. Also, a conversion would take place when the minimum amount (reflected on the agreement) is met.

For example, assuming investor invested $200,000 and were granted the right to convert to equity at a $2 million valuation. If the start-up were then acquired for $10million, the investor would receive $1 million or 10% of the proceeds, by converting the $200,000 loan into equity representing 10% of the issued and outstanding equity, post-conversion ($200,000 divided by $2 million + $200,000).

What’s the Best Option for Seed Investment?

Seed Investment

So, after diving into the 3 main differences between SAFE and convertible notes, what does that mean for all entrepreneurs out there? For my take, SAFE is made simpler for entrepreneurs and they can use SAFE to raise capital with ease without having to go through the trouble of negotiating maturity date and interest rate terms, and also clarify when is the next funding so as to trigger the conversion. SAFE does indeed align the interest of investors and entrepreneurs in a whole new different way. That being said, always remember that what might be a pro to one start-up could be a con to another and hence depending on the nature of your start-up, choose wisely. Are you a startup seeking funding during Seed or Series A? Check us out here!

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About VenturX

VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.

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Networking in Silicon Valley

Networking in Silicon Valley

Silicon Valley

Silicon Valley

There is a stigma that people in Silicon Valley are not like anyone else. From my time living there and then going back a few years later, I learned these tips about the how to formulate a simple networking goal, what questions to ask and how to get ahead of the game! I decided to write this article because I was scratching my own itch. It was something I wished I could find more info.

Questions to ask when you meet an investor:

1) Their favourite question of mine seemed to be: “If you only one day left in San Francisco, what would you recommend?” If you feel pride and joy about your city, it is something that would bring your thought back to happy memories that you would recommend to newcomers.

2) General questions about their work: What is your investment focus, what is your average investment size, etc..

3) What are you hoping to get out of this event?

4) How is your current firm different from the last VC firm you were at? (This is a great question for those who changed firms, which does happen a lot.)

5) Offer them something instead of ask for something.

Tim Ferriss made this great video about how to ask questions. Why would this be a good source? He is from San Francisco himself and he is an elite podcaster. Podcasters are trained in their craft to do one thing — ask good questions. His key insights are:

a. Ask questions that are easy to answer. Instead of “what do you like to read?” change it to “what is the one book you give as a gift most often?”

b. Asking the right questions produces an interesting conversation. (he has a different way of saying it.)

See the full video here:

Formulate Your Networking Goal

Form my last article, “Do networking events contribute to your business goals?” I talked a bit about the importance of investing any time or money towards a networking even only if it helps you reach your business goals.

For any goal to be obtained, it had to be: measurable, timed, and accountable.

When I attended the TechCrunch event in February 2019, I had a goal of meeting X number of startups in investors in my industry. I only had 3 hours at the event. I was accountable to my friend who I will report to the following Sunday.

Even before I went to the TechCrunch event, two friends invited me to the Facebook campus for lunch earlier that day, so I was already in the mindset of achieving my goals. So, if there was any space for extra networking, I would make a new “Facebook” friend. Unfortunately, I did not have enough time at Facebook to make new friends.

How to get ahead of the game

· Add people to your LinkedIn beforehand with the note “Looking forward to meeting you the TechCrunch event tonight — Sydney, Founder of VenturX.” It is simple and short enough to fit in that introduction box LinkedIn gives. The reason for that is to get a small idea of who is attending and what their business is about (and if it relates to yours). Note: you can only do if you have newsletters or an email from the event organizer telling you who is going to be there. I received this list 2 days beforehand. (Estimated Time: 5–7 mins for 20–25 new contacts)

· Add attendees beforehand on twitter. If you are in a B2B business like VenturX, I recommend following their company twitter and check on crunchbase for the founder’s names too. (Estimated Time: 10 mins for 20–25 new contacts)

· When you get a strange request from someone you don’t know, I recommend saying hi and asking how you can bets work together. If I don’t know you and you send me a request, I will ask you that. (You can try and reference this article.)

· Thank new contacts afterwards for any tips or resources new contacts gave you. People always like to hear that their advice was helpful

· If you taking photos for company social media account as well, get there early and take photos. This is especially if your phone is slow. It takes 15+ minutes to find the wifi password, connect to wifi with my slow phone, think of hashtags, find the event hashtag, and think of my own hashtags/text, and take pictures. If you want to tag any sponsors/ people, it would take even longer.

In conclusion, networking events are great for face to face interactions so the person you are dealing with isn’t just another email to type.

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