Funding is Fun

Tonight at FastTrac the topic was identifying funding and working with investors.

Charles put together a panel that included Stephen Fleming who is the Chief Commercialization Officer at Georgia Tech, Dave Unsworth from RBC Ventures, Fred Sturgis of HIG Ventures, and Jim Stratigos from Jacket Micro Devices.

Great panel that led to an entertaining evening. The highlight of the night was when Stephen broke out his “seven deadly sins of business plans”. He sent me the presentation via Powerbook to Powerbook bluetooth, a first for me. The sins follow.

1. Ask for an NDA.

At which point all of the panelists from the investment community literally burst out laughing. Seems to happen a lot with folks wanting to join the ATDC as well. Bad advice from lawyers.

2. Focus on the technology—not the market, the competition, and the customers.

Give the pitch that is focused on selling a piece of your company.

3. Practice top-down sales forecasting.

Having 2% of a huge market is a losing proposition. You want to be a top three market share player.

4. Use four significant digits everywhere.

Do you really think that revenue in 2010 is going to be $27,843,231 or $28,438,132? While your business model might spit this out, round the number in your presentation. $28 million will do just fine!

5. Position investors as necessary-but-unpleasant “mushrooms.”

Investors are partners. Selecting one is a courtship. You have to treat it that way.

6. Fill your plan with typos, errors, chartjunk, and repetition.

Use spell check. If English is not your primary language then as CEO it is your responsibility to put together the resources that can get the job done right. Pay somebody to do this stuff if you can’t.

7. Do your homework

VCs have egos. Big egos. If you don’t believe me just ask the Sand Hill Slave. You give them an opportunity to talk about themselves during your allotted time they will eat a huge chunk of it up and not learn a thing about you and your company.

8. Don’t expect Google to acquire you.

They can only do about an acquisition a month and odds are it ain’t you.

Fred also had an interesting comment about what is the most important consideration from his perspective, the technology, the team, or the market. To him having a market with some potential is the number one factor followed by the team. He wants a team that knows how to make money. More important than that he wants a person that is wanting to step up to the plate and swing for the fence.

Big risk, big reward.

I like that.

November 14, 2006  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Venture Capital