Everybody wants to raise money and talk about it. One of the things that does not get talked about quite so much is the overhead of taking someone else's money. More often than not one of your investors joins your newly created board and you start having board meetings. And every time I have been advising an entrepreneur on such a thing and the first board meeting comes up panic generally sets in. "How do I prep for the meeting?"
It's a fair question for a first time entrepreneur and it goes something like this.
1. Ask the board members what they would like to see at the meeting. They typically will share with you some board meeting materials from their more advanced stage companies that you will find completely overwhelming. "They want to see what?" you and your team will exclaim. The panic will deepen. Don't fret.
2. Ask the CEOs of the investors other portfolio companies what they provide to the board for their meetings. If you were smart and did your investor diligence before you accepted that term sheet you will already have established a relationship with these folks and they will be more than happy to help. What you will find is that what they are providing to their boards is a little bit less than what the board gives to you as examples.
3. Plan ahead. The first time you prep for a board meeting it will consume quite a bit of time. It's well over a two week planning process. This process shrinks over time. I prepare the board materials for nCrowd and I can literally get them together in less then 48 hours after a few years of doing so.
4. Set a schedule. Our board meetings are the third Tuesday of every even numbered month at 2:00pm and last for 90 to 120 minutes.
5. Get the board the materials out early. At least 48 hours before the meeting. With our Tuesday board meetings my aim is to get them the materials on Friday and if I lapse they go out on Saturday morning. While the materials may change in scope and size they generally include the following.
Board meeting minutes
A cap table
KPIs and operational overview
An organzational chart including planned hires (if you have enough folks to warrant one)
Special departmental or strategic presentations
6. No surprises. Each board member should know what is going to be discussed at the meeting and the CEO needs to understand each board member's point of view on important topics of discussion.
My number one rule on board meetings is to get in and get out quick and nobody gets hurt. Proper preparation will ensure this happens for you.
It's a much broader than your typical technology startup funding event. It will explore alternative and traditional lending options, angel investments, crowdfunding, private equity and more.
I have the honor of being on a panel, Startups Start Here, moderated by Daryn Kagan of CNN fame. I will be joined by a great group including Daryl Dollinger, Co-Founder of Raving Brands and President of Big Game Brands; Andrew Linder, Partner at Frontier Capital; Sig Mosley of Flashpoint Ventures/Imlay Investments/Mosely Ventures; David Rudolph, Founder and CEO at PlayOn! Sports; Michael Tavani, Co-Founder & Head of Product at Scoutmob; and Mark Wilson, President & CEO at e-Verifile.
Quite the panel.
you are seeking startup, working, or growth capital this will be a nice event to learn about various local sources of captial and find out which are right for your business. It is a bargin at $30 and friends of FoG can get a $10 discount (the discount code is ATCLW).
Thought it would be helpful to share my Venture Atlanta presentation. Eleven slides to tell the story in six minutes.
Put this together starting with a blank in about a week. Few words. Large fonts. I wanted people to pay attention to me, not the slides. I wanted to freedom to modify the words of the presentation after it was submitted. I actually thought about using no slides at all but was talked out of it.
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So on Wednesday I wandered down to the big fish tank for Venture Atlanta. A fine event. One of the best of startup things a guy, or gal for that matter, can do. I was there as the non-paid entertainment, pitching Half Off Depot as we gear up for our Series B in 2013.
And I gotta tell you the truth it was a little surreal. I skipped Venture Atlanta in 2011 as I was running around the Southeast expanding our business. But before that from the year it was formed in 2007 through 2010 I attended the event for the lack of a better term, an observer. I was not pitching and I was not investing. I was coaching the companies that presented. It's a fun job if you can get it and it's always easy to be a critic.
And it started out the same way as it always had. At some point or another I had coached six of the first ten early stage companies to present. They did great.
But coaching and doing are two distinct things and I was slated as the second venture company to present right after my pal Braxton of Clearleap. I had not stage pitched my own company since 2005 and the last time I did something as big as this was when Venture Atlanta was known as ION and somehow I got elected to pitch CipherTrust. I got elected again.
I was a little like the President the first time back in the bright lights and a room full of people. Rusty. It really sucks when you can not see how the people that you are speaking to are reacting. Instead of a confidence monitor with the slides they need a confidence monitor with a camera shot of the audience. Regardless I think I got my main points across. We are building a platform that enables local merchants to market online, we have a lots of revenue, we are making money, and with a little more capital we can sell more and make more money. Overall I gave my performance a B. There were better and there were worse.
My friend Taryn of Synkup gets best of show (or at least best of Wednesday) from me. I don't know if she is going to raise any money but that girl can pitch.
The early stage folks seemed much better prepared than the venture companies. I ascribe this to them having more time on their hands.
Presenters wore jeans. We are learnin to relax a bit down here.
Venture Atlanta is a great forcing event. It forced me to create an executive summary. It forced me to create a pitch. It forced me to practice.
The networking time with the VCs was fantastic. Talking to them about our business was more practice. They asked great questions, some for which I had no answers (but I will get them), and I got an offer or two to help.
It was great to spend some time networking with folks that I had not seen in awhile.
Some of the folks that I had not seen in awhile (which is almost like two years) were in the exact same place with their startup as they were two years ago. If this is you stop.
There was one out of town investor that said "all the pitches sucked." Tool.
Sam Williams talks too much. He talks so much the mayor called him on it.
Not sure how many if any checks get written as a result of a conference like this.
If you get a chance to present at something like this do it. It's worth it. And if you do it take the time to do it well.
Update: I forgot one thing. The coach became the player. I benefited greatly from my coaching session. Great ideas for improvement from experienced entrepreneurs and investors that I tried to incorporate into my presentation and slides. You can always learn and should be willing to do so.
My take. It does not matter. Unless your startup has over 50% of the U.S. using it, has raised hundreds of millions of dollars in venture capital, went public at a $100 billion valuation, shrewdly maximized the money put in its coffers by pushing its IPO price to the limit, and you have somehow managed to remain CEO while still controling the company. Then it matters. That has happened once in the history of the world. Facebook, like its purchase of Instagram, is an anomaly. It does not matter.
Sure early stage valuations may come down. They should. What Facebook has shown is that private valuations are out of line with public valuations.
That does not mean startups can not raise good money or find good exits. While the argument can be made that the Facebook impact had not worked its way through the system yet, Oracle's purchase of Vitrue for a reported $300 million and Salesforce's purchase of Buddy Media for $689 million are exhibit A and B. Both companies in the social space. Both companies with solid exits for all involved. Both companies valued at north of 10x revenues. Everybody is happy.
For the vast majority of startups Facebook's impact on valuations does not matter. It is an externality that may not impact you and even if it does it is one that you can not control. Go build your business with a focus on getting to profitbility with as little investment as possible.
You do that and everything else will take care of itself.
Way back in August of last year I recieved an email from Annette. It is still in my inbox. The subject line was "Some flattery and a question!" It reads in part:
I recently stumbled across your website and wanted to complement you on a really good blog, i skimmed longer than I probably should have (considering I'm working!) but your posts were so simple and to the point, I just kept going, lol. I was also impressed with your recent recruiting plan, that's pretty proactive and smart but I can't think of many people who would consider scouting through twitter, at least not yet. Anyways, I didn't stumble onto you by accident though and was hoping you could help me out.
I am currently interning with John Greathouse, venture capitalist and 'serial' entrepreneur (aren't they all?), in an attempt to reach more emerging entrepreneurs via his blog, infoChachkie. From the outside looking in, it appears John's content is a really good match for your readers. Please check out John's site. If you agree that his site is complimentary to your readers, we would appreciate it if you could share...
I checked out his site and started following John on Twitter. And over time I discovered that I was reading more and more of John's articles. I started to enjoy his Iconic Advice Series. Bascially startup tips from famous entrepreneurs. Eight Startup Tips From Mark Zuckerberg tipped me.
When I joined Half Off Depot back in May I started looking around for a competitive target. Not the 800 pound gorilla Groupon LivingSocial type of competitive target. A smaller yet significant company that we could set our sights on. That company was BuyWithMe.
As best as I could tell BuyWithMe was the number three player at the time. Founded in Boston, based out of NYC, BuyWithMe was actviely operating in a dozen or so major markets. They had raised $21.5 million from Matrix Capital and Bain Capital. The kind of number that makes our $7 million seem small.
And BuyWithMe was on a tear. The online deal market is going to consolidate and BuyWithMe was playing the role of consolidator, something that I would like to do. In 2011 they acquired six competitors, the most recent being in September. Then the wheels fell off.
Just six weeks after its last acquistion BuyWithMe choked on them. BuyWithMe laid off half its workforce after reportedly failing to close a new round at a $500 million valuation. It was reported to be looking for a buyer.
Working both sides of the Half Off Depot deal was a lot of fun. Part of that included participating in the due diligence work on behalf of Noro-Moseley Partners. During the course of this process I provided a list of potential due diligence items to the firm. The information request itself ran just over four pages. You can find a copy of the due diligence request on Scribd. The actual information itself could fill up a few binders.
Entrepreneurs and founders are often time surprised by the amount of information requested by potential investors. If you are going down a path to raise funding knowing what types of information potential investors are going to ask for and putting it together over a period of time can prove to be very helpful after you get a term sheet and are working through diligence and close.
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The opinions expressed here are mine and mine alone (with the exception of comments by others of course). They do not represent the opinion or position of any other person or entity. All postings adhere to my personal values.