The Seed Capital for Startups Blog

Hot New Startups: myNumo

Hot new startup myNumo opens up the long tail to mobile content.

I'll let you read the details above.

How an IPO Works

This is the very best explanation of how an IPO works that I have ever seen. And I say this as someone who has taken a company through the process.

There's also an interesting review in today's Times of a new Wall Street expose. The book is Wall Street Versus America by Gary Weiss.

Those Venture Capital Finders/Middlemen

Over the weekend I received an email from man who had been badly burnt by a venture capital finder or middle-man. Here's a part of what he wrote:

I have just recently sent $2000 to a company for a "consulting fee" after they said they had gotten me a loan for the amount i needed. Then they disappeared with everyone's money that sent it to them.  So i do not have the trust to send people money anymore ....

I'm probably starting to sound like a broken record on this topic, but please do not fall for these scams. There are a number of variations on the theme of , "I'll find you money if you first pay me up-front."

You can read up on venture capital and angel investor scams here.

When Venture Capitalists Say "No"

There are two kinds of startup entrepreneurs. There are those who announce their intentions to start a business, write a business plan, and then make no further progress for the next 6 to 12 months as they await some stranger to drop money into their laps. In most cases, they then abandon their plans. These are the majority. Then there are those who announce their plans to start a business and have cashflow within a month. These are the savvy minority who focus on creating a positive feedback loop from the get-go.

Find out the secrets of the latter group. Don't waste 6 to 12 months of your life with the wrong startup strategy.

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Getting Quoted in the WSJ!

Well, it's not everday that one finds himself quoted in the Wall Street Journal...but today is my day. The lesson here is that you have to be prepared to move quickly when the press calls.

Hiring by School Tie,  Happens All the Time, But Is It a Good Idea? by Jared Sandberg.

Angel Investor Networks

Business 2.0 just issued a list of angel investor neworks. Here they are:

Angel Capital Association

Angels' Forum

Band of Angels

Common Angels

Keiretsu Forum

Launch Venture Pad

New World Angels

New York Angels

Pairie Angels

Robin Hood Ventures

As always, be leery of anyone who asks you to pay large up-front fees of any kind.

You can find more info on dealing with angel investors at the Smart Startup.

Venture Capitalists Have a Lot of Time

Unfortunately, you don't. 

So who has the power in negotiations?

You or the venture capitalist?

Here is a key point to remember about the process of dealing with venture capitalists:

  Venture capitalists invest in movies, not snapshots

When you first see a deal as a venture capitalist, you see it at a point in time.  If the entrepreneur tells you that you have only three weeks to make a decision, the decision is almost always an easy, "no".  No venture capitalist likes to be rushed into a decision. Instead they prefer to observe the company and team perform over time (like a movie) as opposed to viewing them at just one discrete point in time (like a photo snapshot).  If a team walks into the first meeting and outlines what they plan on achieving in the next two months, and then returns two months later having achieved each of the milestones plus two others, it's very impressive and gives the venture capitalist confidence that this is a team which knows how to execute on its plan.

From http://www.bostonvcblog.com/

Often you will feel as if a venture capitalist is stringing you along without being truly interested. This maybe the case, or he maybe watching to see if you are hitting the targets you said you would at the first meeting. You never quite know with them.

Bottom-line: don't expect a decision and a term sheet in the first meeting. Raising money is a long drawn-out ordeal that takes many months.

Top Ten Books for Entrepreneurs

Well, my list of the Top Ten Books for Entrepreneurs isn't quite finished yet, but here's a start. I read everything that comes out on entrepreneuship and startups but find most of the best sellers little more than regurgitations of earlier books. So my list will be comprised of lesser known but better books.

Stay tuned.

For all intensive purposes, they faded into bolivians

Okay, here's my updated list of malapropisms. You are welcome to use them.

It's a mute point.

For all intensive purposes.

He's now on the straight end arrow.

It's a doggy dog world.

Get your ducks in a road.

Stop spilling hairs.

Sixty one or half-a-dozen of the other.

Stop using your bully puppet.

A wolf in cheap clothing.

It's not sketched in bone.

Don't take me for granite.

Do it to the best of your mobility.

Pigment of your imagination.

Pineapple of ignorance.

He's the black sheet of his family.

It's just the tip of the icebox.

You're gasping at straws.

The death nail.

The deaf nail.

There's light under the tunnel

That is typical of him, he starts on one subject, then goes off an a tandem

At my wick's end.

Slip these into a conversation and watch the other party stop to replay it in their mind while asking themselves, "Did he really say what I think he just said?"

Nota bene: don't confuse these with homonyms.

Creative Venture Capital for Startups

I bid one million dollars!

Just to prove to you how difficult it is raising venture capital, angel capital, or any kind of capital for a startup, look at the latest financing ploy by some entrepreneur. He's resorted to selling pixels on a website to try to raise the million dollars needed to kick-start his main venture. So far it appears to be a slow slog for him but perhaps pixel sales will pick up if the blogging fraternity promotes his idea? Link

If you really pay attention to what entrepreneurs do, you will begin to notice that savvy entrepreneurs know how to create cash while the not-so-savvy try to raise it. Big difference.