Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote -1 down vote favorite

I'm going to start raising funds for my company soon. I already have more than a prototype website and can take payments but still need to get a little more development complete.

I'm undecided on who to pitch first, companies that have seed stage funds which are typically VC backed, or angel investors who put up their own money. Angels are going to want and expect less of the company and a return in my opinion while VC's may want more. Does anyone have experience with either that can give me some advice?

Thanks

share|improve this question
2  
Interesting, why do you think Angels would expect any less than VCs? – Giles Thomas Feb 15 '12 at 11:21
Assuming you're raising far less from an Angel than a VC. Thousands from an Angel vs Millions from VC's. Since the investment from an Angel is smaller the expectation on return is smaller – Anagio Feb 15 '12 at 11:55
Oh dear. Angels may say that they are taking more risk, so should get a higher return, not smaller. – Steve Jones Feb 15 '12 at 12:08
I can understand any investor saying that in an early stage startup. But what if a product is already developed, proof of a huge market, and a solid marketing plan. I think it's a risk when no product or prototype exists and there's little experience in a market – Anagio Feb 15 '12 at 12:12
Proof of a market isn't the same as a list of customers waiting with money in their hands for development to conclude. And marketing plan doesn't mean it'll work and bring & convert enough customers. – dnbrv Feb 15 '12 at 12:34
show 3 more comments

1 Answer

up vote 0 down vote

Who cares?

Who cares about the title, classification, or category? Angle or VC -- the money still pays the bills and grows your company. It will open some doors, close others, and bring a entire spool of strings.

What you do care about are financial terms, the sustainable relationships, personalities, available resources, unique opportunities, valuations and a whole host of other concerns--

What are the target investor markets?

Step back and make a list of your target market for investors. Why would an investor want to invest in this project? What is in it for them? What need does it fulfill for them? Is it about money? Portfolio? Pride? Boasting?

Then within that list -- what are the groupings or categories. . . strategic investor? Personal supporter? Market segment advocate? Each of these groups will have some specific types of resources they bring and opportunity doors they open.

What you want and need:

Now, think about who you are and what your team needs? Do you have a CFO? A CEO? Do you have someone who can raise money? That will cultivate investor confidence? Do you want someone who will be a intial investor, but not future rounds? do you want someone who will have the capacity?

Answer to these questions will allow to develop a profile of the actual person you want as an investor. Combined with your target investor market and you can zone in on the right people, ask the right questions to qualify and ensure that you don't get seduced by the wrong deal.

How will you approach:

Finally, Review which of those resources you need. Which of those opportunities do you need? What is a phasing of groups that you will approach? What is the pitch deck requirements for each target? What support material do you need for each? Who will you practice your presentation with? Which members of your team will present? which will answer questions? What follow-up material do you have?

Good luck as you search for capital -- treat it like a marketing campaign for your company -- create a target, make a plan and execute! Worry about how the people who invest classify themselves when you are teaching a class as the local university in your retirement.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.