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Investor funding and capital

UK startup truRating chooses Australia as its next launch location as it begins to expand globally

UK based startup truRating, whose technology makes it easier for customers to give small business...read more

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How do you determine how much equity to give in the early days of a startup to investors?

Asked by:
Yee Trinh Marketing Manager at SavvySME
Jef LippiattCo-founder at Startup Chucktown
Yee,This is a fantastic and difficult question to answer. It's a tricky topic because it has to be judged on an individual basis and agreed to by the team (or at least the majority).Some people may say, take any offer you can get it is better than continuing to bootstrap. I would argue, that may not be the case. When you are bootstrapping you must be more aware of how each dollar is spent. When you get an investment, you may not be as thoughtful or creative on how you stretch the budget.Also, don't just see it as the amount of money they are giving you (in terms of the trade off for equity in your venture). Are they also bringing their knowledge of the business world and making it accessible to you? Are they giving you access and recommendations to their network? The team needs to be comfortable with the percentage of equity for the monetary infusion. Example, if an investor offers $100,000 for 45% of the company's equity some founders may see that as a quick way to grow the business while other founders may balk at giving up such a large percentage of their venture. It is a combination of your team's comfort level, your overall gut reaction and your ability to trust that the investor is trying to better your venture.It really comes down to what the team agrees is a fair or reasonable trade off between the monetary infusion, networking and resources verses losing some control of the overall business. Once again, great question.
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Questions

What are investors looking for in a pitch?

What gets them over the line from being "That's a good idea" to "Here's a cheque for $100,000"? read more

Asked by:
Yee Trinh Marketing Manager at SavvySME
Jef LippiattCo-founder at Startup Chucktown
Yee,Thanks for asking. I think most startups believe their presentation or "pitch deck" has to wow the investors. But that is not always what draws them in and excites them.Yes, investors want to see that you have an interesting product or service, but it can't end there. They will find accurate numbers interesting, accurate being the key word. If you have a growing number of users show them. But keep in mind they will be interested in knowing how active and engaged to your product or service your users are. If you are constantly gaining new users to replace the ones that aren't staying, they will probably not be very impressed.Another thing they look at is your team dynamics. Do you work well together and share the passion of seeing the venture through and growing it, or are you just a few people that are good at what you individually do? Sometimes investors are more interested in the team you have put together than the idea. They may in fact look to fund you but send you after another idea.This is an extension of the team dynamic, but they may look at your team's experience. Are you all first time founders? They may be a bit more cautious if you are. You can offset this by having a solid set of mentors or board of advisors on your team (even if they don't get involved in the day to day operation).Investors are also looking for honesty. Don't claim you have no competition (they will think you haven't done your research). Don't project overly opportunistic numbers so far out they are meaningless. Keep the numbers you show them honest and use them to your advantage.To sum up I believe investors are looking for:a great product/service or a willingness for the team to transition to a new ideaa team that works well togetherpassion to scale the venture into a sizable companyAnd a bonus is:a great presenter that can sell themselves, the team and the business convincingly
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Investor funding and capital

Investors For Start-ups: Where to Find Them?

There are a variety of different types of investor that businesses looking for financial support... read more

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Joe Piovesan at First Class Accounts
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Questions

What can I reasonably expect from venture capitalists for my new startup?

Hi all, I am considering going to a venture capitalist for my startup, but I'm extremely weary of... read more

Asked by:
Ling Lee Director at Japanese Sword Auctions Australia
Steve OsborneOwner at Smarthinking
Hi Ling, without knowing what your startup is about, my comments are pretty general. Therefore, it depends. Amongst many other things, it depends on what industry you're in, what the scalability potential is like and how much skin the founders have in the game. The first and most obvious thing to say is: they expect a return. And that mighty quick. My experience preparing business plans for VC investment taught me several things – the most important being: 1. your idea is worth precisely zero until it is implemented. Investors want to see a working model. 2. investors are taking a big risk, therefore will expect a big return. After all, if your startup is not doing something that's never been done before, by definition it's just another business. And if all you need is money, go to the bank. So expect them to ask for at minimum, 30% return over 3 x years on say, $1mill. 3. investors are most interested if you can clearly show your three different customers. If you can define these three distinct groups early on, you stand a better chance of growth and a better return on exit. A wiser man than me defined them thus: Customer One is your end-user. It is to serve her needs that your business was created. Without this customer, you don't have a business. Customer Two is your bulk-buyer. This second customer is the one on whom rapid expansion will pivot, based on the idea that it's easier to sell to one who buys 1,000 than it is to sell to 1,000 who only buy one (customer 1). This customer shapes the speed and scale of growth. Customer Three is the business buyer. This is the entity that will eventually buy your business. This individual or company will ultimately make more from your assets (customers, database, products) than you can. This customer shapes your positioning, your customer information collection, your database. And this customer is the most difficult to identify. But it's this last customer the VCs are most interested in, because that's where the greatest value lies. If you can demonstrate a firm grasp of how each customer group is linked, you can argue a simple and very powerful case for investment. Everything else is just logistics. Ask Neil at Wardour Capital about this stuff. He is the expert.
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Investor funding and capital

Australia ranks third in global investments and acquisitions

According to the latest report by Internet Deal Book, Australia (117) had the third largest number...read more

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4 Things Investors Need to Know About Your Startup

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It's Very Good That Gold Was A Bad Investment This Year

Because I write a column on economics for Forbes, people are always asking me, “Is gold a good...read more

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Where Startup Funding Really Comes From (Infographic)

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Why It's Harder For Women to Raise VC Funds

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Survey: 1 in 2 Angel Investors Regrets an Investment Made This Year

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5 Questions Every Startup Should Ask Before Choosing an Incubator

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Twitter's IPO Will Make All These People Millionaires and Billionaires

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A Beginner's Guide to Private Equity

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3 Lies You Heard on 'Shark Tank'

Branson Takeover Check It Out → For Labor Day weekend, we present...read more

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What Every Entrepreneur Should Know About Valuations

Branson Takeover Check It Out → For Labor Day weekend, we present...read more

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Why Joining an Accelerator Isn't for Every Startup

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Google Vs. Apple, From A Fund Manager Who Owns Both

As technology stocks that carry three-digit price tags, Google Google and Apple Apple are part of a...read more

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Investors See Opportunities in Bitcoin's High-Risk Market

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Questions

How do I find VCs or angel investors for my startup?

Asked by:
Nick ChernihFounder at LinkBuildSEO
From what I've heard you need to know the right people as well. Get to know a few investors and find out what they are looking for is a good start. Get some people backing your personal brand as well is also a bonus as they are mostly investing in you as a founder as opposed to the business.
Timothy HitchensPartner at Quaywelsh Australia
The answer is simple "Network". Don't hide under a rock expecting the money to find you.  Most serious investors are dong the same just from the other side of the table.  Remember they are not just looking to invest in your idea but your founding team.  So in summary if you want to be found you have to put up flares make some noise and be passionate about your idea. You will then get noticed and be in good training for the real battle head "Business".
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