Venture Capital and Angel Investor Questions

By far the best company EVER

info@InvestorQuestions.com (IQ) — Wed, 10 Mar 2010 18:32:04 GMT

I love getting pitches that start with: You probably hear this all the time, but I REALLY have the best business ever! Here is one where the math really works! Just brilliant.

Why don't you call me and we can try to work something out in a split business.

I got this program. Mabe we can turn it up a knotch?

What if I told you that I have a way to get $1 from everery one In the USA and more? Population Clocks. U.S. 307493447. World 6785276531 02:56 GMT (EST+5) Sep 20, 2009

Want in 307493447 People Divided by 4 to a Family = $76,873,361 Possibal Dollars. and No more emails.for you ever to be sent out.

call me. I got most of it up and running.

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Arizona Venture Capital Event

info@InvestorQuestions.com (IQ) — Wed, 10 Mar 2010 18:32:04 GMT

Our next Sedona, AZ Venture Capital and Angel Investor event will be on Thursday, December 4, 2009.

We expect to have 4-6 VCs and Angels participating in this conference, like the past 2 years! The event is sponsored by and hosted at the Sedona Rouge Hotel and Spa. VCs and Angels interested in speaking let me know! http://www.fundingpost.com/breakfast/reg1.asp?event=160

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Most popular VC Term: Capital Efficient

info@InvestorQuestions.com (IQ) — Wed, 10 Mar 2010 18:32:04 GMT

Whats the most important thing that an Investor is looking for today?

The most popular words I'm hearing are: Capital Efficient.

We had our Perfect Venture Conference 2 weeks ago and hosted over 60 VCs and Angels. Almost all of them mentioned running a capital efficient business.

Investors are concerned about the economy just like everyone else. They want to know that their investment in your company will enable you to grow. That you can operate in a lean and efficient manor and stretch a buck. I got a call from an entrepreneur the other day. His idea wasn't bad, but at the end of his pitch to me he mentioned that he was raising $20M for his startup, and that was the only way he could execute on his idea. This is not the type of business that will get funded.

As a start-up, you need to show that you can run a tight ship, and that you can take the round of capital that you are asking for and grow a nice and money-making business...and hopefully you wont need to raise another round.

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Perfect Venture Conference: 11/12/09

info@InvestorQuestions.com (IQ) — Wed, 10 Mar 2010 18:32:04 GMT

FundingPosts Perfect Venture Conference V will be in NYC on Nov 12, 2009. We will have 20 early-stage Tech companies and over 40 VCs and Angel Investors!

No other tickets will be sold for this event, just the 20 companies and the investors will be there for a day of pitching, investor panels, interactive workshops, and private meetings. We will be putting the Right companies in front of the Right VCs and Angel Investors to tell you exactly what it takes to get funded. Every company will pitch multiple times to the Investors. There will be 2-minute elevator pitches to every panel, and even more 1-on-1 private Investor meetings than the previous Perfect Venture Conferences!

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VCs setting your valuation

info@InvestorQuestions.com (IQ) — Wed, 10 Mar 2010 18:32:04 GMT

In response to the FundingPost email for the event on June 5, 2008: The event will focus on best practices in raising capital.... how they determine your valuation.

This one caught my attention... you never let a VC tell you how to determine your valuation. Lol. It's like letting you home buyer tell you how much you should sell the house for!!

I notice the tone of this e-mail focuses on Entrepreneur sucking up to VC. I am an entrepreneur and the way I see it is, it's a privilege for VCs to invest in my company that i bust my chops to make it happen (and not the other way around).

VC and company's are partners in a single mission. Funding post should position it such a way. It's very immature to have entrepreneur who are the having to suck up to VCs. It doesn't have to be that way. It should be a place of gathering for two people with common goal to meet.

I dont think its about sucking up, but you Do need to impress the VC with your company. Positioning your pitch to make it out to be a "privilege" for the VC to invest doesn't often work....Unless you are a serial entrepreneur with large exits under your belt. Yes, you are busting your chops and working hard to grow your business, but if you need capital to grow, you need to impress the guy with the check book.

As for Valuation, yes, its a negotiation. You think its higher, they think its lower. So, how do they determine your valuation? Do they just take your word for it? probably not. They look at several factors, including the team, the technology, the market, what you have put into it (cash and sweat), competitors, how far along the company is, etc.... That mixed with a bit of their gut feeling is the number they come up with that they would buy in at. This is what they determine your valuation should be. Now, You dont have to take their money if you think they are valuing it too low, just as they certainly dont have to write you a check if they think you are valuing it too high.

When you buy your next house, I strongly recommend that you dont write a check for the listing price. Look at the other houses in the area, look at the quality of the house, the market, the schools, etc. and then make an offer of what you think the value of the house should be if you were to write a check.

Valuation is often a deal-killer. If the entrepreneur and the VC spend so much time negotiating this, it can be seen as a reflection of things to come. I often hear that getting rid of a business partner is harder than getting a divorce. You guys are in this for the long haul with a common goal. Its always in your benefit to understand how the VCs think, and what their expectations are right up front. Thats the goal of our events.

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