AFI Partners Curt Nelson and Eric de Valpine discuss the "Fundraising Readiness Assessment", AFI's online tool for understanding gaps in an entrepreneur's ability to effectively raise money.
Free New Online Tool helps Local Sustainable Food Companies Assess their Readiness to Raise Outside Capital
AFI released a short video today describing their new tool "Fundraising Readiness Assessment", which helps entrepreneurs thinking about raising capital understand the process, players, and requirements of fundraising.
The tool, which is free and open to the public, can be accessed in the Raise Resources section of AFI's website, at http://www.austinfoodshedinvestors.org/raise-resources.html or directly at Fundraising Readiness Assessment.
AFI's Fundraising Readiness Assessment asks:
"After seeing hundreds of deals, in various states of "investor-readiness", we decided to create a free online self-service tool so that any company, anywhere, could analyze their fundraising gaps," said AFI Partner Curt Nelson. "And, for entrepreneurs that decide to work with us, the tool, along with our other tools, really helps create an actionable workplan that the founders can use to confidently progress toward raising money."
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Transcript of story on PBS Newshour, actually from June 18, 2014.
Some interesting facts from the story:
Here's a detailed overview of the online lending space from Forbes, 9/23/14, "Alternative Online Lenders Fill Funding Needs For Small Businesses", which includes some very interesting charts and graphs.
Lee Hower writes in the NextView Ventures blog about the sources of Venture Capital "Most of the dollars a VC firm invests come from outside limited partner investors (LPs). The actual partners of a VC firm (GPs) will typically invest a minimum of 1% of the total size of their fund."
He continues "but the bulk of the capital in the VC ecosystem comes from large institutions like pension funds, endowments of universities and hospitals, charitable foundations, insurance companies, very wealthy families (aka family offices), and corporations."
In case you're wondering, 100% of AFI's capital comes directly from the private individuals that decide, on their own, to invest in the companies introduced by AFI.
"The pickle- and jam-making set now gets the tech-startup treatment—with a do-gooder twist", writes Anne Kadet in the Wall Street Journal about the Food + Enterprise Summit held in Brooklyn recently. The event was a Pitch Competition organized by AFI's friend Derek Denkla, where a five judge panel heard business plans from artisanal food makers.
Could something like this be in AFI's future? We sure hope so... Fall 2015?
In Inc. Magazine's March 2015 issue they publish a very telling info graphic summarizing the results of some of the nation's top business incubator / accelerators... most of which focus on the tech space. Look particularly at the light blue status bar showing what percent of participant companies "took exits IPO, sold, etc). It is tiny - ranging from just 2% (which, if you do the math for that accelerator, having funded 66 deals since 2009, works out to 1 company), to only 11% for the "best" result.
The graphic doesn't show what percent of investor dollar value - i.e. money invested - is still in play (the "closed" rate ranges from 8-31% of the businesses funded... those funds are gone forever); what percent has been returned (from the exits), and what the overall investor rate of return has been. Our bet: not so good.
Our takeaway: sure glad our model is not focused on "exit".
Oh woe is the typical pitch deck! General, confusing, buzzwordy. Pascale Finette (Managing Director of Singularity University's Startup Lab, writing on Unreasonable.is), lays out, slide by slide, what to show and tell - and not. He starts: "Your pitch deck MUST start with a description of what it is that you're doing."
7 Key Components of a Perfect Elevator Pitch, from bPlan via HubSpot Blogs.
Austin's Paul O'Brien says the typical "Competition" slide in a pitch deck usually essentially says "...we actually do everything! And our competitors (those morons) are overlooking something obvious", to which he replies: "Really? That doesn’t even pass the sniff test."
There's a better way, he writes, that involves deeper thinking about how competitors have strategically deployed resources, and how the pitching company can position their resource allocation relative to those competitors on vectors that matter most to target customers.
In English, that probably means the "We Rock & They Suck" slide should stay in the pocket...
Startup advice blog Shockwave Innovations defines the terms typically used in "market sizing", and explains why each is important. Great background for business planners.
Sara Olsen, founder of social and environmental accounting and management firm SVT Group, lists the 4 myths hindering even conscious business owners from taking first steps to measuring their "impact" beyond typical operational and financial metrics. Spoiler: just starting, with something, is the hardest...
Wired magazine reports that "Instead of just offering a product, discount, or small reward in exchange for monetary funding, crowdfunded projects can now offer equity in exchange for public funding—if they use ." And "cable TV station CNBC and analyst outfit Crowdnetic are partnering to release a new crowdfinance index, aiming to give the investing public a window into how this new market is evolving."
Interestingly, on 2/4/15, the number one company on their list (Plant Growth Net Zero Aqualife), with $5.0M of their target $5.2M raise committed, is a San Diego shrimp company in the "Organic Food & Beverage" Industry.
Serial entrepreneur, angel investor, podcaster, and writer Jason Calacanis writes in his blog on the importance of regular and often investor updates from companies:
"If your startup isn’t sending you monthly updates it’s going out of business. I know this because with two of my investments I found out that they were out of business because I emailed them over and over asking for an update. When the update finally came it was, “can we talk?” When someone says “can we talk?” it’s over. Today I keep a spreadsheet. The columns are the months of the year and the rows are the startups I’ve invested in. We check off the date in the month that we got the last update. When we look at this spreadsheet — and we look weekly — we know instantly who is in trouble and who is rocking. If someone misses their second month I instantly call them on the phone — so I can help!"
Editor's note: apparently there is an Austin company outsourcing help with this called AngelSpan.
Ryan Feit, of SeedInvest, explains in Inc. magazine why it can be better for a company's owners, at the time of their business' sale, for the business to be an LLC... despite what Venture Capitalists will normally advise. What he doesn't mention is that the LLC form can also be advantageous to early investors if the company is pre-profitability.
Also, here's a informative guide to choosing a corporate structure from a long-time securities attorney specializing in start-ups and crowd funding.
The City of Austin's Small Business Development Program has a nifty website for discovering the many locally-owned small businesses in our area, including the ability to add your business.
Silicon Hills Lawyer is an informational website run by attorney Jose Ancer of the firm Miller, Egan, Molter & Nelson in Austin. Mr Ancer writes: "The purpose of this blog, particularly the Learn the Essentials section, is to provide Texas-based founders a curated resource for educating themselves on core startup law & finance concepts, without wasting money or equity on lawyers or advisors."
His articles are excellent, and a great resource for both entrepreneurs and angel investors coming up to speed - and staying current - with start-up finance topics.
Fast Company Magazine recommends considering offering Convertible Notes, Crowdfunding, and, automating Investor Communications. Of course you could also contact us...
The New York Times reports that an increasing number of entrepreneurs have concluded that business plans take too long to write and become outdated too quickly. They skip the plan, which they consider an old economy relic, and go straight to market with a product or service, modifying their strategy in real time.
Cutting Edge Capital's CEO Jenny Kassan presented this pdf to the Stay Local! & Urban Conservancy's "Invest Local" symposium on Nov 20, 2014. It gives an overview of Direct Public Offerings - DPOs - which allow an unlimited number of unaccredited (retail) and accredited investors directly own shares in a company. A DPO is like an IPO, just way simpler, way cheaper, way faster, and doesn't need any Wall Streeter-type involvement.
Prema Gupta writes for Fox Business Small Business Center that as an angel investor, 10 key things matter when he's evaluating firms in which to potentially invest, starting with "Tell a Good Story"...
News from AFI; Links to stories on business-for-good, private-company investing, fundraising, & sustainable food.