Why these key objectives for startups?

26 Feb Why these key objectives for startups?

When I begin pitch coaching training, I share with attendees the key objectives of the training and overall what Brain Gain, LLC is seeking to accomplish. Which are, (A) provide information to help entrepreneurs as they consider if funding from angel investors fits their startups and (B) if they decide to pitch & raise angel funding, I want their startups in the best possible position to generate interest and investment from angels.

This lends itself to the follow-on question, why these key objectives for startups?

Time: The time commitment and success rate of raising angel funding is intense and something all entrepreneurs considering raising angel funding should be ready to face. So, hear they are… For raising angel capital, plan on a minimum of 50% of your time for 1 year; and over 90% of startups seeking angel capital are unsuccessful for a wide range of reasons. Yes, there are entrepreneurs that have raised angel funding in less than a year, and in less than 50% percent of their time, but I have found them to be the exception rather than the norm.

Money: Even if entrepreneurs can draw salaries from their startups in those early days, which is not that likely, 50% of their time also means that 50% of their salaries are going for this one key item, raising angel funds.

Also, at this point if entrepreneurs are raising angel funds, how much have they already spent to date working on their startups? How much of their own personal money and that of friends and family has already been invested? From the formation of the company, to software developers to additional costs to generate the minimum viable product, many expenses could already have occurred with very little to no money coming back into the startup.

When entrepreneurs go out to raise angel funds, all that past money spent, and current expenses are in part being validated. The startup is at a key inflection point and in many cases the angel funding and their value add support could be the difference between breaking through to the next set of milestones or dying a slow death to ultimately close the doors.

Family and Friends: Of all the elements discussed about entrepreneurship and angel investing, the issue of family and friends seems to get the least amount of attention despite crossing over into the mental health of entrepreneurs’ ability to implement. Consider for a moment the element of entrepreneurs responding to adversity.

We all know there will be challenges faced in the growth of startups. Challenges that will require courage in the face of issues that otherwise would want you to curl up into a ball. Family and friends are more than just the source of initial capital, they are the sounding board for entrepreneurs and in some cases part of the reasons why entrepreneurs may have launched their startups.

When startups encounter challenges, the entrepreneurs can either share or not share the bad news with family and friends. With either approach, there can be both short and long term consequences. Obviously, good news is the best and easiest to share, but it is unrealistic to expect good days without the bad days. How entrepreneurs approach their support network of family and friends will impact them one way or another.

Further discussion of the family and friends issue and the effect on entrepreneurs will be something that benefits all in the startup ecosystem. I encourage you to sign up as a subscriber or even as a contributor to the new Brain Gain, LLC blog www.FamilyForesight.com. Let’s further this conversation with your involvement.

Potential: These startups represent new innovations with the potential for changing the world and lives. Simply put, we don’t always know where today’s innovation will lead to in future products. It is up to the entrepreneurs and management teams with the support and feedback from their angel investors and other advisors to pivot and reach the best path forward to getting products to market opportunities.

What if startups never get this chance because their pitches to angel investors has bad messaging? What if they have great ideas, market potentials, and exit opportunities, but have not developed their investor pitches that fully articulates that potential? Or what if they have not practiced or not gotten feedback on their pitches? What if a startup that could have been really great turns into being what never was?

Angel investing is not a fit for every startup and determining the best course of action is a critical part of the preparation conducted by entrepreneurs.

As mentioned at start of this article, for those startups who decide to pitch & raise angel funding, I want their startups in the best possible position to generate interest and investment from angels. The four areas discussed here are a key part towards entrepreneurs ultimately benefiting from the capital and value add support from angel investors.