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February 11, 2014 By

Big Day For NM VC / Start-Up Community

Lumidigm-HID-logo

Yesterday, HID Global announced its acquisition of Lumidigm, an Albuquerque-based biometrics company backed by vc investors including Sun Mountain Capital, based in Santa Fe, and Epic Ventures, headquartered in Salt Lake City with an office in Albuquerque. The Lumidigm team will remain in New Mexico. It’s a great day for New Mexico venture capital and the NM start-up community.

http://www.abqjournal.com/350800/biz/abqs-lumidigm-acquired-by-austinbased-hid-global.html

Let’s keep working hard to create an environment that fosters the creation and growth of successful companies and let’s generate more lucrative exits!

 

Filed Under: Economy, Raising Capital, Startup Community Tagged With: vc exit

January 29, 2014 By

Raising Money Is Like Dating

Raising money to fund your start-up, especially if it’s your first time, can be downright scary. How do I find investors? How do I convince them to consider my idea? More importantly, how do I convince them to write a check? This can all be a bit daunting, so let’s describe the process using an analogy to an equally daunting process most anyone can relate to: dating. Whether you’re a dating pro or you can’t get a number to save your life, you know more or less how dating should work, right?

Step 1: The Intro

First, you need to get in front of the investor in some way, whatever way you can. Think back to college or whenever dating was something that occupied a lot of your time. When you really (really!) wanted to meet so and so, you probably did one of two things. You either convinced one of your mutual buddies to introduce you….or you stalked.

If you have a mutual buddy, getting introduced is the way to go. This is also true when raising money, especially if it’s venture capital you’re interested in. A typical vc receives more pitch decks and business plans than he or she can actually go through in detail. The main way to get to the top of the queue is by way of introduction by someone the vc respects or at least knows. Think about the pile of pitch decks sitting in a vc’s inbox. Do you think he or she will start with the ones received via cold call or start with the one their former colleague or friend emailed over with a note saying, “You should check this out. I know this girl, and she’s wicked smart?” So if one of your former professors or your mountain biking buddy – heck I don’t care if it’s your orthodontist – knows a vc you want to talk to, hit them up for an intro.

If you’ve scoured your personal network, including LinkedIn and Facebook, and you can’t get a good intro, move on to plan B: stalking. Of course, I mean stalking in the non-criminal, non-creeper sort of way. Back to dating, if you didn’t have a mutual buddy who could introduce you, your best bet was to hang out where your crush hangs out. If you first saw your crush at the gym, you suddenly felt the need to work out six days a week. If your crush was a barista, you suddenly became a coffee addict with a new fave coffee shop. It’s pretty simple. So back to raising money. If you can’t get an intro, stalk the investors by hanging out where they hang out. Look up events that might be of interest to an investor, events showcasing other start-ups or events that feature investors as speakers.

Step 2: The Pick-Up Line/ Breaking The Ice

Once you get in front of your crush, your method of striking up a conversation really depends on your personality. Do you walk up and say, “How you doin’?” or “Can I buy you coffee some time?” or “Excuse me, do you know how much a zamboni weighs? Enough to break the ice!” That’s up to you. When introducing yourself to an investor, you can do it however you want, but ideally, you have an “elevator pitch” ready, a concise way to describe your start-up in sixty seconds or less. All you want to do at this point is get the investor’s interest, just like a pick-up line in dating, so that he or she is willing to set up a meeting after you email your pitch deck. Make sure to ask for a business card so you can send that email.

Step 3: First Date

If you get in front of an investor through an intro or by stalking, and you successfully piqued their interest, your next step will be to set up a pitch meeting, equivalent to a first date in our analogy. The meeting will be about an hour long, and it is your chance to make a great impression and tell your story. The investor will not know everything there is to know about your company or your idea after this meeting, but ideally, he or she will be excited to learn more, just like a great first date. Take a look at this handy list written by Bill Bice for tips on how to put together a solid pitch deck.

Step 4: Dating

If the first date, a.k.a. the pitch, goes well, you’ve now started a relationship with the investor, and he or she will start thinking about various aspects of your company and your ideas. He or she will call or email you to ask questions, and this is a good time for you to get to know the investor as well. Think about if you really want this particular investor to make an investment in your company, and therefore become a part of your life for a significant amount of time.

Step 5: Put A Ring On It

If the “dating” part goes well, and the timing is right for both parties, the investor may decide they want to go ahead and invest. So the due diligence process will begin, and this is when things get serious, kind of like when one takes the plunge to get engaged. You still have the chance to back out, or not show up to the alter, but you’re pretty likely to seal the deal some time soon.

Step 6: Getting Hitched

If due diligence pans out, and you go through with the investment, then first of all, congrats! You raised some money for your company, and now you can get back to spending most of your time working on your business! Hopefully, you picked a good investor because you’ve signed on to spend a lot of time together. If the investor is a vc, they will probably want a board seat, and you’ll owe them information and detailed updates at least once a month if not weekly. Before you commit to an investor, make sure the individual or the firm brings something other than cash to the table. Make sure they have ways to help your company, be it help with industry connections, follow-on fundraising, strategy, adding to your team, or positioning your company. Just like in dating, it’s best to make sure you like spending a lot of time together before you get to this stage because, for better or for worse, they become a part of your team and your life, and hopefully that’s a good thing.

Filed Under: Raising Capital, Startup Community

January 27, 2014 By

Making the pitch

I’ve seen a lot of deal pitches with a lot of hair on them. I’ve also put a lot of pitches together, and fought the battle to make them clear and concise. To make my life easier, I’ve put together this simple and straightforward model for building a pitch deck:

  1. Vision: what’s your big idea, why are you doing it and why is it significant.The “Wow!” of what you’re doing should immediately come across. Get me right away for why I should be paying attention. If you don’t have this, you don’t have a pitch.
  2. Market: how big is the market and what is the pain point which you’re addressing?
  3. Product or service: what are you selling and why is it different?
  4. Go to market: who are you going to sell to, and how?
  5. Business model: how do you make money?
  6. Competition: including closest replacements or alternatives, and barriers to entry
  7. Team: who are the founders? Be open about any key missing elements of the team
  8. Timeline: where are you at, and what are your plans?
  9. Fund raising: how much do you want to raise and to accomplish what?
  10. Exit: who are you going to sell to, and why? Please don’t tell me you’re going to do an IPO.

Ten slides. That’s it. Short bullet points. If I can read everything I need to know in the deck, then I don’t need you.

After three or four pitches, you’ll know the common objections to your idea. Address the consistent ones, but don’t be tempted to answer every question in the deck, creating a monstrosity. Your audience (me) wants to feel smart by coming up with objections, and you’ll look smart by being able to respond.

 

Filed Under: Raising Capital

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