Startup Revenues: The Final Frontier

Good old fashioned revenues are making a comeback of sorts, not that they ever went out of fashion.

I earlier wrote that Traction is Job 1.  Ash Fontana’s presentation is getting a lot of press these days. Sales often are more important than product or team as a factor in VC evaluation.  It’s certainly critical in reducing risk.

At BAE Investments & Workshop we see a wide range of startups from concepts to  those seeking several million dollars in funding.  You don’t have to have revenues.  Our program helps plug holes like that.  But there is no denying that traction is and has always been important.

Indeed revenues are becoming currency in deals.  The Next Stage of Angel Investing: Revenue-based Funding from the Texas Entrepreneur Network highlights revenue sharing as an emerging vehicle for startup funding. Typical deals have a 3 to 5% revenue share that’s capped at a 3 to 5X return. It’s venture capital meets factoring.

The run to cash is a natural economic response to the changing capital markets. Demand has increased with the rise of self-funded and angel startups, while later stage money continues to tighten with diminished IPO and VC markets and low returns.  It’s why many angels today have moved to real estate deals.

If you’re an entrepreneur, the question is how well are you positioned for revenues?  If you wait until you start looking for VC money, you’re too late.

The tech culture today is tightly focused on product, as it should be.  As I noted in Exponential marketing VC Fred Wilson proclaimed “Marketing is for companies who have sucky products.”

But it’s becoming increasing clear that revenues are just as important.  A revenue strategy needs to be designed and executed earlier rather than later in your startup’s development. That’s exactly what we do at Power CMO where we work with both investors protecting their investments and entrepreneurs.  We couple innovative revenue-focused marketing strategy with a marketing system for regular, reliable, and scalable revenues. Give us a call at (972) 200-3490 to see what we can do for you.

Traction is Job 1

Ash Fontana from AngelList presented  Want To Raise A Million Bucks? Here’s What You’ll Need.  He says that Product and Team aren’t that important if you reach a traction milestone, such as

• 1K seats at $10/mo for enterprise
• 2 pilot contracts for big enterprise
• 100k+ downloads/signups for social
• $50K revenue/mo for marketplace or e-commerce

One can quibble with numbers and nibble around the edges,  But I agree  that such traction is critical when you’re looking for VC money.

Build your business and show that you can bring in subscribers, or more importantly revenues, and the the investors will come. That’s what I look for at BAE Investments & Workshop.

You can raise your own funding the crowdfunding way now

Wefunder, a crowdfunding platform*, announced Our crowdfunding round:

So, we ate our own dog food. Using current state “blue sky” laws (which prohibited advertising), we raised $533,800 from 58 investors in amounts ranging from $100 to $100,000. Half of these investors were un-accredited.

It’s still not legal to use a crowdfunding platform in the U.S.  So how did they do it?  Wefunder shows you in How To Legally Crowd Invest…. Now.  A summary:

• Only up to 35 un-accredited investors may invest.
  To remain in compliance with the law, the total number of unaccredited investors – across all states – can not exceed 35. But, with the exception of investors in Massachusetts, the start-up can raise from an unlimited number accredited investors (in CA and NY).

• Investors must be a resident of CA, NY, and MA.
  These states have “blue sky” laws that allow un-accredited investors to invest, without requiring a costly investment prospectus (a few other states have laws that may possibly work, but you’d have to confirm with your lawyer).

• No advertising or general solicitation is allowed.
  You can’t broadcast your offering to the world. You can’t post your deals on Facebook, Twitter, get mentioned in the press, put out an ad, etc.

• Companies must comply with various State laws.
  CA and NY require filing a notice and paying a small fee. MA has no filing or fee, but has different compliance issues.

Ready for funding?

*NEW*  Our Winter program is now open for applications and provides $10,000 in seed capital.

The average startup faces a one in ten thousand chance at getting funding.  Would you like to increase that to one in three?

The Bay Area Entrepreneur (BAE) Funding Accelerator features our proven process to dramatically increase your funding prospects.

You know the San Francisco Bay Area is the center of the world for angel and VC investors.  It’s THE place to be to secure your next round.  But not everyone can be or wants to move there.  Now you don’t have to.  We bring Silicon Valley to you … whether you’re located in San Jose, Dallas like me, or anywhere else in the world.

Our program starts with $10,000 in seed capital.  Then our workshop shares eight weekly sessions with personal coaching to get your business plan and presentation fully investor-ready.  The meetings are delivered in person if you’re in the Bay Area and via the web anywhere else in the world.  Lastly we personally introduce you and go with you to meet Bay Area angel and VC investors. Our seed investment more than covers the $1,500 workshop fee and your travel expenses if you’re not local.

BAE makes getting funding even simpler, no matter where you’re located.  Best of all, applying or presenting to BAE costs you nothing.  Send your Executive Summary now to me at marc@baeworkshop.com to be considered for our Winter program.  Our Portfolio is already filling up.  So don’t delay!

Marc Freedman
Managing Director
marc@baeworkshop.com
972-200-3490

Bay Area Entrepreneurs Workshop & Investments
Investability. Simplified.

Can you use $10,000 in seed money for your venture?

BAE Workshop & Investments just increased its seed investment for fast growth startups all over the world to $10,000.

The BAE Accelerator program is proven to dramatically increase your prospects for angel and VC funding.  It starts with seed capital of up to $10,000 when you’re accepted to show our confidence in your business and commitment in getting you funded.  Then our workshop shares eight weekly sessions with personal coaching to get your business plan and presentation fully investor-ready. Lastly we personally introduce you and go with you to meet Bay Area investors.

If you’re not in the Bay Area, you can participate remotely.  The seed money more than covers the $1,000 workshop fee and your travel expenses to meet investors in Silicon Valley.

Read previous announcements here.

Send your Executive Summary to apply for our program now to me at marc at baeworkshop.com for immediate consideration. The Fall Program is already filling up, so don’t delay!  Registration closes Sept. 30.

Why Good Companies Don’t Get Funded

Applications for the Fall program at Bay Area Entrepreneur Workshop & Investments (BAE) close in 2 weeks. Earlier I told you we expanded the program and now accept ventures from anywhere in the world. In addition to Bay Area companies, we likely will accept and invest in at least one from Dallas, as well as others across the US.  What about yours?

Send your Executive Summary now to me at marc at baeworkshop.com for immediate consideration. The Fall Program is already filling up, so don’t delay!

WHY GOOD COMPANIES DON’T GET FUNDED

You know startups face dismal odds of getting funded. One out of ten executive summaries produces an invitation to pitch to a VC. One out of twenty pitches results in an invitation to return. A tiny fraction wind up with the money.

Wait, it gets even worse. Serial entrepreneurs or execs with an extensive investor network typically get funding.  Take them out of the equation and your chances are even more remote.

What’s an entrepreneur to do?

I’ve read and seen over a thousand business plans and pitches and been involved with numerous investors.  Many of them simply are not fundable.  Their business plans and presentations are non-standard and even hard for investors to read.  Some even lack contact info. The startups don’t have a real business model (30% of those pitching to one VC don’t!), they haven’t demonstrated pain or need, the product is incremental and not innovative, their business is not scalable, the product and marketing are not focused, there is no sweat equity, the market is not large enough, there is no team, a believable go-to-market plan is missing, there is no IP or barrier to entry, and so on.  These are just a few of the many pitfalls.

Develop the right business plan and pitch and you CAN separate yourself from the pack to dramatically increase your chance of funding.

BAE Workshop and Investments was founded specifically to do just that. BAE is a 21st Century Accelerator. We provide the education and support that ensures you craft plans and pitches investors want to see. Our process was proven to help 40% of companies get funded.

We invest $5,000 in your startup to prove our belief in your venture and commitment to you.  We’ll introduce you to angels and VCs who invest in your space.

Are you cut out to be an entrepreneur?

Vince writes:

I’ve got a few ideas for an internet startup but a few VCs I’ve talked to basically laughed when I mentioned I wanted seed capital to start a business at my age.  One other person told me being over 45 was a negative indicator for eventual success. The closer to 60 you are forget it.  If you are young < 30 you have a  much
better chance.

So …here I am wondering what opportunity will come along for me (and many other software developers that I could help employ), or should I keep swimming out to meet yet another opportunity hoping I don’t drown in shark infested waters as my idea goes elsewhere and I’m left without a life raft (humor) after I submit an idea.

Vince,

Entrepreneurs can be any age. Don’t believe the myth that young people make the best founders.    Adeo Ressi combats ageism in Is There A Peak Age for Entrepreneurship?  I know a few Dallas entrepreneurs who are in their 60s. So don’t be discouraged because …

Investors are lemmings.   Some do follow what’s hot and want the hip 20 something.  Really, as a founder, why would you chase such shallow money? Many investors, like BAE, evaluate companies irrespective of age. Founder and team experience are a big plus.  We see past the hype of concept ventures that are hot air.  But if you’re concerned about this …

Accept God.  Our God. You must accept the Church of Infinite Rejection as your true savior.  You WILL be turned down and receive grief  for thousands of  reasons on a daily basis from everyone in your life – loved ones, investors, partners, staff, volunteers, service providers.  But frankly this is jumping the gun because at this point …

You are not  an entrepreneur.  Everyone has ideas.  It’s the execution that counts.  You have barely started.  Being an entrepreneur is a long, hard, painful path.  If you truly believe in your mission, you do it because you’re driven.  It’s in your DNA.  You invest the time.  You find solutions.  You adapt.

Now there are incubators that will provide seed funding on concept.  But enrollment is very competitive.  Assuming it’s not a fit or you can’t get in …

You survive.  You don’t pay yourself or your partners or team members.  If you have hard costs, seed capital comes from your savings, credit cards, other personal assets and debts, family, friends, and crowdsourcing.

If you’re just at the idea stage, you have far to go to be ready for an accelerator like BAE, angels, or VCs.  You’ve got to refine your business model, find customer pain, acquire partners, demonstrate market need and demand, create value, start a prototype, build your business plan, and show your sweat investment.  Try my BlueEntrepreneurs.com Resource Guide for helpful links.

Now young kids often are more successful at getting to this point because they have no obligations.  It’s easier for them to make the sacrifice and survive while they build the business.  They don’t have to have a full-time job, support others, or make house, car, or insurance payments.  They can live at home with mom and dad or with other starving entrepreneurs.

Vince, if you truly believe, just do it.  Anyone can at any age.

Good luck!

Marc