Five More Reasons an Investor Will Pass on your Deal

Investors see many deals and can spot glaring holes immediately.  Here are five more reasons an investor will take a pass on your deal:

1.     Lack of plausible financial projections—some startups use the excuse that they can’t predict the future and therefore they have no financial projections.  Most investors see this as a lack of knowledge about the business and the market.

2.      Lack of focus in the business plan—some plans are filled with future possibilities and great opportunities but fail to define the core product and how it will be built and sold.

3.      Not knowing the use the funds raised—the phrase “I’m raising $1M often triggers the bull meter because the fundraiser rarely knows how they’ll apply  the funds.

4.     No validated business model—there’s no evidence of a business either in product or customer activity.

5.     Lack of followup – an investor will express interest and then never hear from the entrepreneur again.

Best regards,

Hall T. 

5 Reasons an Investor Will Pass on your Deal

Investors see many deals and can spot glaring holes immediately.  Here are five reasons an investor will take a pass on your deal:

1.     There’s no traction—there needs to be some evidence of market validation.  Even without a sales team and a marketing budget there should be some demand for your product. 

2.     There’s no social proof—there needs to be some evidence the product works.  

3.     The team doesn’t fit your company—if there are major holes in the team or you’ve filled the secondary roles and left the primary ones empty, then it’s going to be a problem. 

4.     Your company doesn’t fit their criteria—many funds are clear about what they invest in (SaaS, Healthcare IT, etc). Your deal needs to fit into one of those criteria. 

5.     You don’t know your market/customer well enough—those with a vague or fuzzy knowledge of the market or customer will have difficulty raising funding.   Ability to site numbers (market size, growth rates, customer spend, etc) helps demonstrate your knowledge.

Best regards,

Hall T. 

5 Signs you Invested in the Right Startup

There are several signs indicating the investor invested in the right startup.  Here are my top five. The startup is:

 1.     Focused on core products and processes—you see a strong focus on the core       product/service and everyone is pushing in the same direction.

2.     Revenue and results—you see the team focused on revenue and hard results and not secondary metrics such as likes on Facebook or user downloads.

3.     Customer focused – you see the team more worried about what their customers think than what their competitors think.

4.     Numbers – the leadership knows their numbers well including sales, cash spend, and runway.

5.     Updates and information—you receive updates and news that includes bad news as well as good news.

Best regards,

Hall T.  

5 Signs your startup isn’t ready to raise funding

1.       The vision is still fuzzy and hasn’t come into focus yet—if you’re still sorting out the market and your position in it then you need to gain more clarity on the space and your company’s position.

2.      The team isn’t in place yet—if you still have major holes in the team that you are seeking to fill, you need to find candidates for those positions before funding.

3.      You haven’t identified the repeatable business model—if you’re still pivoting from one business model to the other then you’re not ready for funding.  You need to have a business model that is predictable at some level.

4.      You don’t have your financials under control—if you don’t know how much to budget for expenses or what the impact of a sales increase on your bottom line may be, then you’re not ready for funding.

5.       There’s no clear path to profitability—if you don’t see how you can grow to a profitable position with your current business model, then you’re not ready for fund raising.

Best regards,

Hall T. 

How to Make the Most out of a One-on-One Conference

The appointment-based event is gaining popularity with those who want to raise funding as it turns a conference into a series of dealflow meetings. Both investors and entrepreneurs are making more use of the One-on-One conference to find prospective matches.

For those not familiar with a one-on-one conference, the venue offers the participants the ability to see who will attend the event and schedule meetings at the event.  The conference also offers panels, keynote speakers, and workshops.  In a one-on-one conference, one participant invites another for a meeting.  If the invite is accepted, the scheduler provides a date/time/location for a meeting.  The meetings are typically 15 to 30 minutes in length. The objective is to meet as many qualified contacts as possible.  Detailed follow up comes after the event.

In running several of these events I’ve seen how some find better results than others. Here are some tips on how to make the most of your next one-on-one conference:

Preparation—a one-on-one conference takes a great deal more preparation than the typical panel/speaker filled conference in which the participants find contacts through general networking.  The conference will provide a scheduler system with profiles of attendees.   You must log into the scheduler system several weeks in advance of the conference to setup appointments.

Fill out your profile – most schedulers offer a place for the participant to fill out their profile.  It’s important to make it compelling to others so they will accept your meeting invites.  

Make it interesting—give the others a reason to accept your meeting invite or to initiate an invite. Show the values in your business and make clear what you have to offer.

Indicate who you are seeking to connect with—it’s fair game to include what you are looking for as others can determine if they fit.

Research the other candidates -–in addition to scheduling, it’s important to research the other participants.   Since some conferences have hundreds of participants, this could take some time so start early.

Login daily to see who else has just joined—new participants join the conference every day in the run up to the event so you have to check back to see who joined recently.

Know the network—it helps to know the community and network as it will help narrow down your list of contacts to pursue.

Best regards,

Hall T. 

Texas Entrepreneur Network (TEN) Infographic--Wilco Funding Portal

Texas Entrepreneur Network (TEN) Infographic--Wilco Funding Portal

The Wilco Funding Portal provides funding for Williamson County businesses and those businesses seeking to relocated to Williamson County in Texas. 

5 Techniques for Getting a Reader to Open your Email

Readers receive hundreds of emails every day.  How do you make sure a reader opens your email?  Here are 5 techniques to make sure your email gets read:

1.     Make the subject line intriguing and provocative.   Make it short – no more than 30 letters or 6 to 10 words.  Tell the reader what they are going to learn in a short amount of time.

2.     Use numbers – numbers show specificity which comes across as concrete and definitive.

3.     Use the person’s name -- make it a person to person to communication.  Avoid the use of Mr, Investor, All, or other generic terms.

4.     Use your name in the ‘from’ line -- it should come from you and not your company.  Ideally, they should recognize your name and know who you are.

5.     Use an easy to read font in text layout -- avoid brochure style emails as it looks like it was generated from a corporate marketing machine. In preview mode the reader will judge the email by its format and length.   Using bullet points will make it faster to read.  

The key is to offer a great deal of value in a minimum amount of time.  I’ve scanned longer articles looking for the core concept and then passed on reading the article when I couldn’t find it.  Make your message easy to find and you’ll gain more readers.

Best regards,

Hall T. 

How to Pitch an Investor through Email

Pitching investors in person and online is a skill one can learn.  Here are some key steps in reaching out to potential investors through email to pitch your deal. 

Choose investor prospects carefully – don’t spam an entire list but rather use lists to research and identify qualified candidates.  Search for connections to those candidates and topics of interest.  Then devise strategies for how to reach out to them. 

Indicate why you are reaching out to them—show why that person and company could be interested in your deal. This could be based on a past investment, a network connection, or a group affiliation.  Answering the "why" will keep them reading. 

Show your connection to the reader – finding a common connection will greatly improve your chance of a response so it’s worth looking for someone who is in their network that can provide social proof that you are legitimate.

Show the problem you solve, the solution you offer and the market you target—do this in one or two sentences and not one or two pages of text.

Show indications of traction—show 3 to 5 examples of traction such as leads generated, sales closed, number of users in a beta program, etc.

Introduce yourself and show social proof – there’s a tendency to start the email with this information but showing your position in the community and credibility comes after you have established a topic relevance to the investor.

Close with a one sentence ask—make clear the next step such as a conference call, a meeting, advice, etc.

Also remember these following points:

Write in a conversational but business-style tone--not marketing-speak.

Keep it short and to the point avoiding long blocks of text.

Use numbers to make your pitch stronger as it shows specificity.

Remember to attach the executive summary or pitch deck.

Best regards,

Hall T. 

Healthcare Texas 2016 Conference Wrap Up

The HealthCare Texas 2016 annual technology and venture capital conference in Austin, Texas was a rousing success, bringing together 109 companies and 65 investors and holding 270 one-on-one capital matching meetings. The massive turnout from the health care and business community at the two-day conference sent a loud and clear message that Austin is quickly becoming a major force in the health and life sciences and venture capital landscapes.

The conference, which was held May 3 and 4 at Brazos Hall, a chic turn-of-the-century warehouse in downtown Austin, featured keynote speeches and panel discussions on a variety of cutting-edge health care topics and trends, including information technology, informatics, and value-based reform.

“The turnout for HealthCare Texas 2016 was outstanding,” said Matt Black, director of the Texas Growth Capital Forum. “The conference definitely furthered our goal of maintaining a lasting ecosystem of funding for technology growth companies here in Austin.”

“HealthCare Texas 2016 was proof positive of Austin’s standing as an emerging biotech and life sciences hub,” said Hall T. Martin, Founder/CEO of Texas Entrepreneur Networks. “As indicated by the hundreds of one-on-one meetings, the interest from entrepreneurs and investors in Austin’s health and technology spheres has been awe-inspiring.”

Austin Mayor Steve Adler clearly and succintly explained the appeal of the city to investors during the panel “Austin 2020” on Day 2 of the conference.

“I really do think that this a magical place,” Adler said of Austin. “We’re the fastest growing metropolitan area in the country and have been for the last five years.”

Adler said the fact that Austin creates more startups per capita than any city in the U.S. is driven by its “entrepreneurial, creative and innovative core.”

Austin’s life science cluster is currently at a launch pad, the mayor said.

“The infrastructure is here and growing,” he said. “This is a pivotal moment.”

Important partners, including the University of Texas and the city’s business community, have brought research dollars to the city.

This fall, UT’s Dell Medical School will open its doors to its first class.

“Austin is the place where ideas become real,” he said. “Launching the Dell Medical School provides an opportunity for us to meet the challenges of minimal capital, a trend of the future.”

Dr. Mark McClellan, former commissioner of the U.S. Food and Drug Administration, spoke to a packed audience during his keynote address on health policy that it’s critical companies’ business plans align with government policies.  

“Being aligned where policy is heading is important,” McClellan said. “There’s a lot of interest in getting better treatment to patients faster.”

McClellan, who was hired as a faculty member for the new Dell Medical School late last year, said health care companies need to be able to change quickly and adapt to government policies as needed.

“What you do matters as innovators,” he said. “But you’re dealing with very important consequences while dealing with very scarce resources.”

The Dell Medical School, which welcomes its first class of students in August, presented the conference.

Christopher W. Kersey, managing partner of Camden Partners, a prominent Baltimore-based venture capital firm, delivered a keynote on global health care.

“It’s fascinating what’s happening out there,” said Kersey, who also serves as chairman of the board of Johns Hopkins Medicine International. “I often say we’re in the third inning of an extra inning baseball game in terms of the extent to which health care technology can transform the continuum of care.”

Kersey said health care expenditures make up 15 percent of the GDP of the United States. Globally, it’s around 7 percent.

Many countries around the world have experienced double digit growth in private health care sectors, Kersey said, with Australia and India being notable examples of nations that have seen significant growth in recent years.

Kersey discussed three major trends in health care technology: cyber security, personalized medicine, and biopharmaceutical development.

How Uber/Lyft's departure from Austin will impact your VC Fund Raise in Texas

For some, the recent defeat of Proposition 1 in Austin signaled Austin's shift away from the tech world in which venture capital is a critical component for starting and growing companies.  At TEN we recently ran our Healthcare Texas 2016 event in which we had over 100 companies from Texas (mostly Austin) pitch in one-on-one sessions with 60+ venture capitalists, private equity, and angel investors from across the country.

In the run-up to the event, I talked with many of our investors and heard a variety of viewpoints about Prop 1 and on how the fight between the City of Austin and the the Transportation Network Companies  (TNCs) was playing out.  Some investors viewed it as a proxy on Austin's position in the Tech world but most considered it a political fight over who is going to call the shots.  Many questioned Uber/Lyft's campaign strategy and tactics.  In the end that strategy backfired on Uber/Lyft and they lost the vote along with some credibility.

The common message I received from investors was this . . . as long as you have quality deals that meet our fund's criteria, we'll keep coming to Austin.  As one investor said, "the teams are great, the valuations are good, and we want more."

We ended up with over 240 one-on-one sessions throughout the two-day event.  We launched the Austin Healthcare Council initiative.  Uber and Lyft are no longer picking up rides within the city of Austin, but most expect they will be back. The VCs are asking, when is your next event?