John Metcalf of Startup District talks about creating a community for entrepreneurs in Austin

John Metcalf of Startup District talks about creating a community for entrepreneurs in Austin

What is your background?

I grew up in San Antonio. I was homeschooled. I've been getting in trouble on the Internet since AOL days.

I came to UT in 2002 as an undergrad. I was excited about Austin being a startup city but when I was at UT I didn’t really feel like it was a part of a startup community. About halfway through school I started working with a Silicon Valley company called Radar.net. They were angel funded by Joi Ito and Reid Hoffman and later found funding with MDV & DFJ. When they asked me what I'd be up to after graduation, I told them and everyone else I didn't want a job. I wanted to startup in Austin. I prefer to work for myself.

What is the Startup District?

To bring startups and people with a startup-mentality in proximity -- concentrating us.

While I was in school I kept looking for the tech community I thought was here. I went to all the tech events I could and while there was a community there, it wasn’t the same kind as I found in Silicon Valley. The people I met were talking about different things. I finally found a glimpse of what I was looking for when Dusty Reagan started a Jelly in Austin.

What is a Jelly?

It’s a concept that started a year and a half ago in New York, where some independent folks used a wiki to organize their meet ups in coffee shops so they could work together as a group. It's called a Jelly because they came up with the idea while eating Jelly Beans. The idea is to co-locate entrepreneurs or freelancers so they can work, collaborate, and learn from each other. Austin was one of the first cities to have an extension of that. There’s one that meets every Friday at Café Caffeine on South Congress. At these Jellys, I found a good group of young, progressive entrepreneurs.

So how is the Startup District going?

We've place an anchor.

The group I met at Jelly, Dusty Reagan, David Walker, Cesar Torres, and I realized after a couple weeks of Jellying that this was something special, and we could benefit from this type of environment everyday.
With the community's support, the four of us opened a coworking space called Conjunctured on East 7th.

How much does a membership cost?

There are three levels. The top level is $425/month and gives the member unlimited access. Then there are lower levels at $325 and $125 per month.
The people who join are interested in working around other people.

How did you come up with the name for this?

My friend Dane Hurtubise said “Startup District” first. We were talking about Austin's Warehouse District. Dane said "what Austin needs is a district for startups, not clubs."

Why did you start it?

I felt the type of talent in Austin that would thrive in a startup was leaving town for one of the coasts or going to work for a large company. UT is breeding people to enter into the corporate work force. There needs to be an alternative place for these people to go work.

What is your goal for the Startup District?

To build a community of entrepreneurs who build startup companies and eventually, they could act as an incubator for future startups. In addition, the city could recognize it as an economic zone as an incentive for startups to stay here.

It sounds a little like a YCombinator program. How does the Startup District compare?

I had the opportunity to join Paul Graham and Jessica Livingston at YCombinator in Cambridge last week for dinner.

I think we need to build the community first and then we can start a program similar to YCombinator or TechStars.

Best regards,
Hall T.

Jonas Lamis of Scivestor talks about New Application Areas of Moore’s Law.

Jonas Lamis of SciVestor talks about new application areas of Moore’s Law, the coming of the Semantic Web, and a startup workspace called Tech Ranch Austin.

What is your background?

I come from the enterprise software arena. Back when I started you could put your arms around what is software. Today it’s much more diverse. I helped launch three Austin Ventures backed software companies. The first was called Ventix that was an enterprise software knowledge management play. When Ventix was acquired by Motive, we spun out Question.com that was also acquired, and most recently I spent six years growing Troux Technologies. A year ago I left Troux and started SciVestor to create research into new technology areas that are going to change the world.

I see you have artificial intelligence, nanotechnology, and robotics as target areas for your company which provides research. Why did you pick those areas?

If you look at Moore’s law with exponential growth curves, it applies to those areas just as it did software. We’re at a point now that there’s so much processing power available that the second wave of industries will start to take advantage of it. Robotics is starting to see significant returns in medical applications and more. The power that Moore’s law brought to the software industry will now amplify these other areas. While software changed the way we lived, these other areas have the potential of making an even more dramatic change to the way society operations in the decades ahead.

How did you get into these areas?

Ray Kurzweil’s writings were very influential to me. The book called The Singularity Is Near encouraged me to look at these new technologies. That led me to the Singularity Institute for Artificial Intelligence in the Bay area which is a non-profit where I serve as the Director of Partnerships. The Semantic Web space is very interesting because it will lead to the next generation of artificial intelligence.

What is the Semantic Web space about?

It’s about understanding who I am, my context, and what I want to accomplish and using that information and the Internet to deliver results. It could use my speech, gestures, or whatever I offer to help determine what I want. The Semantic Web space is a precursor to the next generation artificial intelligence effort. As an example, Microsoft recently acquired virtually unheard of Powerset for $100 Million – an emerging semantic technology company. They developed a search engine that would parse through Wikipedia and be able to answer questions like, “Which Presidents died in office?” Semantically it would start to understand what you are talking about and give you answers.

What do you think about nanotechnology?

There are again fundamental underlying technologies that will be powerful in the decades ahead. Moore’s law, that exponential growth, sneaks up on you and you don’t know it’s coming for a while and then it pops up. Nanotechnology is coming but is still below the radar.

What about robotics?

One area I’m interested in is the autonomous vehicle space. It’s come a long way in a short amount of time. In the first DARPA Grand Challenge in 2005 – a competition for demonstrating autonomous vehicles hosted by the Department of Defense, the first competition, the lead vehicle only went 11 miles in the 100 mile race. In the 2006 event, 22 of the teams got further than the lead vehicle from the competition a year and a half before. I recently gave a presentation at the Robobusiness Conference on the topic. It’s a pretty interesting space for me because it’s been a sleepy space for so many years with manufacturing robots and now with the emergence of iRobot--the vacuum cleaner, and the use of robots in the military for autonomous vehicles, and the use of robots in the healthcare space. There’s a good chance that a decade from now most people will have some kind of robot in their house providing value for them.

My wife wants an iRobot. I didn’t think she would go for it.

Our Robot Central blog has done some research on the anthropomorphism of people taking the iRobot and dressing them, taking them with them on vacation, and more. One guy would clean the room first before turning on the iRobot because he didn’t want it to work too hard.

What other trends do you see emerging?

Locally here in Austin, I’ve noticed that there are so many groups forming around different technologies. Meetups if you will. For example, I was at a meeting of Semantic Web that came together through Twitter spontaneously. I find these groups want to socialize and share information. I now see people wanting to share workspaces to collaborate, bounce ideas off each other and have a physical business social network. I have an idea called Tech Ranch Austin that is part co-working space and part technology incubator space. I have companies that want office space but not at A-grade real estate prices. Right now, I’m identifying several anchor tenants. My ultimate goal is to have a space here in Austin for every technology group to share ideas and work together.

Best regards,
Hall T.

Paul Groepler of Santo Spirits Talks about his latest venture with Tequila

Paul Groepler of Santo Spirits Talks about his latest venture with Tequila, the trend called Premiumization and Brand Ambassadorship, and the three most important things in consumer products.

In our last startup, we came out with new ‘super-premium’ vodka. On this deal, I’m working on a new tequila. I think it’s even better than the market for vodka. This is not my first startup. This is my eleventh. In my case, I have had one consumer product company prior to the Vodka. Now we have tequila. So this is number three for me. The other was a fashion accessory. Our other team members have built brands much larger than we will this time, so I am confident about that aspect. In addition, our ceo has sold liquor to Mexico, the USA and Canada, so we have the channel as well.

What about getting a restaurant investor to invest in the tequila deal?

You can’t. For example we have spoken to the owners of a local restaurant and also a bar, who both really wanted to invest but the federal liquor laws allow you to be in only one of three of three-tiered systems – manufacturer, distributor, or retailer. I’ve not given up Austin because I haven’t been able to raise money here. But it has been a little challenging.

What is special about your tequila?

Well, a couple of things. First, I always enjoy that question, because I think 2 of the most interesting questions I get are number one - ‘How are you going to beat _ Patron and number two - ‘Why another tequila?’

There are three big market spaces in the liquor industry, whisky is the biggest, tequila is the second, and vodka is the third. We just went from the third to the second. There are more competitors in the vodka space than tequila. You can prove that by going into a liquor store, and seeing how much tequila is there and how much vodka? So I’m happy to play in a space with fewer competitors and bigger margins. So that’s not answering your question, that’s just sort of sizing up why we’re doing this at all.

If you want to buy a really nice tequila as a gift for somebody, what have you got? There aren’t that many, probably about three or four, and those are mostly brand-based, e.g. they don’t taste at the level of their purchase price.

So what we’re doing is we’re taking this ‘value for price’ and packaging it and positioning it as ‘ultra premium’ selling as a ‘super premium’, because there is this trend going on called “trading up” or “premiumization”. The brand guys call it “premiumization”. We are not inventing the wheel, we are just riding it.
The three most important things in consumer products are package, package, and package! You see it before you smell it, taste it, and touch it. For our vodka, we used Icelandic glacier water. I mean that’s positioning, that’s top notch. The bottle was a stand-out and everybody loved it. In addition, we distilled it an extraordinary seven times. No on does that. Ther are no more left-over distillates, so the vodka, along with the super-pure glacier water is very clean, very smooth, very crisp.

What do you call it?

IS Vodka, but ice is spelt I-S because it’s the Icelandic word for ice. So you get some creative confusion in the minde, like ‘is’, ‘ice’, ‘ice’, ‘is’, hmm and your brain works on it and you are going to remember it.

So how do you penetrate the market with a new tequila?

The way that you do this is you don’t put a particular advertisement that says ‘We’ve got a new tequila.’ You go about a multi-pronged approach including brand-ambassadorship and ‘buzz’. You go around to the trendiest clubs, nightclubs and bars in that city where you are launching, and you have events and you do that with what I call brand ambassador.

This product (tequila Ambhar™) is more of your sipping-man’s tequila; this is your late 20’s through mid-forties crowd that wants to be just that little bit nicer a bit better. They don’t want Wal-Mart, they don’t want the Piano Bar on 6th Street, you know that sort of thing, or to do the nasty shots of 4-dollar tequila.

So you get your brand ambassadors, and these are women and men, who are tastefully dressed. They go around to these clubs and bars and take part in the events and are continually putting this in front of the bar manager, waitresses, and customers, and saying here it is. We will be launching in Austin like that, that will be in October.

What are the profit margins on this product?

We made $84.00 a case on Vodka, the case is 12 bottles, and we almost doubled that with tequila. So it’s a much bigger profit.

Why does it cost less?

It’s made in Mexico, and it is logistically centralized. Our markup on the Vodka is about 220%. Not bad, but our market on the tequila is about 312%

It’s also simpler to make from a logistics perspective. For the vodka, we had the bottle made in Spain, it was decorated in Belgium, the cap came out from Canada, the water came from Iceland, and it was distilled in a distillery outside London. It is then packaged in a box and put back on a ship to the US or wherever it is going.. But the tequila has to come from one place in Mexico. It’s got to be from a certain region. The tequila certification board is a Mexican regulatory body, which certifies all the distilleries.

Also, since the product is in Mexico, is just a ‘truck roll’ that’s hours from the border, not weeks. So it’s a lot tighter on the logistical turn time. It costs us $5.81 to make this and we add about a $4.00 marketing and sales cost to it. By the time it gets to the distributor to whom we wholesale for $32 and our mark up is $22, that’s not bad. Remember, in the US we cannot sell directly to the end-customer (e.g. restaurant, bar) due to the federally mandated ‘three-tier’ system.

We’ll break-even at 6000 cases, that’s 12 bottles a case. Our launch is around 5000 and that’s already spoken for, by a single customer.

Who’s buying that first 5000?

Sam’s Club Mexico. Our CEO has a relationship with Sam’s, Mexico. Please note also that Sam’s in Mexico is not Sam’s here. In Mexico they are the main suppliers of restaurants and bars.


So you are launching in Austin but your first customer is actually in Mexico. What’s your expansion plan? Where do you go next? The 80-20 rule applies for tequila, namely that the 80% of tequila consumption is by 20% of the United States, and these states are located in the Southwest: Texas, California, Arizona, Nevada and New Mexico. These are our ‘target market’ states in the US.

There are 3 cities that comprise our initial launch, they are Austin, San Antonio, and Las Vegas. The sales team just got back from a wonderful pre-sales trip to Vegas. We are in the process of getting letters of intent from the casinos there, including: Mandalay Bay, MGM, Mirage, and more. Things are heating up quickly!

Best regards,
Hall T.

Galen Kaufman of Fizzy Fruit talks about the business and how he discovered the idea of carbonated fruit.

Galen Kaufman of Fizzy Fruit talks about the business and how he discovered the idea of carbonated fruit.

What is your background?

I was trained as a veterinarian and did neuroscience research at UTMB in Galveston.

How did you come up with the idea?

By accident; I was on a sailing trip with some fruit stored in a cooler with dry ice and later found it had become carbonated.

What are you trying to do with it?
We started serving Fizzy Fruit in school lunch programs, which continues today. But we're moving forward in the retail market after a limited run in 2006. We delivered over 500,000 units in about a 12-16 week period. We learned some valuable lessons in the process, resulting in a new package producing a much higher quality product.

What did you learn from your early efforts?
That the product, because it is so innovative, needed to be at retailers that do heavy sampling. Additionally the packaging changes result in a much better consumer experience.

We originally hired executives that were experts in development and engineering processes. Going forward, the new team is being developed with fruit industry and consumer packaged goods veterans.

How are you going to distribute it now?
We are working with regional co-packers to get it to market quickly, and capitalize on an infrastructure that is already in place. We also have a fresh stable product that will have longer shelf life, and can be made anywhere with high quality and incorporating Fizzy Fruit's technologies.

Where is your new first roll out?
In Northern California -- that's the source of our fruit and it's the highest consumption per capita of fruit as well. We plan to grow nationwide through the use of our co-packing partners. We are also preparing to sell Fizzy Fruit via our on-line store at www.FizzyFruit.com.

What is your exit strategy?
Our current strategy is to build a solid turn key operation that is built for multiple options including an eventual IPO or acquisition.

Best regards,
Hall T.

Karen Hartline of Mashable talks about the upcoming Mashable Tour coming to Austin

What is your background?

I lived in Oklahoma for 20 years and moved to California recently. Later the opportunity with Mashable came up. It’s a startup with some great things in the works.

What is the idea behind Mashable?

It’s the number one news source for social media and networking. Three years ago, our CEO started blogging about social networks. No one else was reporting on it, and it just grew as interest grew. Since then it has grown into one of the top 10 blogs in the world.

We’re trying to bring people face to face to share ideas. We have 15 people on full-time staff in both editorial and business side. It’s a virtual company in that we all work from home. We have core teams in San Francisco and New York with writers spread across the US.

What is the Mashable Tour?

They are networking events with plenty of interaction. We’re holding an event in Austin in a few weeks. The event lasts from 7 to 10pm. Startups and entrepreneurs come to learn and share information about what’s going on.

What trends do you see out there?

Twitter is big. We use it all the time. We are working on ways to display Twitter feed at each Mashable event. The further east you go in the US, the less people know about it, but it’s big in Austin. I just wish it were up all the time. I get the ‘Fail Whale’ too often.

Another great trend is online conferencing. There’s a company calledEventVue out of Boulder. They are an online community for conferences and events. Once you register it pulls your information in and searches for your Facebook and Twitter account, and creates a “chatter” area that people at the event can use.

There are also social media camps that are becoming popular. They are similar to Bar Camp. They’re typically free and it’s a great way to connect people.

Best regards,
Hall T.

Keeping Your Investors Informed – Regular Communication from the Entrepreneur

I recently received a comment on this blog from an angel network that heartily agreed that keeping investors informed is a key element in the ongoing entrepreneur/investor relationship. This post outlines the key reason an entrepreneur should send regular, informational updates to the investors. In a nutshell, it’s to maintain the relationship so the entrepreneur can ask the investor for follow-on funding later.

I remember my first angel investment back in the 1990s. This was before I knew you were supposed to setup an agreement with the entrepreneur on how, how often, and what they would communicate to the investors. After several months of hearing nothing, I finally called the President of the company and asked for a written update including financials. A week later he sent me a short two paragraph email along with a spreadsheet attached showing the financials. There are several items to point out here:

1. The two paragraphs by no means filled in the details of the business. To this date, there are holes in their explanation of what went on in the business.
2. The financials of any company should not be in an Excel spreadsheet. They should be in Quick Books. Excel has no audit trails, no security or validation. Anyone can change the formulas. In fact, several of the columns of financial data didn’t add up in the bottom row.
3. I only received this after I demanded it and I never received another one. After that experience, the entrepreneur wanted to discuss over the phone and found excuses to not send out the financials again.

These are all red flags indicating that things are not going well. Later the company went bust. Needless to say I won’t be investing in their companies in the future.

Here is a list of best practices for entrepreneurs communicating with shareholders along with why and what should go into the report.


Best regards,
Hall T.

The Cost of Angel Investing—Where are the Fees?

I recently read a discussion forum in which the author of the post had bought a financial instrument and later discovered that the investment advisor who sold it to him actually made a commission on the sale. The author was incensed that someone actually made a commission off selling him something and to top it off the investment advisor didn’t disclose his commission. As I read the post I began to wonder where has this guy been the last 50 years. Of course people make money selling things and financial instruments are no different. When I sit in pitches from investment advisors promoting their fund, or whatever their financial instrument may be the first question that nearly always comes up from the audience is how much are the fees and commissions. Of course this number ranges from a fraction of a percent for mutual funds to double digit percentages in private equity.

After reading the post I began to wonder about the cost of angel investing. Where are the fees? In a member-managed group such as the Central Texas Angel Network there is a membership fee to belong to the group but the members review the deals, perform the due diligence and ultimately decide what to invest in.

The main cost comes in three areas and while those costs aren’t paid directly by the angel investor, the business pays the costs and ultimately the angel investor takes a reduced return based on those costs. An experienced angel should ask about the costs.

The first cost is the management salaries. Management salaries are kept low in the early days of a company to give the business every chance of succeeding. I was recently in a deal in which the members asked about the CEO’s salary. He replied it was $300K/year. You could feel the air leaking out of the room after he said that. While he was a strong manager there was no way the business was going to survive paying salaries like that.

The second cost is that of consultants whether they are on the board or as advisors. It’s fair to ask who is getting paid and how much for the work they are providing. There are good consultants out there but I’m often amazed how vague their duties are. Often times I hear things such as “they are going to help us.” There’s no job description, no metrics, no deadlines and it’s all very nebulous.

The third cost and what I consider the most important is the angel investor’s time. If the deal will require a day a month or worse a day each week, then the deal must be spectacular to make it worthwhile. The angel investor should figure out up front what value he can add and if the business runs into trouble who is going to help them. The angel investor’s time becomes the key factor in calculating the cost of angel investing.

Best regards,
Hall T.

Francine Walker of SurvivorSoft talks about developing applications for the iPhone

Francine Walker of SurvivorSoft talks about developing applications for the iPhone, the challenge of the gaming industry, and what help game developers need:

What have you been doing since we last spoke?

I just came back from a trip to Africa, working at a cheetah conservation center in Namibia for two weeks. This facility currently cares for 49 cheetahs, and works on some other conservation initiatives. It was an amazing experience. Namibia was surprisingly modern. It certainly wasn’t what I expected.

How is your company SurvivorSoft doing?

Exciting times! Right now, I’m moving some applications over to the iPhone. However, I have to say Apple appears to have underestimated the effort it takes to use their tools. Apple uses ObjectiveC, which is a combination of C and Smalltalk. There’s a steep learning curve involved that’s going to throw off some inexperienced developers. Fortunately, I’ve found some tricks that really help cut down on the teething pain.

I like the iPhone though. My goal is to identify a way to use the accelerometers in it to create Wii-style gaming experiences, although the Apple certification process for iPhone games is still somewhat unclear. I’m also in the concept stages for a physical fitness application keeps track of your workout. Given the success of WiiFit, there seems to be a market for something like this.

I’m also doing contract work for Aspyr, an Austin-area publisher I’ve had the good fortune to work with on multiple occasions, on an educational/reference title for the Nintendo DS.

So how is the gaming industry today?

As far as Mobile Windows applications go, there’s no market out there. People just don’t know where to find and download applications. Apple has so much more potential, because users can go to the brick-and-mortar retail locations or to iTunes. Both venues already have mindshare. Another challenge is that many users simply don’t want to pay very much for games on mobile devices. I’ve seen an excellent 3-D game on the iPhone that sells for $9. That’s a slim margin for a title that obviously took a lot of time to develop. Electronic Arts is coming out with a series of games for the iPhone soon, and I’m sure they’re going to charge more than $9 each. I’m very curious to see what other people can do to monetize the iPhone. It’s very hard to discern the real revenue from the hype.

Our investors have looked at a few gaming companies and it’s like the movie industry – “Is this going to be a hit?”

Too many people get wrapped around the axle about how a title looks in the early stages. I’d worry more about if the developer was actually going to finish it. This business is about execution, not bluster. All too often, feature creep takes over and the team can’t muster the discipline to wrap bring it all together until they run out of money. Some publishers in fact take advantage of that. They wait until the developers run out of money and then come in to take over the title. Some even go so far as to delay royalty payments as much as they can to see if the developer goes under.

What about the Austin Game Developer’s Conference?

It’s focused primarily on helping developers with technical or design issues, particularly in the area of Massively Multiplayer Online games. There needs to be more support for the developer regarding business issues such as raising funds, finding publishers/distributors, pitching the product, contracting, managing finances, employees, and the like.

Best regards,
Hall T.

Angel Investment Program by the Federal Government -- HR 3567 Bill Proposed

You know you’re getting big when the federal government wants to step in and help you. Here’s a case in point.

The HR 3567 Bill is an amendment to the Small Business Investment Act of 1958. It is currently making its way through Congress and would provide federal funding to angel organizations in addition to creating an office in the SBA to carry out the program. The program would include building a database of angel investors and setting up a matching funds program up to $2M per group.

The Angel Capital Association researched the bill and surveyed the membership as policy advocation for angel investing is now becoming a higher priority based on membership feedback. The survey showed that members found two positives in the bill:

1. Having the office focus on connecting resources of financing (angels) with users (entrepreneurs) may lead to market efficiencies;

2. The office will provide a point of entry at the federal level for angel investors and angel groups to discuss and address other issues related to angel investing.

The survey also revealed two cons to the bill:

1. The bill could lead to a reduction in angel investments because many angels would not want to report their investment activity to the government office;

2. Some question the need for angel legislation when the number has increased from 67 percent since 1999 and angel investments annually total more than $26 billion.

Currently, the ACA does not take a position at this time. Relevant text from the proposed bill is below:

Title III - Angel Investment Program
Section 301 -
Establishes within the Investment Division of the SBA the Office of Angel Investment, headed by a Director, to provide support for the development of angel investment opportunities for small businesses.

Requires the Director to establish and carry out a program, to be known as the Angel Investment Program, to provide financing to approved angel groups. Limits to $2 million the financing to an angel group. Provides a matching funds requirement. Establishes an Angel Investment Fund. Authorizes appropriations.

Requires the Director to establish and maintain a searchable database, to be known as the Federal Angel Network, to assist small businesses in identifying angel investors. Authorizes appropriations.

Requires: (1) the Director to establish and carry out a program to make grants for the development of new or existing angel groups and to increase awareness and education about angel investing; and (2) each grant recipient to report to the Administrator describing the use of grant funds. Authorizes appropriations.

Best regards,
Hall T.

Best Practices for Entrepreneurs Seeking Funding

I work with entrepreneurs every day who are going through the fund raising process. Over time, I’ve found some entrepreneurs employing practices that make the process go smoothly. For those who seek funding here are some best practices to consider in your fund raising efforts:

Develop a relationship with investors early on

I often come across entrepreneurs who say that don’t need funding right now so they don’t need to talk with investors. I sometimes ask when they will need funding and am surprised that the answer is usually six to twelve months later. I advise the entrepreneur to start developing relationships now. If you wait six months and then start looking you’re behind. In meeting with an investor the entrepreneur can state that he’s not ready for investment but then lay out the plans for developing the business. By building a relationship now and keeping the investor informed of your progress, the entrepreneur will be in a better position when it comes time to raise the funding.

Have ready the executive summary, slide deck, and business plan with financials

It helps to have the core three documents – executive summary (one-page only), slide deck, and business plan already developed and ready to go. As the entrepreneur meets prospective investors he can use the appropriate docs for each meeting.

Publish a periodical email newsletter for interested investors

In the fund raising process, I see some entrepreneurs sending out email updates to highlight the progress of the company. Some come as often as weekly to show progress in sales, product plans, and other milestones. This shows the company’s ability to execute.

Find a lead angel to develop a terms sheet and start off the funding round

By finding a lead angel and creating a terms sheet, the entrepreneur removes the biggest barrier to fund raising – the negotiation process. There are numerous angel investors who find the initial negotiation and due diligence process too time consuming. By eliminating this hurdle, the entrepreneur opens up the deal to a larger number of investors.

Make the deal terms “investor friendly”

Of course every deal must be negotiated. The harder the terms for the investor to accept the longer the time it will take to negotiate. By making the terms “investor friendly” through reasonable pre-money valuations, preferences, and other terms, the faster the process goes.

Push all due diligence docs to a password-protected web-site so interested angels can perform due diligence more easily

The due diligence phase can be sped up by having all the key docs already available. I’ve seen some entrepreneurs put everything on a protected web-site and then give out the password to interested investors. This knocks down the hurdle of trying to send 600 MB worth of documents through the email system.

Continue the quarterly email newsletter after funding so investors stay with you

It’s important to keep investors up to date even after the funds are raised since investors can help in other ways. Some investors bring a rolodex of contacts while others bring experience and coaching. By keeping them informed of your progress and challenges, they may be able to help. This practice is also useful for when it comes time for follow-on fund raising.

Best regards,
Hall T.