Launch: StartupList — a new way to reach angels: ”

Yesterday, we launched AngelList, a curated list of angel investors, representing $80M going into early-stage startups this year.

Today, we’re launching a cool new way to get intros to these angels: StartupList. It’s a weekly email we send to AngelList, with 3 high-quality startups who want intros. Here’s how it works: you send us your pitch, we review it and, every Monday, we email the best 3 startups of the week to AngelList.

StartupList is already getting meetings for startups

I’m psyched because StartupList is already working. We released it on Twitter a few weeks ago and 9 investors like Mike Hirshland (Polaris), Matt Mullenweg (Founder of WordPress), and David Cohen (Techstars) have already asked for intros to 7 early-stage startups and counting. See the full list of investors who have gotten intros here. (We’re publishing these names with the permission of the investors.)

Startups: How to get on StartupList

If you’re a startup, apply for StartupList here. We welcome startups from all over the world. We look for the same things that early-stage investors look for: traction, social proof, and team. You don’t need all 3, but you need to kick ass in at least one of them.

Before you apply to StartupList, build a minimum viable product, put it in front of customers, and learn something about product/market fit. If you can’t get this far on your own, find some idea investors instead.

Then write a 150-word elevator pitch and apply to StartupList. Our elevator pitch template is a good place to start. Spend time writing and re-writing the pitch until it’s awesome. Get feedback from good writers and entrepreneurs who have raised money. You have 100% control over the quality of your pitch and there’s no reason not to kick its ass.

Runners-Up

If you’re not one of the 3 startups we highlight on StartupList each week, we may include you in the runners-up of the week. Investors have asked for intros to the runners-up, so it’s also a good place to be. One of the runners-up writes, ‘Where can we send you a small token of thanks? This added some social proof in itself with a couple of the folks we’re chatting with. I greatly appreciate it.’

Privacy

No one will review your pitch except the Venture Hacks team: Nivi and Naval. If we send your pitch to AngelList, it’s obviously out of our hands, but that’s no different than sending the pitch yourself. At your request, we can also send your pitch to specific angels instead of the whole list.

Angels: How to get StartupList

While AngelList is public, StartupList is only emailed to the investors on AngelList. If you’re an angel, apply to AngelList here. At a minimum, you should have made two $25K angel investments in 2009 and plan to make two more $25K investments in 2010.

Why we’re building StartupList and AngelList

Entrepreneurs are always asking us if we can introduce them to angel investors. It’s one of the most common questions in the startup world. And startups spend a lot of time trying to get these intros. Even the startups who end up raising money from Ron Conway, Fred Wilson, or Sequoia.

We think this is an unnecessary friction and we want to make it easy for qualified entrepreneurs to get intros to qualified investors.

Apply for StartupList and please help us spread the word! I’m looking forward to discussing your feedback in the comments.

”

(Via Venture Hacks.)

9 quick tips for raising venture capital: ”

(Editor’s note: Dharmesh Shah is a serial software entrepreneur and the founder and CTO of HubSpot, which provides marketing software for small businesses. This column originally appeared on his blog. )

As the market improves, many start-up owners are likely be thinking about raising funding.  With my latest startup, I’m now a venture-backed startup founder (I’ve raised $33 million in three rounds of capital for my marketing software company).  So, I’ve got some direct experience with the process.  Several of the companies I’m an angel investor in or otherwise involved with have also been in the fund-raising process.  So, along the way, I’ve learned a few things, and I’d like to share them with you.

There’s already lots of great content on the web about raising capital and understanding deal terms. But, I figured it wouldn’t hurt to share some of the ‘lessons learned’ from my own experiences.

1.  Get the first round right: The terms of your Series A deal are very important. Not just because of the impact on that first round, but because many of those same terms are likely to carry through to future rounds.  It’s tempting to concede on some important terms but try to resist that temptation.  When negotiating the term-sheet for your Series B or Series C round, the ‘base’ terms (the starting point of negotiations) is whatever terms were in your Series A.  So, if you agree to some non-favorable terms on the ‘A’ round, you’re likely going to continue to pay the price for that in future rounds as well.

2.  Avoid valuation infatuation: Entrepreneurs often become obsessed with the pre-money valuation on the deal.  Though this is certainly an important element of the transaction, there are other factors at play that have significant impact on the raw direct economics of the transaction including the employee stock option pool (and who pays for it). If you get close to finalizing a deal, it is imperative that you have a spreadsheet that helps you understand the economics of the deal.  (See Jeff Bussgang’s article on the topic.)

3.  Raise more than you need: Regardless of how much capital you raise, you’re probably going to have wished you had raised more.  Within reason, if you have access to capital and the terms are decent, raise more than you think you need.

To help overcome the fear of dilution, build a simple spreadsheet that models the actual financial impact to your personal bottom-line based on various outcome scenarios.  What you will likely find is that if things go really well, the extra dilution is not going to change things all that much.  And, if things go really poorly, it won’t matter either (because those extra common shares aren’t going to make you money).

While you might raise the additional capital in a future round at a much higher valuation, it’s easy to forget the transactional cost of the additional round.  Raising a venture-round is a very time consuming process and when your bank balance is getting low, you’re going to really want to just keep working on the business instead of shifting focus back to the funding game

4.  Know what ‘market’ is: It’s possible that you’ll encounter some not so favorable (and fairly uncommon) terms during your VC negotiation.  It’s also possible that your potential investor is just pushing on the edges a little bit to see what they can get away with.

Your strongest line of defense against weird, non-favorable terms is the following reply: ‘That’s not market’.  This is sophisticated VC-speak for ‘what you’re asking for isn’t very common in VC deals right now.’  This line of defense has two advantages:  1) it works and 2) it demonstrates your savviness.

5.  Orchestration is important: Try to keep the interested parties moving along at as close to the same pace as possible.  This isn’t easy, but it’s important – because to get great VC terms in a round, the single largest contributing factor is competition.

If you can get two or more VCs competing to invest in your company, you’ll get much better terms.  But to get credible competition going, you’re going to need to have several VCs at the ‘termsheet’ stage of the conversations.  If one VC delivers a termsheet to you, but you are still early in the process with others, it’s going to be tough to get a competing termsheet.  Meanwhile, the VC that gave you the first termsheet is going to be ‘anxious’ for you to accept.

The good news is that nothing accelerates VCs more than knowing that you’ve already gotten a termsheet.  Once you get that first one, you’re likely to get more as the VCs jostle for position.

6.  Beware deal fatigue: Even in good times, fund-raising is an arduous process.  Be prepared for yet another round of meetings, yet another level of due diligence and yet another round of negotiations.  Don’t try to sprint to the finish line — you may have another lap to go.  And, it might be the most important lap.  Much like any large negotiation, there are often relatively important deal terms that get finalized in the final stages of the deal.  You need to maintain your energy so that you don’t just give-in on some of these seemingly unimportant details.

7.  Don’t Use Your Uncle Larry As Your Lawyer: As entrepreneurs, it’s not often that we need to engage legal counsel.   But if you’re raising venture capital, you need a lawyer – and experience counts. This is a high stakes game.

VCs are super-smart and they negotiate financing deals all the time.  You don’t.  You need someone that has competency in this area.  A great lawyer understands the nuances of this game both from the perspective of which deal terms are important, what ‘market’ is (#4 above) and when to stay firm and when to concede. Don’t be penny wise and pound foolish on this.

8.  Partner personalities matter: Yes, ideally you’ll be raise funding from a top-tier fund that’s a great brand.  But, what’s more important is that you fundamentally like the VC partner that is investing in you.  This is a long-term relationship and life is short.  You might part ways with key team members along the way, but your venture investor will almost certainly be with you until the very, very end.

If you have the luxury of choice, you should put strong weight on the person you take money from, not just the firm and not just the deal-terms.  I followed my own advice on this in our funding rounds.  We had higher offers than the deal(s) we took, but we solved for the best overall deal and the best partner.

9.  Switching Partners Is Hard, Do Your Homework: It’s likely that in the early stages of your VC process, you’ll get introduced to a particular partner at a firm.  Usually, this is based on what area that partner invests in (i.e. which one you ‘fit’ with).  But, in many larger firms, there might be more than one partner that could conceivably do your deal.  Or, you might get bucketed wrong (because your startup straddles a couple of areas of interest for the firm).

If that’s the case, you need to work hard to figure out who the best partner would be (from your perspective) and try to connect with that partner as early in the process as possible.  Once conversations begin in earnest, it’s very, very hard to switch to a different partner within the firm.

”

(Via VentureBeat.)

Out of everything I write about, this is probably the most important piece of advice I am ever going to hand out. I have a pretty good way to keep you sane….Okhams Razor.

Okhams Razor is the premise that with all things being equal, the simplest answer is usually the right one. I have beat myself up so many times after I have met with someone and they don’t return my calls or don’t answer my emails. It drives you crazy thinking about all the things that could have happened; maybe I fluffed the presentation, maybe he didn’t like the handshake, maybe she has found a better deal; maybe my idea really isn’t that good; maybe maybe MAYBE …you get the idea.

Sometimes, they may just not have gotten round to you yet or they are on vacation or are traveling right now or are ill or one of their children is ill. There are a million and one simple yet highly plausible reasons besides all of the mad ones you conjure up in your mind why they haven’t got back to you.

Point here is this.

When you did everything right, you got good rapport, the information exchange was great, the handoff and follow up promise was in place, the calls are put in along with the ‘so good to meet you email’ and you hear nothing back, follow these three simple steps:

1. Take a breath and recall Okhams Razo

1. Wait just a little bit longer than where you are now (a day or so)
2. Give them a call and see if they received the info.

You will be surprised at how many times the reason is nothing to do with you. I have had people actually happy that I didn’t let the connection go and have been apologetic about not getting back to me.

There are caveats of course. You may have been grin fucked (see the post about Grin F*cking).

I would honestly say that applying Okhams Razor to my encounters has saved me sleepless nights and lots and lots of stress.

Want less stress? Try using the Razor.

I watch Entourage on HBO and there is one character that I love and identify with. Ari Gold is the efficacious entrepreneur. Driven, aggressive, persistent with that killer instinct and an ability to lead and inspire his team. He gets up at 5am, reads the papers whilst he does his cardio, is out the door before his family get up – much to their chagrin – and is then like dynamo all day and into the night to get Vince whatever he needs and to take his business to the next level. His company is one of the top agencies in Los Angeles and his partner is one of the most powerful women in town.

None if this was by accident. Ari has crystal clear goals and goes after them relentlessly day after day after day. If you want to take a look at a really good example of what it takes to be a successful entrepreneur then go and watch every episode of Entourage paying particular attention to the agent.

It is all fictional and fun but I can bet that the character was based on a real person. As I say the juice is worth the squeeze and is why the blog has the name it does. When it’s your business and you are going after it, you had better be going after it like a Dog On A Pork Chop.

You want to know how to be a winner, try being like gold.

So, it is 11pm. My day is done and it has been a good one. Startups are as my friend says, smoke and mirrors and I shit you not, nothing could be closer to  the truth. Looking back on today, I realize yet again that it is a certain type of person that does startups. It has lows, but when you pull it out and the planets align, the highs are what make you do it and keep doing it.

Let me explain:

NanoGIANT needs to get to the next level. We have been stealth, done a lot of validation with our nanospheres with various universities across the US and the time came for us to take it to the next level. The next level means, attracting a leader, building revenue paths and going to get the funding to make all of this happen.

The leader…check

We convinced the ex president of Volvo worldwide to advise us and then come on board as our CEO when his citizenship papers come through. He said yes. He and I built the strategic roadmap that we can then present to people with money. Today I presented to the first of them.

=========

I woke up stressed as I had the preso to build before 2pm which was when the money guys/enablers were arriving to listen to my pitch. The presentation was done, I just needed to assemble the slides, discuss and refine with our CEO and off we go. But oh no, business cards. I had business cards with an east coast address as I had been building and talking with east coast people but now we were talking to west coast people so I needed cards with our head office address in Phoenix.  At the same time (today), we  had the bright idea of giving a little gift of a test tube of nanospheres as a take away to the meeting participants.

This was 10am.Here we go.

Plugged myself into some really banging house music and built the presentation, delivering it to the CEO prior to his arrival at 12pm. We grabbed lunch but in the back of my mind I knew I still had to get over to the lab, find some spheres we can give out and then print some business cards if we had a color printer which I wasn’t sure we had at head office. Stress level rising as 2pm loomed. Went over the presentation and I consider myself very lucky that this behemoth of a man had the same vision as me in terms of what we were going to say to the money people at 2pm. We nailed the preso with minimal changes and headed back to the office.

12.45 – Headed over to the lab for some particles I could give to the people in the meeting. Steve, our lead scientist just shone and not only pulled out particles we didn’t have but also gave me a couple of vials of pure opal and some liquid I call PFM – Pure Fucking Magic. “Pour this stuff onto the opal spheres and leave it 30 minutes and watch their faces” he said. Trust comes in strong here. We are an exceptionally tight team of colleagues and friends and I would trust this guy with my life. I left with my bag of tricks.

1.30pm – Walked in the door of our office and immediately downloaded a template for some business card sheets handed to me as I walk in. I have to point out that I know dick about making business cards but I pulled it out and printed a couple with a color printer I never knew we had.

2pm – I made my intro along with everyone else and cool as a cucumber, rocked the presentation to the point that these people stopped the meeting midway, called another even bigger money guy and said “You need to come and see these people ASAP”.

When I handed out the business cards out at 2.03pm, the ink was no more than 12 minutes old.

It was stress like I have never felt in a normal job but I tell you, I wouldn’t have this life any other way.

Smoke and mirrors. You simply do what needs to be done, day after stressful day.

Same thing. Different money guy tomorrow.

I love this!!

Reposted from venturebeat.com

Therapists don’t tell you what to do. Rather, they ask probing questions that get you to discover for yourself what is true for you, your situation, and what you want.

You’re smart. You’ll make good decisions. But you also get bogged down in daily minutiae and putting out fires, meanwhile missing the big picture. That’s where this piece comes in: To splash cold water on your face, forcing you to face reality and continue to defend or change the important choices inside your business.

What follows is your startup therapy session. Having to think through and answer these questions forces you to identify what you need to do today to seek profits and growth.

In one sentence, what does your product do and who buys it? And in one sentence, why does someone buy your product?
These are surprisingly difficult questions. The shorter and more precise your answers, the more you understand why you exist. If the answer is: ”I honestly don’t really know why people give us money,” that’s something to remedy immediately.

If you have an answer, is it because you have hard evidence that this is how your customers perceive you and why they give you money, or just because you believe it? “Evidence” means emails and Tweets and testimonials that use those words exactly; otherwise you’re likely interpreting their feedback to match your expectations. (I find myself constantly guilty of this disconnect.) If you don’t have evidence, it is OK to have a hypothesis but you should be concerned about collecting proof and disproof.

If you do know the answer, these two sentences should drive your marketing efforts. If these sentences aren’t on your home page, why the hell aren’t they? Is there anything else more compelling to potential customers? At the least, these represent the themes that drive your marketing campaigns.

What one thing is most responsible for preventing sales?

Do people not know you exist? Is it pricing? Not enough product features? Unorganized sales strategy? The look-and-feel of website? Something else?

Most little companies aren’t honest about this, yet it’s possibly the most important question you could ask. For example, I’m an engineer, so my first answer to “Why don’t you have more customers?” is almost always: ”Because we need this feature.” You hear some potential customer say, “we will buy if you do XYZ” so you conclude that if you implemented XYZ people would start breaking your door down.

But is that really the case? If you added one feature and maybe satisfied that one customer (assuming they wouldn’t ask for a second thing – which, in my experience, they usually do), would that get you 100 more sales? For those hundreds of people who downloaded your software, but never bought — is the reason “not enough features?”

For the hundreds of thousands of people who never came to your website in the first place, or hit the front page and left after three seconds, is the solution “more features?”

When you honestly ask yourself this question, it will naturally lead into things you can do right away to get more people to the site, into a trial and/or into a sale. Don’t just rest on what comes easiest.

What’s one thing you could do to get more feedback from customers, potential customers or sales you’ve lost?
You already know that external feedback is the only way to empirically determine how to build products people want to buy. Maybe you can’t drop everything to solicit feedback (although folks like Eric Ries say you should), but surely it’s worth one day every month to go out of your way to collection information from the field.

To get the ideas flowing, here are eleven ways to get more feedback, most of which take less than a day to implement.

If you had zero revenue from now on, on what date would you run out of money?

The first thing this does is force you to nail down your monthly expenses and accounts payable. Second, you know the length of your fuse even in event of disaster (if you have revenue) or if you never manage to land a customer (if you’re just starting out).

More than that, knowing your “padding” as I used to call it is helpful in making decisions like “Can I afford to try this Risky Expensive Thing,” such as making your first hire or trying a $20,000 media blitz. Whenever you’re contemplating a new expensive idea that could be awesome but could be setting money on fire, your fuse date helps you know how much time you’re risking — time to recover if your bet doesn’t pay off.

Finally, knowing “the day my business could die” helps focus your attention on activities that bring in revenue.

If someone handed you $100,000 today, how would you spend it to maximize future profits?
This gets you to crystallize what cost-centric activities would most help your business. We get caught up in free-but-takes-tons-of-time marketing and development activities — and most of the time that’s a good way to think — but sometimes it’s still true that “you have to spend money to make money.”

Sometimes the “thing you could do” is so compelling, it might mean you should raise a small angel round or consider debt. Typically it’s best to get by with minimal debt and investment, but if the “thing you could do” is transformative, you might reconsider.

NanoGIANT LLC is a company that I work for and after years of research and months of preparation, we are taking our silica spheres public. Here is the press release:
Contact: Tony Whelan
Phone Number: 1 800 380 6266
E-mail: tony@nanogiant.org
Website: http://www.nanogiant.org

For Immediate Release

US NANOPARTICLE MANUFACTURER OPENS ITS DOOR FOR NEW TECHNOLOGIES
NanoGIANT LLC announces new standard in monodisperse silica nanospheres – in bulk

Phoenix, Arizona – Breaking into the nanoparticle manufacturing market, NanoGIANT LLC is now producing extremely uniform silicon dioxide (SiO2) spheres. Independent characterization laboratory Particle Characterization Laboratories, Inc. utilizing the Brookhaven Instruments 90Plus Particle Size Analyzer show a Polydispersity index of only 0.005 on NanoGIANT’s 368 nm sphere.

Unlike other narrow particle announcements, the clear differentiators for NanoGIANT are its ability to produce virtually uniform, affordable nanospheres quickly and in kilogram (kg) increments.

“Our ability to rapidly mass produce our spheres cost effectively while maintaining the polydispersity will prove to be a key advantage for our customers,” said Tony Whelan, VP of Business Development at NanoGIANT.

“Nanotechnology is still just scratching the surface of its true potential. Our spheres will allow the transition from research to development for technologies where narrow spheres had previously been inaccessible due to manufacturing limitations.
Our technology will open the floodgates for manufacturing using highly specialized materials. We believe that the cost savings our customers can achieve with our material will revolutionize manufacturing in dozens of sectors.” says Whelan

Sample spheres are available for sale online – http://www.nanogiant.org

Based in Phoenix, Arizona, NanoGIANT LLC is a privately owned research and development company, specializing in the proprietary manufacture of highly uniform silicon dioxide (SiO2) nanoparticles. The company focuses on producing very narrow particles for mass production in the nanotechnology industry.

###

To schedule an interview,  further information, business enquiries, or samples, email tony@nanogiant.org or call 1 800 380 NANO.

Pitching Hacks is here. The PDF is $19 and you can download it immediately. 83 pages. Buy it here.

Samples

We’ve raised $100 million for startups like Epinions, invested another $20 million in companies like Twitter, and advised many others. Pitching Hacks shows you how to apply the simple lessons we’ve learned along the way. Check out these samples:

Table of Contents
Why do I need an introduction?
Can I get investors to sign an NDA?

Many successful investors and entrepreneurs like Marc Andreessen, David Cowan, and Brad Feld have generously contributed passages sprinkled throughout this weighty tome.

Many of the ideas in Pitching Hacks first appeared on this blog — that was our first draft. Thanks to your feedback, we’ve written this book — a second draft. Please send us more feedback — so the next revision is even better. You can always reach us at team@venturehacks.com.

Testimonials

Thanks to the beta testers who paid to give us amazing feedback (check your inbox for a revised copy!). They made the book much better. Here are some of their (unsolicited) testimonials:

“Your first stop if raising money!” – Adam Smith, Xobni

“Almost every sentence in Pitching Hacks is a valuable nugget. I thought the book was *awesome*, and definitely up to the high standard of quality that you’ve already established in your blog.” – Travis Leleu, Industrial Interface

“Pitching Hacks is amazing, just packed with great practical advice. A must-read if you’re even thinking of raising money.” – Luke Groesbeck, JobAlchemist

“I loved the book!  I suppose it should be no surprise that a book about articulating ideas clearly and concisely, has managed to clearly and concisely articulate its ideas.” – Aaron Iba, EtherPad

“I really truly liked the book. Entertaining and informative read. Can’t say that about a lot of business-related books.” – Yokum Taku, Wilson Sonsini

See what people are saying on Twitter and buy it here.

Everyone at some time needs to write a tutorial and this is a good guide for you to follow. Again, this is Guy Kawasaki and is very informative.

Learn and Enjoy

http://blogs.openforum.com/2009/03/19/the-art-of-the-tutorial/

I am on a plane headed for Dallas to meet up with two people to then meet another. The two are the CEO and lead investor of a new startup that I have been invited to market and develop. The investor I have only me once but the CEO is the father of two very good friends. The third guy, the one we are all converging in Texas to meet is a scientist who has done some really cool stuff before and has worked with the CEO and who now claims to have perfected a process to create something that is the atom level building block of a number of things we use today. It isn’t new. It isn’t novel, well it is and it isn’t. Point being his process to develop this product is much cheaper than anyone at all on the market.

He says we are going to change the world.
And I believe him.

This, what I am doing right now, sitting on a plane to meet a mad scientist is the stuff books are made of.

I have an objective here and it starts with me sitting in front of him with a blank page. I want to open his head, scoop out the insides and smear them onto a set of slides. A little graphic but you get the picture.

You see beyond all reasoning of people outside of an entrepreneurial mindset lies a basic inability to leap. And believe me, I am fully aware of how HUGE this leap is. It is not that we startup types don’t know the risks. It is that we leap despite the risks. It is exciting. I know that is an over used word but it really is exciting.

You know what. I don’t ever want to be that guy that sits at the bar with the bartender two years down the line saying “remember when that mad scientist guy had that crazy idea and I was thinking about joining the company? Yeah what a good idea that might have been”

This really could be it – again of course but hey, that’s the world I am in.

And I love it.