Thursday, December 13, 2007
The Funded - The Search for Funding
I've recently begun thinking about funding. Not that we're ready for it, but it's good preparation. Now, we're probably nearing readiness for angel funding, but we're far from institutional money - and here's why. We don't have a usable product right now and thus, no users. This stuff matters to VC's - and we're well aware of that. Without traction for an internet software play based on users, a VC won't look twice. Angels are more forgiving. They may be interested in our ideas. The problem with that is our valuation would get ripped. What are we worth now? A small percentage of what we would be worth with traction. In fact, if we can turn a profit, running lean, as we are now, funding may not ever be necessary - which would be a dream come true. Nobody wants to be tied to someone else's money. But sometimes there's no choice.
Anyway, I've been using an invaluable resource in my hunt to learn what I can about raising money. It's called The Funded. It's a website dedicated to providing information for the entrepreneur. By the entrepreneur. About all things VC/Angel/Legal. Only entrepreneurs can join - and they have a somewhat stringent policy towards gaining access. I had to prove, beyond a shadow of a doubt, that I was, in fact, an entrepreneur and who I said I was. You can definitely cruise the site now and gain some valuable perspective and information on specific funds, but the real value is gained when you join. There is in depth analysis of VC's, angel's, how to raise financing, what the process looks like and should look like, term sheets, lawyers, whatnot. It's incredible! And written very personally, calling out specific partners of firms, etc. If you're an entrepreneur - then sign yourself up.