PATRICK
HENRY
E N T R E P R E N E U R C E O Q U E S T F U S I O N
I like to think of myself as a young man , but I guess I have a full head of grey hair now . I ’ ve run three different tech startups , a public company for seven years , raised a lot of money and bought and sold a number of companies . I ’ ve managed thousands of people and hired hundreds . I ’ ve even fired a few . So when I was asked this question , “ What did 25 years and $ 200 million in financing teach you ?” I decided to focus on a very important aspect , the context of raising money for startups companies .
There is more than one way to skin a cat .
It is very easy to fall into the trap that the way to raise money for a startup company is to do a seed round with angel investors followed by an institutional round from venture capitalists that reside on San Hill Road in the Silicon Valley . This still is the traditional way that most startups will get funded and it is much more straightforward if your company is located in the San Francisco Bay Area .
EVERY NO IS ONE STEP
CLOSER TO
A YES .
However , there is a plethora of new ways to raise money for startups . You can go on Shark Tank . Just kidding , or maybe I ’ m serious . Tons of technology incubators are springing-up around the country and now around the globe . You have syndicated Angel financing rounds through the likes of Angel ’ s List . You have the emergence of equity crowdfunding . You have Reg A + opportunities to raise even more private financing in syndicated financing rounds .
However , I still think the best way to fund your company is to bootstrap as long as you can with your own money . Try to fund it out of revenue . Use government grants . Take non-recurring engineering dollars from strategic partners and customers .
Raise money from strategic partners . Make as much progress as you can for as long as you can before considering outside financing from Angels that you don ’ t know or from venture capitalists .
Don ’ t innovate a new business plan format .
Investors are used to getting information in a certain way . I suggest giving it to them the way they are used to getting it . There is no shame in leaving the innovation for your product versus trying to innovate a new business plan concept .
Use big picture stories to describe your business in a language that your audience will understand .
If possible , create a visceral reaction . Focus most of the time talking about the business and only about 20 percent of the time on your product or your solution .