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10 Recommendations for Start-ups Looking to Raise Capital

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The 2011 Pipeline Fund Fellowship Pitch Summit had eleven woman-owned, for-profit, socially responsible businesses presenting their business plans, hoping to raise money from a group of ten women learning to become angel investors.   During a break in the pitches, Nithya Das, an associate at the law firm Goodwin Procter presented the keynote.  She represents and advises emerging and later stage companies on venture capital financing, securities offerings, and strategic partnerships.  Drawing on her capital raising experiences, Nithya shared her top ten recommendations for start-up ventures.

They are as follows:

1. Be wary of people who provide sage advice in list format

In other words don’t rely entirely on what you can read. Surround yourself with real people and experts who can give you feedback regarding your unique situation.

2. Raise more money than you need

You may think you know how much money you need but you don’t.  You need extra money to be able to address the inevitable problems and hiccups that you didn’t expect or plan for.

3. Avoid being a “Me-Too” player

Build your own identity, be able to describe your company in a way other than “we’re just like Google.”

4. Pick your investors carefully

Whether you are raising money from a venture capitalist or angel investor be intentional about your choice.  Do not select an investor based on reputation or term sheet alone.  Evaluate the person who will be sitting on your board – what is their experience in your sector?  Who can they introduce you to?  The expertise and network of your investor is more important than valuation.

5. Identify clear milestones for money-raising

What goal or accomplishment will trigger the need for a second or third round of fundraising? Planning for multiple rounds and communicating your plans will indicate confidence and help inspire investors.

6. Don’t be afraid to say no to investors

Investors may strongly suggest a course of action but ultimately you need to make your own informed decisions.  Take advice but be the boss.

7. Features are not always your friend

Don’t get bogged down in too many or too fancy features.  Purposely constrained products are easier to use and market.  Identify and work on your three main must have features first.

8. Fail fast

It’s OK to stumble.  But fix it, and fix it fast.  Identify the problems, make changes, and move on!

9. Be consistent

An entrepreneur must be flexible but they must balance that with knowing when to stay the course and be firm.

10. Keep your valuation reasonable

If your valuation is reasonable in the first round of financing then you have room for growth in the second and third rounds.

Nithya finished with one bonus thought.  Based on her experience she feels it is most important to remember Rule 1, “trust your instincts and surround yourself with a really great team!  With a great team you can succeed at anything!”

 


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