My fundraising career:
(1) Believing I got this money easy was wrong for a couple reason: One because I didn’t realize how much it meant that I had already been working hard for this guy – my old boss – for several years. Hereby proving what investors often doubt – that you will actually do the hard work you say you will. Second because I didn’t realize that getting 30K visits/month for a prototype can take even funded startups many month or years to achieve. I had done it over the course of a summer break.
(2) The prototype that ended up becoming 1calendar.com was a simple website with schedules created manually in an excel spreadsheet. These schedules gave a much quicker overview of classes, assignments and exams in a convenient week view. It also gave the student the ability to quickly skim other students classes. It covered around 900 students schedules and got about 500.000 page views during the 12 month it operated.
(3) I have come to learn that people and especially investors will react to fear more than anything else. In the startup world this is called fear of missing out or FOMA. Fear that they miss investing in the startup that potentially blows up like Spotify, Skype or Soundcloud, just to mention a couple of European success stories that starts with an “S”.
(4) A down round is an investment round where the price of share is lower than the previous round hence the name “down”. This typically happens when a startup hasn’t reached the growth it was expecting. The last round was priced from expectations from that growth, so if that hasn’t happened then the price goes lower than the last round. If investors have an anti dilution clause, then a new round with a lower valuation will enable them to get a discount that they got on the first round which will further dilute the founders.
(5) Iconfinder.com is a search engine for icons and has around 2.5M visitors/month. It hosts free icons and launched its marketplace for paid icons in April 2013.
(6) Rising demand occurs when institutional investors have to do a fixed amount of deals (e.g. 10 a year), but simply don’t have enough deal flow to be able to pick and choose between startups, because they don’t have the needed network or reputation. This either means that the price goes up or the quality of their investments goes down. Since some investors don’t have the option to pay a higher price the outcome is pretty obvious. This is often the case with investors in small markets like Denmark. The investors can’t really compete with the other European startup cities like London and Berlin, where there are many more investors and much more capital set-aside for high-risk assets.
(7) Signalling basically just means that you try to seem bigger, better or more serious. This won’t help your startup succeed but it will greatly help you raise the interest from investors. A good example is press. Press won’t get you more users but it will make investors think you are hotter – be it completely true or not.
(8) There is a hierarchy within investors and investment funds, which mainly derives from the performance and reputation of the fund. The best performing funds become brand names and getting one of these on board can mean a big difference the next time you have to go and raise or maybe sell your startup. I see a lot of bad performing funds that are managed by people who have never done a startup themselves. It seems logic that their startups aren’t performing when they can’t pick the winner or properly guide the founders in charge of the startups they have funded.
(9) 500startups are based out of Mountain View in California. They run a 4-month accelerator and have literally invested in something close to 500 companies – hence the name. The main guy at 500startups is Dave McClure who is behind the phrase “fuck it, I’ll fund it”, since they he is the guy most likely to write you a check without long discussions and due diligence.
(10) Leading a funding round simply means being the investor negotiating the terms sheet and setting the price.
(11) Mogl.com simply lets you register your current credit or debit card and get cashback at participating restaurant – a kind of next generation Groupon.
(12) Approximately 80% die in the first few years and only maybe 5% make it big.
(13) Techstars is another incubator and ranks number 2 just after Y combinatory.
(14) If you want to have a look at a simple term sheet then check out Passion Capitals term sheet in Plain English
(15) Pivot is an overused buzzword that simply means that your startup does a change in direction – e.g. a change in business model, distribution, product or similar. It has to be more than just changing a feature or charging a higher price to qualify as a pivot.