Resources: How/Why Start-Ups Get Funded
This question gets asked a lot. And unfortunately there is no one answer and there is no easy answer. In fact, in some cases, it’s not even the right question. How do we raise capital is not a simple plug and chug equation. It is a multi-variate, 3D, how do you find the area under a saddle kind of question. I’ll talk about the different variables that come into play in another post.
If you find yourself asking this question, one of the best things you can do is start educating yourself on what equity investors look for, how they think, and how to set realistic expectations. Here are some resources that you can use to start the process:
- If you’re interested in start ups and raising capital, you should be reading avc.com. Fred Wilson is the managing partner of NYC venture fund Union Square Ventures. He has great insight into start-up strategy as well as funding and tech trends.
- Paul Graham of YCombinator is long winded, but many of his articles contain excellent advice.
- I also like what entrepreneur turned professor Steve Blank has to say. Especially about customer development and lean methodology — often as they relate to funding.
Here are some blog posts from a few brave souls who decided to share what things look like when you take VC $$ and things go south. It’s not always a love fest, and the process of winding down a company sucks.
Other reading recommendations: Venture Beat; TechCrunch TechCrunch also has CrunchBase which can be great for competitive research.
The Funded is a site that provides reviews of VCs and Angel funds. Membership is free for founders and CEOs.
Two sources if you want to geek out on private equity financing:
The quarterly Entrepreneur’s Report from Wilson Sonsini (legal firm in SV) is useful for tracking trends in equity financing in terms of up/down rounds, valuations, amount raised and deal terms. Data leans west cost, but you can use it to guage climate.
Dan Primack’s newsletter. Dan is a writer for Fortune/Money and does a daily newsletter focused on VC and Private Equity. It can be interesting to keep an eye on what kinds of companies are getting what kinds of money, what industries they are in and where they are located. He also often discusses issues like The Jobs Act, changes in General Solicitation rules, the IPO climate etc. It’s pretty technical, but I think worth checking out. The sign-up for Dan’s newsletter is on the right of this page.