How To Find a Cofounder

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

A founding team includes someone who is building it and someone who is selling it.

It's important that the startup has two founders.

Here are some steps to find a cofounder for your startup.

Figure out which role the founder is taking and look for a cofounder to fill the other.

The key to finding and recruiting the co-founder is to show how the business will be successful.

This typically starts with a customer or market ready to pay for the product to be produced.

Show the key insight you have into the market and how you can use it to create a successful business.

Validate with customers who are ready to buy the product and place them on a waitlist.

Sign up customers who are ready to pay and provide the service manually till you have an automated solution.

Gain agreement on the goals of the company for the coming three years.

Negotiate compensation based on what each founder is bringing to the table.

Use the negotiation process to test out the other's skills.

Go on joint sales calls to see how each performs.

Work on the product development to see what progress can be made.

Consider these steps in finding a cofounder.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_______________________________________________________

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Key Attributes of a Good Angel Investor

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Anyone with an accredited investor status can become an angel investor.

Here's a list of key attributes of a good one:

They know their industry well and how to invest in it.

They know people and can size up a founder to determine if they are a fit for a successful startup.

They have actually run a startup before and know what it takes to launch and build a successful one.

They take an active role in the startup and help the founders along the way.

They add value to the startup.

They also add value to other angel investors through coaching and mentoring.

They look for startups to fund and not to provide consulting.

They know how to screen through a volume of deals to find the viable ones quickly.

They provide quality feedback to the founder, raising funding.

They know how to perform diligence and where to focus the time spent on it.

They reserve funds for a follow-on round.

Look for these qualities in an angel investor.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_______________________________________________________

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How To Calculate Warrant Coverage

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

A warrant is the right to buy a company's stock at a specific price or range over a certain time period.

The warrant acts like an option, but it issues stock, which dilutes the cap table.

Founders raising funding offer warrants to incentivize investors to fund the company.

Warrant coverage is the number of warrants an investor receives based on the size of their investment.

It's typically stated as a percentage such as 5% or 10%.

Here's how to calculate warrant coverage:

Take the number of shares at a specific price per share as the initial investment.

Take the number of shares to be provided as warrants.

Divide the number of warrants by the number of shares of the initial investment to reach a warrant coverage amount.

Here's an example.

The founder offers 50,000 additional shares to those who invest in 500,000 shares at $3 per share.

The warrant coverage is 50,000 divided by 500,000 at $3 per share, generating a 10% warrant coverage.

Consider these calculations in offering warrants in your fundraiser.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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The Downside of VC Funding

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Venture capital can enable a startup to reach the next level through funding.

There are downsides to VC funding.

Here's a list:

The founders' ownership goes down by 20-25% on each fundraising round.

The VC model promotes growth over all other strategies.

Taking VC money means taking the VC's business model, which is to give the Limited Partner a return in 3 to 7 years.

VCs will want the founders to take a minimal salary so as to apply as much capital as possible to growing the business.

The VC is concerned primarily with paying back the Limited Partners in their fund.

This means the VC is less likely to support initiatives that are impact-related or others that are important to the founder.

Some VCs provide funding but little else, such as coaching or a network.

The VC will bring their view of how to grow the business, which may not align with the founder's vision.

VCs take board seats, which come with a certain level of control.

For some startups, angel money may be a better option.

Consider these points before taking VC funding.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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In this episode of Investor Connect, host Hall Martin welcomes Darcy Bachert, Founder and CEO of Prolucid Technologies. Darcy shares the journey of Prolucid Technologies, a software engineering firm that specializes in designing and developing mission-critical systems for highly regulated industries such as med tech, nuclear, and industrial applications.

Darcy explains how the company pivoted from industrial automation to focusing on more stable industries during the Great Recession and highlights the importance of quality, cybersecurity, and compliance in their operations. He also discusses the challenge investors face in understanding the longer timelines and higher costs associated with bringing regulated software products to market and explains the pros and cons of investing in such technologies. Hall and Darcy delve into the increasing role of AI in med tech, particularly in enhancing diagnostic processes and speeding up clinical decision-making, with Darcy mentioning Prolucid' role in transforming prototypes into production-ready systems.

They also touch on the importance of advanced data analytics and ongoing monitoring in reshaping product value and post-market support. The conversation further explores the strengths and weaknesses of startups versus large strategics in the innovation landscape of regulated software products, and how choosing the right engineering partner is essential for success. Darcy offers practical advice on identifying credible partners and warning signs to watch out for, emphasizing the need for engagement and quality management systems.

Visit Prolucid Technologies at www.prolucid.ca/

Reach out to at www.linkedin.com/in/darcybachert/, darcy.bachert@prolucid.ca

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The Failure Rate for Startups

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The failure rate for startups is high at almost 90%.

Here's a list of reasons why startups fail:

The founders underestimate how long it will take to gain traction in the market.

The startup runs out of cash.

The product fails to find product-market fit.

The competition wins the market.

There are regulatory challenges that cannot be overcome.

The team was not up to the challenge.

The timing of the startup was off.

The founders failed to focus on productive tasks.

Some startups take on too much debt too soon.

The startup is building a product for an undefined market.

Half of all startups fail in the first five years.

Twenty percent of startups fail in the first year.

Less than 10% of founders build a successful startup.

Startups are challenging for many reasons.

The failure rate is high.

Consider these risks in launching your startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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Six Months To Build, Six Months To Sell

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Building a minimum viable product or MVP is a key step in a startup launch.

After some market research, there's an ideation step on what to build.

The rule of MVPs is that it should take no longer than six months to build and no longer than six months to sell.

If you can't build it in six months, then you are scoping the solution too broadly.

It's best to reduce the features and functionality so you can go to market sooner.

It's the customer interactions that count, not the number of features in the MVP.

If you can't sell what you built in six months, then you built the wrong thing.

The key here is to sell it first, then build it.

Show the concept to potential customers and take pre-orders for it with some money down.

This will most likely be at a greatly discounted price.

Instead of focusing on the revenue, look for what the customer finds most valuable about the product.

Customers may say one thing, but paying money indicates what they really want.

Consider these steps in building your MVP.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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Founder Dilution

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Founders raising funding incur dilution.

Their ownership stake goes down as they raise more funding.

Founders start with 100% ownership.

Each round of funding dilutes them by 25% or more.

On average, founders own 60% after the pre-seed and seed rounds.

After a Series A, they own 45%.

After a Series B, they own 26%.

After a Series C, they own 25%

After a Series D, they own 11%

There are often two to three founders in a startup, so they split this amount.

Investors should consider the impact of dilution on the founder's ownership stake.

If they own too little of the company, they may not find the incentive to carry it to an exit.

Founders should consider funding strategies that are more capital-efficient.

For example, after one round of funding, the company could grow based on revenue and profits alone.

This may take longer, but it will reduce the dilution.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
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