Southeast VC

Entrepreneur's Advice on Raising Money

In early June, I did a post talking about Ryan Allis' appearance on CNBC. This morning, his company iContact announced they raised $5.35m. With almost 12,000 customers, it has been no secret that iContact has experienced phenominal growth. Ryan has shared the iContact story regularly at venture conferences. Here is the presentation he did back in April at Venture 2007.

Anyway, you can check out Ryan's blog for several posts about his experiences raising capital. But here is his "Top 12 List of Advice to Entrepreneurs that are Raising Money." Thanks Ryan for sending this over to me today.

1. Get introduced through an entrepreneur or attorney to a VC they have worked with in the past. A good law firm can be very valuable for investor introductions if you can convince them your business would be a good investment.

2. Talk to multiple firms at once. Create a competitive process and seek multiple term sheets if you are able.

3. Read up on term sheets and have a good understanding of them before you start talking to investors. The key terms are pre-money valuation, liquidation preference, participation, share revesting, dividends, board size and protective provisions.

4. Be upfront about the general terms you are seeking to save yourself and the investor time.

5. Know that the pre-money valuation is only one of the most important terms.

6. Get involved with organizations in your community that can connect you to other entrepreneurs who have done it before and then have lunch with those entrepreneurs.

7. Realize that it will probably take at least 9 months to raise money from start to finish your first time doing it.

8. Realize that until you have at least $1 million in annual revenue it may be difficult to get most VCs interested.

9. Know that it may take 6 months of sustained product and revenue progress after your first meeting before a VC will consider your deal seriously.

10. Know how much money you are trying to raise before you begin discussions.

11. Know that it may be easier to seek angel funding or debt funding instead of venture capital early on.

12. Know that once you sign a term sheet it will be at least 30 days and up to 90 days before you actually close on the funds.

Titles in a Startup

An entrepreneur emailed me late last night and asked what I thought about a startup company not giving titles to their employees. In the example he presented there is basically the founder/CEO and then there is everyone else.

So, my response was that it depends on the size of the company and also the people involved.

When a company is launched, I can't say that I jump up and down fuming the company doesn't give titles to their employees. I think it is more important that everyone understands their goals, their role at the company, what everyone else is responsible for and everyone is held accountable. At Red Hat, I don't think everyone had titles until we reached 100+ people or so. It didn't bother me.

But the way I look at it, as a company scales, titles work even better. I also like titles when employees interact with the outside world. Customers and partners want to know who they are talking with.  I think that part is actually the most important.

Impact of Videos on E-Commerce

I just read an interesting article on Internet Retailer that said 80% of consumers take some kind of action after viewing online video ads. That included:

• 31% checked out the web site after watching the video
• 22% searched for more info about the product or service
• 15% went to the store
• 12% actually made the purchase

Also, out of people that made a purchase last month:

• 48% said the internet drove their initial awareness.
• 57% said they learned more about their potential purchase using the internet
• 55% used the internet to determine best price and where to buy

All these stats are pretty interesting. But I am still not seeing a lot of internet retailers offering video to help them sell their products yet. I spoke with a VP of e-commerce at an IR 100 company last night and he thought it would make a lot of sense for them to implement videos to better showcase the quality of the products they are selling. I agree.

One company based in Utah called Blendtec does a fun/smart job promoting their TotalBlender online which sells for $399. They post a lot of videos on the site of their CEO blending random objects. Just as one example and because I'm a big baseball fan, here is the CEO blending a baseball. The option to buy the blender is at the bottom right hand corner of the site.

And for more video reviews, check out ExpoTV, a site focused on letting users create videos with their own reviews. I think over time, we will see more internet retailers posting videos and probably pulling in user generated videos into their sites as they look for ways to further increase sales.

Tech 2007 - Now Accepting Applications

CED is now taking applications for their Tech 2007 conference scheduled for Oct 10 & 11 in Chapel Hill, NC. Forty companies will be selected and unlike past Tech conferences that focused just on NC-based companies, this one will highlight companies from throughout the Southeast and Mid-Atlantic.

Companies will display their products and applications in the "Tech Demo Room." The conference provides great exposure, is always well attended by entrepreneurs, larger companies looking for partner/acquisition opportunities, VCs and service providers.

Companies that are interested, should apply here.

Alternatives to Venture Capital

BusinessFund.com published the Top 25 Alternatives to VC. Good reading. Thanks to Rich McIver for sending it to me early this morning.

Hope everyone is having a good day!

Top Tech Companies in the Southeast

TechJournal South published their "Tech 50" list which includes some of the most innovative technology companies in the Southeast. A lot of familiar names made the list.

Incredibly short post since I am out of town. But I hope everyone has a good weekend!

Ryan Allis Offers Advice to Young Entrepreneurs on CNBC

Ryan Allis, the 22 year old CEO of North Carolina-based iContact was interviewed the other day on The Big Idea with Donny Deutsch on CNBC. Ryan offers some great advice for young entrepreneurs and talks about his entrepreneurial background. Here is the video clip:

VC Podcast

While we were down in Atlanta a couple of weeks ago, Scott Burkett and Michael Blake at StartupLounge.com taped this podcast with me. I talked about what it was like raising our 1st fund, best ways for an entrepreneur to get in front of a VC, what things we like to see in entrepreneurs as well as our perspectives on the Atlanta and North Carolina entrepreneurial markets.

I had a lot of fun doing this and again, I'd like to thank Scott and Michael for the invitation!

MAVA Capital Connection - Quick Recap

DJ & I went to Baltimore earlier this week for MAVA Capital Connection. This is the big annual venture conference in the Mid-Atlantic.

The conference brought together 800 people including investors, entrepreneurs and service providers. Keynote speakers included Kevin Plank, CEO of Under Armour (awesome speaker btw!) and Seth Godin, author of The Dip.

40 companies presented on Wednesday. We definitely noticed more of a weighting towards early-stage companies. Also, there was incredibly strong representation of all the Mid-Atlantic venture firms attending. Many of them, like Novak Biddle, brought their whole team!

I enjoyed catching up with so many people. Thanks to the team at MAVA. I know they worked hard putting this together.