How To Answer Questions You Don’t Know

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

Investors ask many questions of startup founders.

Founders should know their business and, in particular, their numbers.

Sometimes an investor will ask a question that the founder doesn’t know.

Here are some key steps on how to answer questions you don’t know the answer to:

First, make sure you understand the question.

Probe to find out more about it.

If it’s a question requiring a simple answer that you don’t know, then state you don’t have it readily available, but that you will find it for them.

If it’s a deeper dive question, then break the question down into separate components and open a dialog on the subject.

Explain what you know so far.

Describe what you’re doing to learn more in this area.

List what you hope to accomplish with the answer.

Invite feedback on what to do as well.

While this may not answer the question in a succinct fashion, it shows how you are approaching the situation.

Use the question as an opportunity to show you have a plan.

Demonstrate what you have done so far on it.

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 Perform Technical Due Diligence

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

Investors perform diligence on a startup before investing.

Most of the diligence focuses on the financial aspects of the business.

Technical diligence is just as important.

For startups, it’s also important to focus on the technical aspects.

Here’s a list of areas to review for technical due diligence:

Architecture

Review the technical architecture for scalability and robustness.

Check the architecture for fit with the application.

Code

Review the code for quality and documentation.

Are there processes for testing and verification?

Security

Review the code for security measures.

Perform penetration exercises to check its strength.

People

Interview the technical team for their technical background and skills.

See if the skills match the project requirements.

Intellectual property

Review the intellectual property to see if the key technical features are covered.

Consider these steps in performing technical due diligence on a 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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Benefits of Family Office Funding

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

Family offices bring many benefits over other investor types as a funding source.

Here’s a list of reasons why family offices should be considered for your fundraising:

Family offices have deeper pockets than angel investors.

This allows them to make more follow-on investments.

Family offices are not tied to a ten-year fund cycle as venture capitalists are.

This allows them to be more patient for the exit.

Family offices will fund deals outside the traditional venture model.

This provides capital for a wider variety of startups.

Family offices typically don’t have a Limited Partner base to appease.

This allows them to invest at other times in the startup's life cycle.

Many family offices have deep experience in business.

This gives the startup another source of mentorship for growing their business.

Family offices can take the role of a passive investor.

This gives the startup the freedom to take the company in the direction they want.

Consider these benefits of taking family office 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

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
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How To Hone Your Deal Selection Process

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

Investors funding startups go through a great number of deals to find the ones to fund.

The investor won’t know for several months or years if the deal is going to work out or not.

The startup’s fundraising is typically over after six months or a year.

The investor often brings their personal business experience to the selection process.

For startups, this may or may not be the best way to screen startup deals.

Markets and technologies change over time, so it’s important to keep up to date with one's selection process.

Here’s how to hone your deal selection process:

For the next twenty-five startups, write out which ones you would invest in and why.

Do the same for those you would not invest in and state why.

Revisit those twenty-five startups three to six months later to find out what happened to them.

Compare their outcomes with your written projections.

This will tune your selection process by giving you more factors to consider.

From time to time, hone your selection process to find out what’s working in the startup world and what is not.

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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In this episode of Investor Connect, Hall Martin welcomes Abe Kwon, a partner at Lowenstein Sandler, LLP, a renowned national law firm with a strong focus on emerging companies, venture capital funds, and investors. Abe Kwon shares his extensive experience as a startup venture capital lawyer and provides key insights into the critical legal considerations for early-stage fundraising, especially regarding venture capital, SPACs, and alternative capital vehicles.

The conversation delves into best practices for governance and board structuring as companies grow, emphasizing the importance of trusted legal counsel in navigating these complex waters. Abe Kwon discusses the growing trend of cross-border investments and the complexities early-stage startups face when hiring contractors or employees abroad. He highlights the resurgence of crypto and digital securities, providing his perspective on evolving legal requirements and the importance of staying updated with regulations. The episode also covers strategies for preparing for M&A and IPO events, stressing the importance of having a solid legal framework from day one to ensure smooth exits.

Abe Kwon shares lessons learned from challenging deals and offers practical advice for founders in choosing the right legal partner and preparing for due diligence. The discussion wraps up with an exploration of trends in the ESG and impact investing space and how legal frameworks are adapting to sustainability-based capital. Abe Kwon also touches on his involvement in national innovation ecosystems and the impact on local startup communities.

Visit Lowenstein Sandler LLP at www.lowenstein.com/

Reach out to at www.linkedin.com/in/abekwon/; akwon@lowenstein.com

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

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The KISS Note

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

KISS in the startup world stands for Keep It Simple Security.

It’s similar to a convertible note.

Here are the differences between a KISS and a convertible note:

The KISS gives the holder the right to participate in future funding rounds.

Convertible notes only convert the current debt into equity.

The KISS gives the holder a “most favored nation” clause, which means the holder gets the best terms of any investor in the round.

The KISS gives the holder additional liquidation preference rights.

Convertible notes give no liquidation preferences.

The KISS note is more investor-friendly than a convertible note.

In addition, the KISS note provides representation and warranties, which means the founder has disclosed all relevant information and is liable if not.

The KISS can be transferred to others without permission from the founder.

The KISS, like convertible notes and SAFE notes, is easy to use and simple to apply.

Consider a KISS note for 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

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

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

In fundraising, the startup founder should underpromise and overdeliver to the investor.

Here are some key areas to apply this:

Forecasting.

Most founders overpromise and underdeliver on their sales forecast.

Instead of over-promising on the revenue results, forecast a lower number and then show how you exceeded the forecast.

Planning.

Most founders overpromise on their progress in building products.

Instead of overpromising, set a less aggressive goal and show the investor how you are ahead of plan.

Hiring.

Most founders set an aggressive goal for how many team members they need.

Instead of hiring the full headcount, show how you accomplished the goals with a smaller headcount.

Fundraise.

Most founders set ambitious goals for their fundraisers.

Instead of proposing the ideal fundraising timeline, set a lower goal.

In the updates to the investor, show how you are ahead of schedule on the raise.

Apply these steps to under-promise and over-deliver to the 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.

_______________________________________________________

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/
For Startups check out: https://tencapital.group/company-landing/
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How To Use Framing in Your Pitch

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

In pitching investors, framing can be used to position the startup as a successful business.

Framing is how you structure your message to shape how your audience perceives it.

It can be used to generate credibility and overcome objections.

Start with a problem statement and a compelling solution.

Position the team as credible and trustworthy.

Articulate the benefits of the solution throughout the pitch.

Show how it aligns with the goals of the investor, which is to make a return.

Contrast is a framing technique.

Use it to show the difference between the current problem and the promised future of the solution.

Start with what you want the audience to think and work back to the solution that creates that result.

Positioning is another framing technique.

Use it to place your startup as superior by showing the competitive advantage.

Use framing in your fundraising pitch to investors.

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/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

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