LearnVC.com » Pre Venture Capital http://learnvc.com Your guide to raising capital Tue, 01 May 2012 13:37:34 +0000 en hourly 1 http://wordpress.org/?v= The importance of grants and applying for them http://learnvc.com/2011/08/the-importance-of-grants-and-applying-for-them/ http://learnvc.com/2011/08/the-importance-of-grants-and-applying-for-them/#comments Wed, 24 Aug 2011 14:55:31 +0000 admin http://learnvc.com/?p=941 Today is NC IDEA and IDEA Fund Partners appreciation day, as determined by those that have received grants and funding from them.

First off, the initial value of the NC IDEA grant program is the application. I’ve heard complaints about the application’s restriction on number of characters. Having reviewed the applications myself a few years back, I completely support these restrictions. As entrepreneurs, we tend to be overly verbose where we shouldn’t be in applications/pitches/etc.

We first applied for a grant in the Fall ’08 cycle. We were rejected, primarily based off the weakness of our application. When we applied and received a grant in the Spring ’09 cycle our application was much, much stronger. That is part of the process and helped us immensely to refine and clarify how we pitch our business.

The fact that the money is non-dilutive is fantastic. Up to $50,000 meant to help your company meet milestones that make your company more attractive to angel and VC investors. Absolutely no downside, in my opinion. Only thing is, the Fall ’11 cycle’s deadline is August 26… so get busy with the application.

If you can find other programs similar to NC IDEA’s grant program, I would recommend applying. We recently found one that we applied to, Innotribe $100k Start-up Challenge.

Statsheet’s post on their experiences with NC IDEA and IDEA Fund Partners.

-Jeff

]]> http://learnvc.com/2011/08/the-importance-of-grants-and-applying-for-them/feed/ 0 Valuation of the seed round with friends and family http://learnvc.com/2008/10/valuation-of-the-seed-round-with-friends-and-family/ http://learnvc.com/2008/10/valuation-of-the-seed-round-with-friends-and-family/#comments Mon, 06 Oct 2008 22:22:10 +0000 squareroots http://www.learnvc.com/?p=551 The balance between the founders and the investors is critical for any early stage company.  This is true even with investments from friends and family.  Consider two situations:

High pre-money valuation

Example: a pre-money valuation of $10M for a pre-revenue software company.  Although this would appear to favor the company and the founders, what may result is an inability to raise money in the future from angel investors or venture capitalists.  Professional investors sometimes avoid companies where an unjustified high valuation would require a “down round” to correct to market valuations.

Low pre-money valuation

Normally this dilutes the founders, which can be fixed with stock options.  However, it may be a flag of inexperience to investors in future rounds.

As part of due diligence, investors will ask about an entrepreneur’s previous startup experience.  Especially important is when they ask about the returns for investors in these earlier companies.

External Links

Collection of articles on angel investing
Do VCs like Angel backed companies by Brad Feld
Another VC takes on the same topic by Fred Wilson

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