Raising Seed Capital

Yesterday there was a panel discussion at the annual Edison conference (for inventors and entrepreneurs) on how to raise seed capital. It was moderated by David Bradford, partner at Greenberg Traurig, the 8th largest law firm in the nation. David is also my partner in FundingUniverse.com. Panelists included myself, Blake Modersitzki of UV Partners and Michael Keene, former Chief Science Advisor to two Utah governors. In preparing for the discussion I read through all my markups in Angel Investing, the excellent book that every entrepreneur and every angel investor should read about capital. Here are some of the facts and quotes I wanted to share:
  • Angels fund 30-40 times more companies than VCs, but they do much smaller deals.

FundingArizona.com Launched

Okay, so our new web site for Arizona has only 1 registered investor with $50,000 of available capital so far. That's not going to change the world. But guess what is going to happen in the next few months? I think the number of registered investors and entrepreneurs on FundingArizona will grow steadily. Arizona has more than twice the population of Utah and it is also growing rapidly. Eventually, there should be more investors and more business plans on FundingArizona.com than there are on FundingUtah.com.

Become Worthy of Angels

Angel investors like their privacy. They don't want to be bombarded with hundreds of investment requests, and so they are usually pretty low profile people. I know angels that have done dozens of investments and no one has heard of them. They don't have a web site, a blog, and they don't write articles in magazines that will bring attention to them and their wealth, and bring with that attention an unwanted rush of entrepreneurs knocking on their door.

So FundingUtah.com protects the privacy of investors.

How PR is Helping FundingUtah.com

Many internet entrepreneurs I know (myself included) are pretty content sitting at the computer most of the time doing research and figuring how to generate traffic, improve web site design and conversion rate, and study web analytics to determine what to do next. We use the web for hours a day to do research on what everyone else is doing. Then, relying primarily on email and instant messaging, we can efficiently communicate hundreds of times per day with employees, customers, partners, etc.

April 26th Press Conference with Governor Huntsman

David Bradford (former general counsel of Novell) and I have teamed up to launch FundingUtah.com, a new free service that matches Utah angel investors with Utah entrepreneurs. We will be holding a launch event and press conference, with Utah Governor Jon Huntsman, Jr. on April 26th at 1:00 pm at the Larry H. Miller Business Innovation Center (Karen Miller Conference Center). Some of the leading investors and entrepreneurs in the state will be in attendance.

Raising Private Capital–Powerpoint from Invest Nebraska

When entrepreneurs post business summaries on FundingUtah.com, I want them to be able to list what stage they are at in their companies development. So I needed to find out how the industry categorizes companies that are seeking financing.

I found a great powerpoint from InvestNebraska.com that outlines the types of private equity that are available for entrepreneurs.

I was disappointed to be reminded about how little venture capital flows into seed stage companies. The data shows that in 2003, venture capital went into companies as follows:

  • Startup/Seed Stage, 2%
  • Early Stage, 18%
  • Expansion Stage, 55%
  • Later Stage, 25%

Of course, seed stage companies need relatively little capital while later stage companies need very large rounds.

Notes from Seminar: The Power of Angel Investing

I attended the first half of a seminar yesterday at the University of Utah by the Kauffman Foundation on angel investing. Kauffman does a lot to promote entrepreneurship. They have presented this "Power of Angel Investing" seminar more than 20 times. Led by Entrepreneur-in-Residence Bill Payne, the presentations and materials were designed to help people become angel investors or to learn how to be a smarter angel investor.