Visible Blog

If you’ve been following along at home it may feel like seed rounds are exploding in size. However, this is not just a feeling but a fact. Not long ago, it felt like $500k to $1M was getting up there in size for a seed deal. Fast forward to today and we are seeing seed deals pop up well in excess of $5M. As Elizabeth Yin, Founder of Hustle Fund, put it, “I’m seeing massive party rounds here in San Francisco — $3 million – $5 million seed rounds. Sometimes $10 million rounds right out of the gates! My friend, a fantastic serial entrepreneur with an exit, raised $8 million recently at $30 million+ post-money valuation with only a very early version of a product. Investors literally threw money at her and her round was oversubscribed.” Defining exactly what a seed round is today has become more subjective. You’ll often see companies raise a pre-seed, a seed plus, or seed extension, etc. The explosion of the traditional seed round size has cemented the rise of the pre-seed round. No doubt the pre-seed round has been around for years but is becoming more prevalent. What is Pre-Seed Put simply, “a Pre-Seed round is a pre-institutional seed round that either has no institutional investors or is a very low amount, often below $150k.” The pre-seed round gives a startup the opportunity to continue developing a product and create a plan to generate significant revenue. How to Raise a Pre-Seed Round If you set out to raise a pre-seed round a few things must be true: You have some proof of concept or early product The market has desired some form of need for a product/solution One of the interesting aspects of raising a pre-seed round is the lack of traction and metrics you will likely have. A later stage fundraise will likely revolve around metrics, financials, and data (on top of your product, market, and team) but a pre-seed round will revolve around concepts and vision. The lack of traction will also add an extra focus on the founding team. If you have no traction but a proven track record it will ease the decision making process for a pre-seed investor. If you have no traction and no track record, raising a pre-seed round will be even more difficult. Your ability to pitch and demonstrate your ability to build a product and model your total addressable market are a must. Successfully closing a pre-seed round is just the start of your startup journey. Being able to deploy the capital to build a product, sell to customers, and attract top talent will be vital to raising future rounds (seed, series a, etc.). If you’re just getting started with your pre-seed pitch, be sure to check out our other fundraising content. Good luck!

This won’t be the first or last time we write this: being a startup founder is hard. On top of your day-to-day tasks you have to worry about your customers, employees, and investors. You can often feel like you’re buried when balancing the communication and relationships with all of your stakeholder groups. Concisely sharing strategy with your stakeholder groups is an effective way to set expectations and build relationships. One tool we’ve seen pop up more frequently in the last few weeks are strategic memos. Memos are a clear and concise document to lay out strategic vision, rationale, and expectations. We’ve shared 3 different “memos” below that can be used for your investors, team, and executives. Y Combinator Fundraising Memo In case you missed it, YC recently published a Series A Fundraising Guide. The guide is full of useful information covering every aspect of a fundraise. One of the areas we found to be most interesting was the idea of writing and sharing an investment memo. YC makes the case that founders should write an investment memo is two-fold. First, it can set up a meeting with a potential investor nicely when sent in advance. Secondly, it helps you as a founder clarify your pitch, thoughts, and rationale. As the team at YC writes, “A memo is particularly effective if you can write well. It stands better on its own as the deck (sent ahead of time) can miss context provided by your voiceover. Founders tell us that memos sent before meetings in place of a deck provided the necessary to set up an engaged conversation from the outset.” They go on to share a template of a memo that you can find here. We’ve turned it into an Update Template so you can share it out via email or link! Executive Team Strategic Memo Andy Johns is a seasoned startup professional and currently a partner at Unusual Ventures. Andy recently published a blog post, A Simple Tool for Managing an Executive Staff as a First-Time CEO, to help first time founders deal with their first executive hires. As Andy points out, managing an executive can be quite different than managing team individuals. “An executive’s job is to focus primarily on taking strategic risks. Each year, they should identify 2–3 major initiatives, large enough in impact to shape the direction of the company and enforce great execution against those initiatives. This is in contrast to non-executives, who you want to be focused primarily on tactical execution.” So how does a founder enforce execution against those initiatives? Andy suggests having your executives fill out a quick memo template for your executives to share with you. As Andy puts it, “Ideally, what they come back with is a strategy that has 2–3 major initiatives that they find are important, along with a list of success metrics and resources they need to get it done.” Once a founder gets a strategic memo from each executive it makes forming strategy and roadmap for the company as a whole easier. These memos can be used to fuel your strategic and financial plan for the year, create performance plans with executives and individuals, and the kickoff discussion points for annual planning. Check out the strategic memo template from the team at Unusual Ventures here. The EVERGOODS Product Brief The last memo is slightly different than the first two. EVERGOODS is a small equipment and apparel company based out of Bozeman, MT. EVERGOODS has a strong focus on building an incredible product and puts a great deal into R&D and perfecting every minor detail of their products (a couple of gear junkies on the Visible team can attest to this). As the founders, Jack and Kevin, put it, “Our experience lies in product design, development, R/D, and manufacturing for the likes of GORUCK and Patagonia. We believe in product and the processes of doing the work ourselves. Each project is an exploration, and ultimately a discovery, aided by our triumphs and our failures. This evolution inspires us and is at the heart of EVERGOODS.” Being gear junkies and product focused ourselves, we found their product brief to be interesting and useful to more than equipment and apparel companies. While it may not translate directly to every industry, their brief is a great tool to help product-focused founders understand why and how they are building certain products and features. Check out the product brief memo from EVERGOODS here. Each template above serves a different purpose. While each template may be entirely different they all have one thing in common: clear and concise communication. Setting up a system to properly share strategy and rationale in a concise way will not only strengthen relationships but keep all of your key stakeholders aligned. Do you have a memo or strategic doc that you share with your stakeholders? We’d love to check it out. Shoot us a message to marketing at visible dot com.

The Visible team has been hard at work on our investor platform. Check out the updates below. Over the next 6 weeks we will be rapidly rolling out new functionality — stay tuned! Our team is happy to jump on a quick call or demo to walk you through the latest changes and answer any questions. Schedule your demo today! Reports Our new report builder allows you to create and save reports for your portfolio. Reports will provide instant insights into company performance and custom views — great for weekly meetings! In our initial release, reports can include: Metrics Metric Insights for changes between periods — % and actual (WoW, MoM, QoQ and YoY) Custom Properties Request Metadata Sorting Advisor Roles Want to share specific portfolio companies with advisors, mentors or individuals that work closely with your portfolio companies but don’t want them to get full access? Advisor Roles are a perfect fit for you! Custom Properties Custom properties are now live in the UI. In your portfolio click the secondary dropdown and create custom properties for your portfolio. Properties can include: Numbers Percentages Currencies (Full currency support) Dates Short/Long Text Dropdowns URLs Revamped Portfolio Company Metrics We re-architected how company metrics are created and handled. Metrics can be assigned to all companies or on a per-portfolio company basis giving you ultimate control and customization. Want to learn more? Schedule your demo today!

Ever have one of those days where everything is clicking? Customers are signing up, the team is excited and your vision is being executed. I had a day like this not too long ago. I was sharing the feeling with one of my mentors. He gave me some great advice, “Those are the days to work late… Call up leads that went cold. Write up a product spec. Do some strategic planning.” I call this the press. Doubling down when the going is good. What if it is the opposite? Customers are leaving. Partnership agreements are falling apart. You missed an important deadline. Call it a day early. Spend time with some loved ones, work out or get some sleep. Just last week I had a day when I was pressed. We had an awesome day and then saw a potential customer signed up last minute for a demo late in the evening (we love all of our Australia, New Zealand & Singapore customers :). If I was having a crap day I would have asked to rescheduled. I pressed, took the call, and fortunately converted a customer right there. What do you do when everything is clicking? Seems like it is falling apart? Have a great weekend all! -Mike

When times are tough (which they will be) being a founder can often feel like you are alone on an island. Having people to open up to and work your way through the troughs is key not only for your mental health, but your company’s health as well. Establishing a trusted circle of mentors, advisors, and peers, your personal board of directors, from day one is a great way to prepare for what lies ahead in your company building journey. What is a personal board of directors? A traditional board of directors is “ a group of people who jointly supervise the activities of an organization.” A personal board of directors is a group of individuals that can offer advice and direction for both personal and life decisions. Your personal board should be a trusted group you can lean on when making difficult decisions. Just as a board of directors holds an organization accountable, the same could be said for your personal board of directors. Who should be in my personal board of directors? Finding the right mix of individuals for your personal board of directors can be tricky. They should be a collection of individuals that are willing to give honest and candid feedback. Generally speaking, this means leaving family and close friends off of your board of directors. The team at Harvard Business Review suggests including a mixture of the following people: “First, you need fans — people who support you and will deliver tough feedback with kindness and good intent.” “Second, recruit potential sponsors — senior leaders who can advocate for you when it’s time for a promotion.” “Third, include at least one critic. These people may be the toughest to approach, but they can be the most valuable.” No one wants to face criticism; but it is an important aspect of personal and company growth. This mixture of individuals will be able to help with professional development, company strategy, and major life decisions. Assembling your personal board of directors Asking people to be on your personal board of directors can be an intimidating tasks. We suggest building a list of people you would find to be a good fit (using the criteria from above). Start with your top choices and make your way down the list. If you get no response or a simple “no,” don’t fret. Simply move on to the next person on your list. If you’ve done your research and built a proper list most of the people should be eager to help you. As we wrote in our post, “Startup Leaders Should Have Mentors. Here’s How to Find One,” we suggest when reaching out, “you should make sure to 1) explain why you’re reaching out to them specifically and 2) ask to meet with them once instead of asking them to commit right away. Those two things will make them much more likely to say yes.” Well a personal board of directors can’t guarantee success it can certainly help as you struggle through the inevitable tough times of building a startup. If you’re interested in learning more about approach mentors and advisors, be sure to check out our mentors post here.

With the seed to series A conversion rate estimated to be under 20% having the right resources, framework, and mind set for conducting your series A fundraise are vital. The team at Y Combinator recently published a thorough guide on raising your Series A that helps lay out every step of the process. The guide is full of helpful tidbits so we pulled our favorite takeaways and shared them below: Consistency with Metrics As most fundraising related articles will tell you, having your metrics in place before a fundraise is required for a successful fundraise. As they simply put, “if you don’t know your metrics cold, you’re not ready to fundraise.” The YC guide takes a deep dive here but also focuses on the importance of consistency with your metrics. The decision to invest in a Series A round is likely still a gut instinct for investors. You have more data than your seed round but likely just a few months so being able to demonstrate consistency and emerging trends is key. Always know your metrics off the back of your hand so when things start clicking you can kickoff your fundraise with conviction. Managing Your Relationships Just like we’ve covered in the past, fundraising starts by building relationships. This is over the course of the 6-12 months prior and should not be confused with your formal fundraise. YC suggests building out a sales/investor funnel to manage the process. Just like a sales process it starts by building a list, getting connections, having conversation, then starting regular conversation if it makes sense. Once you push investors towards the bottom of the funnel you will likely have formed a strong relationship, know one another’s expectations, and have built up the excitement to pull the trigger when you’re ready to launch your Series A raise. The team at YC found that, “On average, we found that companies that raised A’s started with coffee meetings with at least 30 individual investors.” You are likely talking to 50, if not 100+, different investors throughout a fundraise so having a system in place is key. Check out our free Fundraising CRM to help keep tabs on the process. How Much Should I Raise? The requirements/size of a Series A feel more subjective than ever before. There are not cut and dry guidelines for what revenue, traction, metrics, etc. you need to have. The average round size for a YC company last year was $9M. However, we’ve seen Series A rounds ranging from $200k to $50M over the past year and seed rounds that have exceeded their $9M average. The team at YC summed it up perfectly by saying, “You should raise the minimum amount you need to hit your Series B milestones, typically ~3-5x your current numbers. We suggest picking a single number, not a range. Ranges look indecisive and investors will assume that your numbers can flex, so pick the amount you actually need.” Sharing (the right) Data One of the things we get asked about most is when and how you should share data with potential investors. While it can be intimidating to question or reject a potential investors requests, YC offered a tip we found to be very useful — “A good strategy is to ask the investor what question they are trying to answer by requesting information. This can help you (1) figure out a more efficient way to answer their question and (2) suss out if they are only trying to create busy work.” Own the Schedule When it comes to scheduling meetings and running the actual fundraising process, YC is adamant about batching your meetings. For example, having all of your partner meetings within as 1 or 2 week window. The idea being that (1) investors will make offers around the same time and (2) they will not be able to collude and/or see other investors passing. Additionally, this gives you a chance to quickly iterate on their pitch and spend more time on the day-to-day of their business. However, this is easier said than done. YC warns that founders will often let the first meetings drag out for months or on the flip side; founders will create a tight timeline by accident. Losing track and control of your schedule is an easy way to kill a fundraise. Raising Money Isn’t the Goal One of my favorite lines from the guide comes towards the end; “If you’ve succeeded in raising an A, there’s one final challenge: remembering that raising money isn’t the goal.” Raising a Series A is an incredible feat and one that very few companies will get to. However, it does not make your company a success. Successful founders will remember why they raised their Series A and set their eyes on tackling the goals they laid out during their fundraise to begin with. If you’re interested in reading more about raising your Series A, be sure to check out our Series A Funding Guide.

I’ve been grappling with the idea of getting a CEO coach for a while. In particular, I’m always looking for ways to level up my leadership skills. Sidenote: I recently read Conscious Leadership based on a referral from one of our customers and loved it! I’m curious, do you have a CEO coach (or any type of coach)? What types of issues do you work through? If you have 2-3 minutes, I’d love for you to respond to this survey — I can’t promise your typical 10-20 seconds 😉 Transparently, we’re thinking through ways how we can offer coaching services to our customers. It appears that wellness and vulnerability are resonating based on responses to last week’s note. -Mike

It seems like the Twittersphere is ablaze with the idea of debt entering the market as a financing vehicle. Check out Alex Danco’s, “Debt is Coming” blog post if you missed it…Tyler Tringas and Earnest Capital have an entire fund devoted to this thesis. I’m sure there are a ton more blogs, Substacks and Tweets about it now. These ideas mainly pertain to SaaS. The tl;dr is that the last 15 years have paved the way to build and scale a SaaS company for next to nothing while recurring revenues are (hopefully) predictable. If both of these things are true, isn’t equity an incredibly expensive thing to give away? I suspect we’ll see more debt funding vehicles enter the market for all stages of growth. Getting started? You could use a credit card. A couple thousand in MRR and want to go full time on a side project? Take a look at Earnest Capital. $50k in MRR? Check out Lighter Capital or Stripe Capital. >100k? Private Equity and Banks will be happy to help. At the end of the day, more options = better deals for founders so I’m a fan. However, does debt come with operational expertise? Can it help you hire? Navigate strategic decisions? I think Alex Taussing has a great response in his newsletter Capital Stack with, “My hope is that operators will constrain its use to areas where debt is a more natural fit.” Have you taken any debt? Considering it? Any other ideas? Share your ideas below. Last Weeks Note – Do you Sleep? I got some great reactions to the Sleep note last week. Here are some of my favorite responses. For the sleep matter, I often feel the Hustle porn trend induces a huge bias. While we hear from folks working 100h a week that feel in their good right to brag about it, it obfuscates a huge part of the founders, realizing how much sleep & good personal equilibrium matters but that won’t brag about it. Well that’s interesting! Just knocked together a little chart based on that DoD study. Assuming at 10 hour day, and that a person is just as enthusiastic and focussed about being at work as anywhere else (unrealistic) then yes in theory someone could extend their working day another 4 hours per day. Might explain the stereotype of the startup founder working well into the night without realizing for days on end, while there is a productivity loss, if you do it for a few days you can still come out ahead. That’s if i’ve done the math right of course! It’s 12:46 am. I’m writing code. Should I be writing code? ever? no. But we’re behind on a deadline for an important customer, so here I am. I’ve crushed 2 critical tickets since I put my kids to bed. I use the Withings Sleep Tracker to measure my sleep (it sits under my mattress). I’ve seen repeatedly that it is the most important variable in my control that affects everything in my life from personal wellbeing, through to cognitive ability. It’s been elevated to a level it deserves.

We are 2 for 2 in the Weekly Note! For the longest time we’ve treated lack of sleep as a badge of honor. “Hustle Porn” on Twitter & the web has made it even worse. Personally, I always felt like I was doing a disservice to Visible by prioritizing a good night’s sleep…”Should I be working instead of sleeping?” was a common question I’d ask myself. Luckily, we’re starting to see more data, studies and efforts by entrepreneurs to show how sleep is critical to just about everything we do. From productivity increases to reducing the risk of cancer and heart disease, sleep is fundamental to just about every aspect of your life. I’ve recently gotten to know Jeff Kahn from Rise Science (they have worked with NFL, MLB, and NBA teams to Basecamp to Fortune 500 companies…yeah, they are legit). I love Rise’s simple yet insightful approach to helping you understand your sleep and sleep debt. In particular, they don’t require any sensors, gadgets or putting your phone on your bed. One of my favorite features is their “peaks & dips” insights (your natural circadian rhythms). I find it to be incredibly accurate and I now structure my day around it. I’ll workout during my dips and prioritize critical thinking in my peaks. You can see my screenshot here from Rise. I asked Jeff why their model is so accurate. They use 3 different models to power this “peaks & dips” feature. One of those models comes from the Department of Defense. Turns out, the DOD has completed some extensive studies that enable us to more effectively utilize our troops in times of war. You are welcome to check out the research here. How much sleep do you get as an operator & entrepreneur? Do you prioritize it? Any stories you’d want to share that I can highlight? Let me know and I’ll share them next week (anonymously).

I’m going to start writing a weekly note (at least try!). Inspired from my great friend Max Yoder — make sure to check out his weekly note if you want to do better work. I’ll focus on something that caught my eye in the startup space, an interesting data set and/or anything that I think can give founders a better chance of success. If you unsubscribe, I totally understand but my goal is to make this as valuable as possible. Have you seen the latest buzz about founders wishing they had retained more ownership? Sam Altman from YC tweeted it here. The takeaway is founders feel like they dilute too much early on. Sam also thinks that founders dilute themselves 2x more for the same level of progress they used to 10 years ago. Suhail (Mixpanel founder) has a great response in his tweet. In short, he encourages founders to raise less money at a lower valuation early on. Easier said than done! I do love his mention of thinking through the preference stack. I think it’s incredibly important to model out how the preference stack impacts outcomes and decision for founders. Speaking of doing more with less. Can you guess which companies financials these are before going public. If you guessed Google, you are correct. How much did they raise to get to this point? Only $25M. A little different than today’s climate. Curious, have you felt like you’ve given up too much of your business?

We recently hosted a webinar with Tyler Tringas, General Partner at Earnest Capital, covering alternative financing options available to startups. During the webinar Mike, our CEO, and Tyler covered the current state of venture and SaaS markets, all things Earnest Capital, and SEALs. In case you missed it, check out the recording and our favorite takeaways below. Financial –> Production Capital One of the driving forces behind the Earnest Capital Investment Memo is the notion that software is entering the deployment age (read more about the deployment age in the investment memo here). In short, Tyler explains the deployment age as a time when products, software in this instance, can and should be distributed to every corner of the economy. This creates a new software category where niche and sustainable business can succeed as opposed to the winner take all software companies we’ve seen in the past. Generally speaking, venture capital has been the default funding option for software companies but as we enter the deployment age there will be a need for a new form of funding. As a result, the type of capital companies need is shifting from financial capital to production capital (Enter: Earnest Capital). The Peace Dividend of SaaS Wars Another key driver to Earnest Capital Investment Memo is the idea of “The Peace Dividend of SaaS Wars.” The idea is that when countries are at war they will throw money to escalate and create new technologies. An example Tyler gives is the development of synthetic rubber during WWII. After the war, synthetic rubber could be applied to consumer goods. So how does this relate to SaaS? Investors and early leaders are throwing money to create new technologies in the winner take all SaaS markets. As a result, it is less capital intensive than ever before to start a new business. Tyler mentions that software companies can be started on a free Heroku plan where in the past you’d need to buy your own servers and space. In turn, this helps companies attack markets with a smaller total addressable market and may not be a fit for venture capital. The New American Dream Entrepreneurship is in decline in the US. Tyler believes that one major component of the decline is because, “the major area for new entrepreneurship, software and software-enabled businesses, has no default form of aligned funding.” In the past (think 1970s or 80s), an entrepreneur may have had experience or been highly qualified in a field, went to the bank for funding, and likely built physical locations. But with no physical collateral for a software company, who is supplying the funding to grow these companies? Another sign of a need for a new form of financing. Tyler argues that, “building, owning (and possibly someday selling) a profitable remote software business is the new American Dream.” Entrepreneurs can employ 15-20 people, distribute their profits amongst employees, and still create huge economic impacts for themselves and those involved with the business. Shared Earnings Agreement Tyler discovered that the traditional financing options for early stage investors (SAFEs, convertible notes) are not aligned with “Earnest” founders so they create a new financial product: Shared Earnings Agreement. Tyler discusses why they created the SEAL in the webinar and dives into a few of the key components. If interested in learning more about SEALs, we suggest checking out this post. Send Updates to Potential Investors Tyler briefly touches on the importance of sending investor updates. Tyler mentioned that he has seen investor updates as the best tactic they have seen in use to help companies fundraise. If Earnest speaks with a company they are interested in but are not quite ready to invest, they’ll ask to be sent updates about the business. From here, Earnest can be in the loop and ready to make an investment as soon as possible. Check out the Founder Summit Earnest Capital is hosting a summit for founders and startup leaders in Mexico City in March. The summit is intended to allow founders to meet and network as oppose to another conference full of presentations. If you’re a founder and interested in learning more about the summit, check it out here. Q&A Mike and Tyler tried their best to answer all of the questions at the end of the webinar. For the questions they did not get to, you can check out Tyler’s answers inline below: Q: I assume that at least some incumbents/market leaders will try to meet growth expectations by appealing and selling to niche audiences. How much weight does this threat carry in your investment decisions? If it’s not a threat, why not? A: Competition from large incumbents is definitely not something we outright ignore, it’s just that we try to dramatically lessen the risk by backing founders tackling markets that just wouldn’t move the needle for a $10B or 100B+ firm even they came in and took 100% of the market. That said it certainly can still happen. I don’t think we have a special sauce for that scenario other than to encourage founders to lean in to their startup competitive advantages. One thing we do is encourage founders to not try to make themselves seem bigger than they are (don’t use the “Royal We” if it’s actually just You). It’s surprising how much some customers really want to support an independent small brand. The Basecamp folks are putting on a masterclass on how to counterpunch on BigCos like Google with this Q: How does Earnest protect itself from a business defaulting on quarterly shared earnings payments? A: Pretty much the only “investor right” we ask for in our investment docs are the right to inspect the books. Many founders just go ahead and give us access to their Quickbooks. Which is how we would address some kind of fraud or misrepresentation of Founder Earnings. At another level it’s quite hard to accidentally “default” in the sense of being unable to make a payment, since the Shared Earnings are always a % of Founder Earnings, the business should have generated the cash to make the payment (in contrast to debt where a payment is due whether you have the profits to pay for it or not). Lastly if a company has the Founder Earnings but just refuses to pay, we are somewhat protected by the fact that a) the company is obviously doing well and therefore is valuable and b) not making Shared Earnings payments keeps our implied % of a sale higher, so the founder is kinda shooting themselves in the foot if they ever intend to sell the business, we’ll likely get more money from the higher % of the sale than they would have paid out in Shared Earnings along the way. All about aligning incentives! Q: The required “hit rate” for a SEAL portfolio to work is really high (given the capped return + long time horizon): How do you think about this question? Do you have a target % of startups that must “survive” to get a return? A: It is higher than you would see in a traditional seed VC portfolio, but our theory is that the failure rate is not a law of startup physics but rather the whole venture strategy ratchets up both a) the chance of being a unicorn and b) the chance of failure. We don’t know what the typical failure rate is for a basket of highly filtered and selected, post-revenue bootstrapped businesses, but our basic bet is it’s much much higher than is typical in venture. I go into this in some detail here. Q: For your portfolio companies, to what extent do they also have other investors beyond the founding bootstrappers? What is your range of size of investment and also the range of time horizon to large-scale recurring revenue? A: We have done a mix of being the first/only investor in a company, leading a round where several angel investors co-invest with us, and a few deals where we co-invested with other investors (least likely for us, but does happen). We’re open to anything but have a slight preference to be the first/only just because it’s so much easier to close (can be as fast as 2 weeks). As of this moment, we invest $50k-$250k which may increase over time. As a fund, ideally we would love to see business mature and get to real profitability in 7-10 years but we are early-stage, long-term investors and understand that timeline is out of our control. Q: Tyler mentioned a mix of outside capital and sweat equity, however Earnest and other micro-VCs only seem to want to invest in products that are built and have traction. How do I get help building an MVP? I’m a technical founder so I can write code, but trying to do everything myself is taking forever. A: Yea, I have to concede that one of the main advantages the venture model has over ours (similar funding for bootstrappers ideas) is that pre-seed VCs have a model where they can invest at the “idea stage”… because we are not unicorn hunting, we also can’t take the very high risk of investing pre-product pre-launch. One of the main effects of the Peace Dividend that I talk about is that it’s now pretty reasonable to bootstrap, as a side project, a real product to real revenue from real customers. So as an investor, I (and many others) now really have to wait until that stage because so many entrepreneurs are getting there without funding. Some good resources would be some of my Micro-SaaS blog posts (microsaas.co), Indiehackers.com, and Makerpad (makerpad.co) for tips on building an MVP for business ideas without writing a ton of code.

Our Community Templates are a collection of Update Templates created by our customers, partners, and friends. If you’d interested in showcasing your Update Template send a message to marketing@visible.vc Community Spotlight Company Name — Malomo Description —Malomo is a seed-stage, SaaS company based in Indianapolis, IN providing shipment tracking software for ecommerce brands Stage — Seed Capital Raised — $600k Market/Business Model — SaaS, E-Commerce The Investor Update Template If you’re a seed stage, SaaS founder this is a great template to get you started. Yaw, the CEO and Founder, of Malomo shares the Update below on a weekly basis followed by a longer form Update on a monthly basis. For a seed or earlier stage company a weekly investor Update can be a valuable resource for your company. A weekly Update gives you an added opportunity to leverage your investors and use their experience, network, and knowledge to help with early company decisions. Talk to your investors and see if they’d be interested in a more frequent Update. You may not need to send a weekly investor update to your entire investor list. If you have investors that are not as hands on or close to the business it may be best to only share a monthly or quarterly Update with them. You can view and use the Template below: Thanks to Yaw for taking the time to share his template. If you’re a founder, investor, or company operator and would like to share your Update Templates send us a message to marketing@visible.vc

Upside is a podcast about startup investing outside of silicon valley. Our founder, Mike Preuss, was able to sit down with the hosts at Upside and discuss all things founder and investor relationships. If you’re interesting in learning more about Visible, investor communication, and portfolio management give the episode a listen. From the Upside blog, you can find the recap of the episode below: AD: Finding experienced employees for your new business with Integrity Power Search (5:23) Mike’s background and entrepreneurship experience (7:56) Orr Fellowship (11:17) Managing a remote culture, different time zones, and off-sites (12:44) Initial problem and genesis of Visible (18:38) Changing the product from investors to founders (21:53) Finding clients (26:07) Tracking metrics and data (or lack thereof (30:05) Visible using Visible (32:38) Money model (36:13) Investors’ and founders’ access to information (43:13) Visible’s potential in a downturn or recession (46:31)

A board meeting can be an intimidating endeavor for first time founders. However, when a founder is well prepared a board meeting can be an integral part of a company’s success. In case you missed it, we hosted a webinar with Russell Benaroya covering the ins and outs of running a board meeting on demand. Russell spent the last twenty years investing in private equity and as a healthcare entrepreneur, building and exiting two start-ups. Currently, Russell is a Partner at Stride Services where they help high growth organizations with back-office support. Between his time as a founder and helping companies at Stride, Russell has become an expert in preparing and executing a board meeting. During the webinar, Russell shared how founders can always be prepared for a board meeting. You can find our favorite takeaways from the “Board Meeting on Demand” webinar below: Lead with Facts It is normal to feel anxiety and excitement before a board meeting. However, it is important to manage your emotions and stick with the facts. If you lead with data and facts then you can take the time to talk about strategy and the future of your company. Russell warns founders not to approach board meetings with a narrative or a story to tell as it can be exhausting and can understates the facts. A Board Member Will Never Know Your Business as Well as You Do If you’re looking for a board member to give you tactical operational advice remember that their view will be slanted. No matter how involved a board member is with your business they will not have the same information and understanding of your business as you do. In reality, a board member should be able to determine if you’re properly capitalized to execute on your strategy, how you are executing to the strategy, and do you have the right people in the right roles. Turn the Executive Session on Your Board Rather than using the executive session as a chance to air your frustrations and “seek counseling,” use it as a time to allow your board to bring up their own discussion items. Ask your board to come prepared to discuss their topics, their observations, and their agenda items they want to cover. What to Send Before the Meeting Russell suggests sending your metrics vs. plan, financial and operating metrics, actions since last meeting, key customer learnings, your pipeline, and your functional roles chart. You can take it a step further by saying founders should not send a simple org chart but rather a functional role chart that will showcase what positions you need to fill to deliver on your strategy. Russell recommends sending your materials 3 days in advance so your board has a chance to review the facts and form an opinion in advance of the meeting. No Surprises A board meeting should not be full of surprises for you as a founder or any of your board members. You should go into a board meeting with a deep understanding of where every board member stands. Russell recommends scheduling 1 on 1 meetings with each board member to pick their brain on different issues. There tends to be a herd mentality when sharing to a group (your board) so it is important to discuss on an individual basis to understand where they truly stand. Come with Your Best Thinking As a founder “you should be coming to your board meeting to share your best thinking.” This can be boiled down to a simple process. You come to the meeting and share how you are thinking about an issue, how you analyzed it, your recommendations, then ask the board for their thoughts on your recommendations. This way you stick to the data and use your knowledge to make the best decision for your business. From here, you can have a spirited discussion with your board. All in all, remember that running a board meeting comes down to the preparation you put in beforehand. With the right preparation and mentality heading into a board meeting, it can truly be a valuable asset for your business.

Generally, we discuss what it takes to raise venture capital on the Founders Forward blog. However, there are a number of other types of investors and capital. All of which serve different purposes and can help different businesses in different ways. Angel investors are an integral part of the “startup ecosystem” and can be a valuable source of capital to take your business to the next level. So how do you find an angel investor for your startup? What is an angel investor? Both angel investors and venture capitalists offer a form of equity financing but there are a few key differences that will help you determine if you should approach angel investors. The main difference is where their capital comes from. An angel investor is generally a wealthy individual who is looking to invest spare cash in an alternative investment. On the flip side, a venture capital firm is backed by limited partners who are expecting substantial returns in a certain period of time. This means that an angel investor may have alternative motives (personal interest in the problem, product, founders, etc.) whereas a venture capital firm is focusing on maximizing their returns. With the different expectations in returns also comes a difference in check size and resources. An angel investor will typically write a check for anywhere from $1,000 to $100,000 (maybe more in some cases). As for venture capitalists, they will likely write a check from $100,000 to $5M+. If you’re not growing at hypergrowth speeds or do not need a huge check to grow your business, angel investors are likely a great option for your business. However, smaller checks are not necessarily a bad thing. As Kera DeMars of Hustle Fund puts it, “it’s often easier to convince a bunch of people to write small checks rather than a few people to write huge checks.” Recommended Reading: The Understandable Guide to Startup Funding Stages Angel Investors vs. Venture Capitalists VC funds are often organized under the limited partnership (LP) model. They raise large sums of money from institutions – such as pension funds, endowments, and family offices, then invest that money in exchange for a share of the return & management fees (see this excellent article by Elizabeth Yin for a deeper explanation on how VC’s make money). This gives them incredible leverage and financing power, but often leaves them under the watchful eye of LP’s who want a return on schedule. Angel investors usually operate under a different model. Most tend to be high net worth individuals, and in many cases have built and exited a company themselves. They need to be accredited investors who can stomach the inherent risks involved with early stage startups. Because angel investors tend to have smaller sums to invest than VC funds, you’ll often find them in Pre Seed and Seed rounds. VC’s tend to participate across all rounds, but typically only they can afford to play the game in Series B and beyond, as the shear amount of money required tends to be out of the range of most angels. Recommended Reading: Venture Capitalist vs. Angel Investor Step-by-step guide for finding and securing angel investors Considering the wide range of people who can be angel investors and their check sizes and interest there are many ways to find and approach angels. Here are a few of our favorite approach to finding angel investors: 1. Ask friends and family first As Elizabeth Yin writes, “There are lots of rich people worldwide — they don’t even have to be super rich. There are lots of angels who can write you a $1k-$10k check. Angels may not know they are angels. It’s your job to plant the seed in their heads that you are open to an investment from them!” When searching for angel investors it is generally best to start with the people already in your network. 2. Tap into your personal and professional network Don’t be afraid to ask someone in your network for an introduction. Past co-workers or investors likely have their own professional network and can open doors to new potential investors. Part of raising angel capital is stepping out of your comfort zone, and as Elizabeth Yin puts it, “embracing the awkward.” If someone in your network passes, quickly move on to the next opportunity instead of wasting time continuing to pitch someone who passed. Related Resource: Top 6 Angel Investors in Miami 3. Signup for an account with Angelist Angel investors tend to network and create their own communities. One quick way to find angels outside of your immediate network is to turn to the internet to hunt down angel groups A slightly different approach is to find a syndicate. As AngelList defines it, “a syndicate is a VC fund created to make a single investment. They are led by experienced technology investors, and financed by institutional investors and sophisticated angels.” AngelList is a great source for finding syndicates and angel groups. Related Reading: How To Find Private Investors For Startups 4. Join the Angel Capital Association As written on their website, “CA is a professional society of accredited angel investors who make up the world’s most prolific early-stage investment class. The association is the largest professional development organization for angel investors in the world deploying more than $650 million in early-stage capital each year. ACA provides an insider perspective that can help you make smart investment decisions.” Learn more about Angel Capital Association and the perks for founders here. 5. Leverage social media Many investors spend time on social media — especially Twitter and LinkedIn. You can leverage social channels to get in front of angel investors. Investors typically need multiple data points to make an investment. By interacting on social media, you’ll be able to build up those “data points” so when the time comes to raise they will already be familiar with you and your business. Who can become an angel investor? Just about anyone can be an angel investor. Typically speaking an angel investor has to be an accredited investor. As Investopedia puts it, “to be an accredited investor, a person must have an annual income exceeding $200,000, or $300,000 for joint income, for the last two years with the expectation of earning the same or higher income in the current year.” One of the interesting aspects of raising angel capital is that everyone around you has the chance to be an investor. With the introduction of equity crowdfunding (more on this later) the scope of angel investors has been opened even further. What do angel investors look for? Angel investors can be interesting because they may not be motivated purely by returns. Sometimes angel investors are attracted to a market, a personal interest, or even just want to back a friend or family member. With that being said, it is still vital to be able to portray that you are building a sustainable business that can generate returns and compete with their other investments. At the end of the day, an individual investor has countless options for where they should invest their money. You need to be able to paint a picture of why they should allocate their money in your business as opposed to public markets, real estate, and other traditional investment opportunities. ROI Like most investors, angels are looking for a return on their investment. Motives might differ than a traditional venture capitalists, but at the end of the day they’ll want to see how they can make a return on their investment. A reliable leadership team Angel investors want to know that they are investing in a reliable leadership team. This means they will properly communicate, lead, and build their startup. Early growth and traction If an angel wants ROI, they’ll want to see that you have the data and business plan to generate returns. Like VCs, angels will use data and traction to make their investment decision. A scalable and effective business plan Also going hand-in-hand with generating a return, is a scalable business plan. Angels will want to understand how your business scales and what it looks like at different points in the future. How much do angel investors typically invest? The typical investment amount from an angel investor varies quite a bit. Angel investors will invest anywhere from $1,000 to $1,000,000+. However, the average check size hovers around $25,000 to $100,000. There are a few ways to approach the wide range in check sizes. On one hand you can talk to as many angels as possible and pick up smaller checks to build your round. This obviously can be more time consuming and requires you to keep more stakeholders in the loop. However, it is generally an easier decision for someone writing a $5,000 check as opposed to a $100,000 check. On the flip side, you can target a couple of larger angel investors and spend your time targeting a few large checks to close your round. What are the benefits of angel investors? Angel investors can often play a role in providing crucial company-building guidance in the early days. Because they tend to arrive on the scene early, they stand to make a massive return if your company succeeds. VCs can be equally helpful, and they’ll sometimes place a member of their fund on your board who can assist in guiding the direction of your company. Check out some of the benefits of raising from angel investors below: Build momentum during a raise — angel investors can be a great first check and help build momentum during a fundraise Introductions to other investors — angel investors tend to know other individuals that might be willing to invest in your company or help in key areas Silent investor — some angel investors tend to be more hands-off than VCs (which can be a pro or con depending on your business. How to pitch angel investors If you can find an angel investor that fits in with your company ethos they can be incredibly valuable for you as an advisor and source of capital. Check out how Jonathan Gandolf, CEO of The Juice, found warm intros to potential investors below: Find Their Motivation As we mentioned earlier, often times angel investors have an alternative motive outside of profit. A lot of the time they may be investing because of the founders, a personal interest in the problem, or an interest in the market/business model. With that being said, it is important to tailor your pitch to what motivates your angel investors. A pitch to a venture capitalist often times will focus on the economics and ability to create returns but a pitch to an angel investor may differ quite a bit. Iterate Your Pitch You’ll want to be sure to iterate on your pitch for each angel investor. After your first meeting if you find they have an affinity for your founding team, you may want to build your pitch around the team. If you find they have a personal interest in the problem you are solving, build your pitch around your solution. Note: is vital to let angel investors know the risks associated with backing a “startup.” This is especially true if it is their first time investing in a private company. Provide Status Updates Angel investors are ultimately risking their own money for your business and it is your duty to keep them involved throughout the process. It does not have to be an in-depth dive into your business start by sending them status updates during and after your fundraise. We suggest including things like wins/losses, high level metrics, priorities, etc. Remember if your investor has a certain motivation behind their investment feed into that when updating them. If they have experience in the market or field you may want to make specific asks where they are qualified. Keep your investors up to date with Visible Once an investor writes a check it is your responsibility to keep them engaged with your company. At the end of they day they should be the ultimate evangelist for your company so it is vital you communicate and have a transparent relationship. Depending on their check size and involvement with the business will dictate how much you should share with them. However, if it is someone that wrote a smaller check size it may make sense to send a less involved Update. This allows you to keep them in the loop but avoid the additional questions and confusion that may come with sharing too much information. In a “lighter” version of an Update we’d suggest sharing a couple key things: Major milestones — share your big wins from the past quarter. This can be a new customer, round of funding, or just anything you are proud of. Where you need help — let angels know where they can be of help to your startup. Don’t be afraid to ask for introductions to customers, potential hires, and other investors. Key Metrics — share 1 or 2 of the key metrics behind your business. They should already be familiar with these metrics and should not come as a shock when they see a chart. Not all investments are created equally. Do you want an investor that will write you a check and leave you alone? Are you interested in ‘smart money’ that will help you build your company? Do you want mentorship in exchange for a board or advisory seat? No one can answer these questions for you, but it’s important to keep it them mind when evaluating the pros & cons of angel investors vs venture capitalists. Fundraising is one of the hardest jobs in the world – you should try to make it worth it.