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Andrew Romans, author of The Entrepreneurial Bible To Venture Capital, has made it his mission to demystify startup financing for entrepreneurs.
Romans is celebrating his book launch by bringing five other VC’s for a VC & Angel Investor Roundtable on October 8th on Campus.
Romans’ ‘bible’ collects hundreds of VC stories to guide entrepreneurs, wherever they are in their journey— from founding to exit.
This soon-to-be classic textbook also includes a history of venture capital, instructions for how to approach VCs, and some solid advice for founding and leaving a company.
With hundreds of tips and stories from VCs, this book is a must read also for the seasoned and savvy entrepreneur, and for anyone who wants to start investing in startups.
Here are four sample takeways:
Choose the convertible note.
Instead of selling your equity through a priced round, use convertible notes, the preferred financing method of angels. The amount that an angel invests in a convertible note converts to stock at the VC round. The key things to keep in mind with convertible notes are discount rate, cap and valuation- key issues Romans tackles step by step.
Understand the VC mentality.
A VC finds him or herself saying no to a lot of folks. “Some entrepreneurs don’t take no for an answer, and keep pestering the VCs, which causes aggravation for the VC.” VC firms have to compete for the best entrepreneurs, and face heavy pressure for success. Once you understand what motivates a VC (a good opportunity), and what frustrates him (entrepreneurs wasting his time), you’ll be able to make a better impression. Romans recommends being concise, direct and using bullet points.
Don’t spend too much time on the business plan. Focus on the deck.
You should have a 10-slide PowerPoint investor slide deck, and a longer version of the same slide deck designed for a 20-minute pitch. Also pack these things:
- The executive summary (Word doc saved as a PDF). As easy to read as possible.
- Financial model (Excel): Absolutely critical. Romans highlights what VCs look for, and what you should focus on.
- Demo (live, working product). Try a demo video.
- Investor control schedule (Excel) (a list of all of the investors you’ve contacted, with details). Keep this one confidential.
When it’s time to sell, look for an emotional buyer.
There are traditionally two types of buyers who acquire startups: financial and strategic. A financial buyer will assess you on spreadsheets alone, while a strategic buyers look for the ‘big-picture’ view of your company and what it has to offer to the marketplace. Clearly, a strategic buyer is better. But the best kind of strategic buyer is an emotional buyer- someone who needs your company or one of your competitors, and now. (Learn more about startup acquisition this Thursday on Campus).
We recommend Andrew’s guide to any entrepreneur, no matter where you are in your business. Meet Andrew Romans and fellow VCs this Tuesday.
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