Stage: Fund Raising | Progress: 0%

Stage: Fund Raising

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In this section:

1. You'll learn about how investors invest in startups.

2. You will be able to write up a perfect pitch + slide deck.

3. We will save you time by giving you a couple of channels to apply to multiple incubators at once.

Not every startup needs funding. While 90% of all startups fail, 75% of all funded startups fail. Which means that, being funded doesn't necessarily make your success rate higher. Just a little fact before you spend a bunch of time looking for funding and closing the rounds.

However, that's not to say that you shouldn't get funding. Money that is good for your company is what we call smart money - the kind of money that comes with brains and connections to help you grow your company.  

What we could recommend is to apply to incubators around the world. These incubators often have great networks of mentors who can help you improve your startp.

Some incubators are specialized in a certain segment, so it's possible that you can apply to the incubators that would be a better fit for your startup. Incubators typically offer you USD$20,000 for 5-10% of your company, and will require you work with them for 3 months at their facility.

From Forbes's Incubator Ranking:

Rank Incubator/
City Note
1 Y Combinator Mountain View, Calif. Dropbox and Airbnb are just the biggest names in portfolio. Investors fight to invest in YC companies at sky-high prices. Founded in 2005.
2 TechStars Boulder, Boston, New York, Seattle, San Antonio Founded in 2007, it has grown to five cities, but keeps batches small to give each startup extra attention. Has broader impact by helping other incubators.
3 DreamIt Ventures Philadelphia, New York,Israel Founded in 2008, it has programs in Philadelphia, New York and Israel, with 65 portfolio companies, including SCVNGR/Level Up.
4 AngelPad San Francisco Founded by seven ex-Googlers in 2010; hot portfolio, but too early to value many of the companies.
5 Launchpad LA Los Angeles Founded in 2009, 23 companies have gone through program, 19 have been funded, 5 acquired.
6 Excelerate Labs Chicago Founded in 2010, the firm has graduated 20 companies so far. Mentors include localGroupon investor Brad Keywell.
7 Kicklabs San Francisco Stage-agnostic accelerator focuses on helping startups close first deals with large brands and agencies.
8 500 Startups Mountain View, Calif. Founded in 2010. Also has seed fund in addition to incubator. Focus on startups from overseas as well as US.
9 TechNexus Chicago Doesn’t have time limits on companies it accepts. Invests in its companies on case-by-case basis. Founded in 2007.
10 Tech Wildcatters Dallas New incubator, but has some promising startups

Others considered: The BranderyCapital FactoryERA Accelerator,
LaunchBox DigitalNYC Seed Start

Also, TechStars established a Global Accelerator Network (, which is a network of the best incubators that are not in Silicon Valley. They also have a lot of great incubators that you can consider as well.

A lot of these startups like YCombinator and 500Startups offer not only incubation (seed) money, but also traditional investments. A lot of the top incubators also offer you convertible debt (It's basically debt until the debt is converted into stocks. It converts when a milestone is hit, or if the investor chooses to convert).

Also, if you already have traction or revenue, there isn't any reason why you shouldn't continue to bootstrap (if money isn't a pressing issue). In fact, look at the article here, which mentions that 76% of the startups that were acquired in 2012, did not get VC funding. That's not to say that they did not get angel funding or seed funding. However, it's just some additional information for you to consider.

Read: The Pros and Cons of Joining a Startup Incubator

Learn about Term Sheets 20 Minutes

Term sheets are investment agreements between an investor and a startup. Term sheets can be very difficult to comprehend for startups, so we have prepared for you our favorite document that will get you prepared for anything you need to know about the world of startup investment:

There is also a thing called Option Pool Shuffle (MUST READ). The pool is part of your company that investors will reserve in advance to handle future occurences (like future funding equity, employees).

For example: If a VC decides to invest in 40% of your company at 1M valuation (They invest 400K), you think to yourself - okay great, we still own 60% of the company. Wrong! You read the term sheet carefully and you realize that there is another 20% option pool shuffle, which brings your ownership to 40%. The 20% is reserved in advance to handle future hirings of senior stuff -  for example a VP who would probably take 1% of the company.

Solution: Develop your future hiring plans so that you can reduce the option pool. 

Advice on Raising Startup Capital

  1. Startup Valuation Advice - Mark Suster May 2011
  2. Fundraising 101 Checklist – Walker
  3. Pitching a VC - Mark Suster Advice
  4. How VC’s Evaluate Startups – Thomvest Ventures
  5. VC Experts
  6. Seed Stage Valuation Guide - Jordan Cooper
  7. Alternate Funding Ideas – Business Inside

I have read the document carefully, as I understand if I don't understand the terms, I might be getting the shorter end of the stick.

No, i'll go back to read it!
The Perfect Pitch 30 Minutes

Create the perfect pitch + slide deck. Use the Perfect Pitch Template to script up your pitch.

Many incubators will ask you to give them a pitch during the last round of interview. Nowadays there are actually great pitching tactics and structures that have been developed by top incubators like Techstars. Also, the 3rd month of an incubator bootcamp is also focused on helping you come up with the perfect pitch.

AngelList 10 Minutes
Important Action

Log into AngelList, create a profile, and apply to the incubator programs you see fit.

Remember to document all the responses that you make in the applications in a notepad or something, because most of the questions will be asked again. Even if some of the forms are reused, some incubators reorder the questions causing some of your original responses to be cleared. You will definitely encounter different incubators asking the same questions.

Also, some incubators require you to make videos of your founders and the products. It'd be good to create 1-minute videos for both founders' introduction and product introduction.

Production quality is not too important. What incubators want to see is that you know what you are talking about, and you are passionate about your products.

A elements of a good founder introduction video should be: 

For each founder, education, talk about role in the company, previous experience

A good flow of a product introduction video should be:

1. Who each of the co-founders are, and if possible, your expertise related to the problem you are trying to solve.

2. The problem + blend in customers (We're solving X for Y) 

3. What your product solves.

4. How the product actually works to solve the problem.

Example of founder introduction:

Example of product introduction:

f6s 10 Minutes

Log into f6s, create a profile, and apply to the incubator programs you see fit. 10 Minutes

Log into, create a profile, and apply to the incubator programs you see fit.

Seed-DB 10 Minutes

Log into Seed-DB and apply to the incubators that are on it.

Crowdfunding 10 Minutes

We've only discussed some of the most popular ways to raise funding in this section. However, there are also other methods that have proven to be good for many startups. One of the ways is doing crowdfunding. this is a new term that just sprung up these couple of years. It's basically have the mass public fund your idea. It's just like pitching to investors, except your investors are now ~7 Billion people instead of a VC firm.

Crowdfunding platforms for businesses and entrepreneurs (in order of popularity):

  1. Fundable - Online funding platform for small businesses (recommended)
  2. Crowdfunder - Crowdfunding for business (recommended)
  3. WeFunder - Crowdfunding for startups (by investors) (recommended)
  4. Rock the Post - Crowdfunding for entrepreneurs (by investors) (recommended)
  5. FundingLaunchPad - Crowdfunding for Local businesses (recommended)
  6. Appsfunder - Good for mobile apps 
  7. Peerbackers - Leverages social media to help you raise funds through friends

Crowdfunding platforms for products (if that's whta you're building):

  1. KickStarter - For products and art
  2. indiegogo - Also more for products and art
  3. Quirky - For quirky inventors
  4. Rockethub - Crowdfunding for projects
  5. Crowdtilt - Group fund anything you love
  6. New Jelly - For artists

Other crowdfunding platform for other things - projects, non-profit, causes:

  1. Eppela - Crowd Funding based in Italy
  2. Start Some Good - For entrepreneurs trying to do some good. Non-profit and for-profit both
Stage: Grow to a Mill...