Venture Hacks

AFAIK seed rounds are usually $1 million or less. Venture hacks is a great source, but I unfortunately couldn't find an exact answer to your question: http://venturehacks.com/

As an aside, http://venturehacks.com is a great site for questions like this.

In addition to the comments above, once you wrap your head around the basics of the process, I find Venture Hacks a great place to get a feel for a lot of the caveats ahead: http://www.venturehacks.com/

What are your top 3 questions about how to turn your idea into a startup? My top 3: 1. How do I get money? 2. How do I get a good deal? 3. How do I recruit great people? I'll collect the responses and post the results here on news.yc. - Nivi from Venture Hacks, http://venturehacks.com

Are you going for venture capital or an angel investment? The level of documentation and requirements will be similar, but at the angel level the chips are stacked more in your favor as far as getting meetings and investment. Angels are not going to expect a minimally viable product or traction as much as VCs will. A few sites to check out: http://www.venturehacks.com http://www.markpeterdavis.com/ Every VC is going to be different in what they want and don't want to hear/see. Remember going in that the odds are against you. To increase those odds you can show traction in the market, and at minimum a working product (even if it is not the final product). Angels and investors are going to want to know about your background (i.e. school, previous work, and any startups you have done in the past). Essentially it is a dog and pony show where you have to prove to them that you can execute on a product and make a return on their money. While a return is not always going to happen, the more comfortable they are with you, your product, and the chances of making a return on their investment the better off you are. Get a lawyer, one who is experienced in raising outside investment. There are laws that you must follow when seeking outside investment and having someone familiar with the process is essential. Be ready to spend some money on the lawyer (most lawyers will work with the intent to take their fees off the top of the funding when finalized). The final thing is it takes…

I would recommend you check out a few sites like: http://www.venturehacks.com http://answers.onstartups.com http://www.bothsidesofthetable.com To answer your questions directly: 1) You generally tell them how much money you are trying to raise (based on your financial projections). The valuation determines what percentage ownership you end up giving up in exchange for the funding. The total amount you end up with is negotiable. 2) The VC takes a percentage ownership of your company, and generally ends up with a seat on your board, Officer salaries are generally determined by the board. As the founder, you usually specify your salary requirements during the fund raising process....an overly large salary is a red flag and could turn investors off. The total amount of control the investors end up with depends on your specific situation. 3) Usually it is done as one big check. However, it may be split up into 'tranches', which are delivered upon meeting certain milestones. 4) Most startups do end up failing, the investors know the risks associated and factor that in their decisions about what companies to fund. If it fails, it fails. The fact that your company is a separate legal entity protects you from personal liability. 5) Generally investors end up taking a 20%-40% ownership stake in your company per round. If you raise multiple rounds, each new investor takes a new slice of the pie. I would definitely recommend checking out the sites I linked above to get a much…

I originally started my angel fund as an incubator (The Hit Forge). I quickly moved away because of Adverse Selection - the best entrepreneurs are insanely committed to themselves and their ideas, and rationally or irrationally, don't want to diversify. Since then, I've invested in a lot of companies, including Twitter and Disqus and Heyzap, and am glad that I did so. The Incubator model works as a "search" model (MRL Ventures, Obvious Labs, Ooga) where the Incubator "finds" a company that the principals join, but not as an "investment" model where the incubator survives and keeps spinning out companies. This is true because you can't create or replace entrepreneurs - you can only discover them or be them, but you can't create them. The other problem with this proposal is that the Internet is extremely competitive. You can't do anything great part-time over the long term. A funded team working full-time has a huge advantage on you. Of course, giving up control sucks. "Valuation is temporary, control is forever." And a business controlled by VCs too early can't innovate easily. So, either raise money from angels, or learn how to negotiate with Venture capitalists. Check out Nivi and my writings (sorry, shameless plug) at http://www.venturehacks.com. If you do have a good product with traction and are out raising VC money, ping me and I'd be happy to help you keep control (free!)

It sounds like a terrible deal, but if you need the money you need the money. I'm curious what geographical area you are located in -- you'd never get something like that from a SV VC. Was this a verbal offer made quickly or do you have a term sheet? These guys are offering a valuation half what YC offers, and they are proposing a board structure that gives them defacto control over the company board and the company. And they aren't YC. Your response should be "how about convertible debt?" Convertible debt makes a lot more sense than setting up a board of directors that they control and it works out for everyone in the next round. I would recommend reading http://venturehacks.com in its entirety along with pmarca's relevant blog posts. http://blog.pmarca.com/2007/06/the_truth_about.html, http://blog.pmarca.com/2007/06/the_truth_about_1.html, http://blog.pmarca.com/2007/06/the_truth_about_2.html, and more. After reading pmarca, you should be able to answer the question if you actually want to raise VC money or not. It only makes sense for a very specific type of company.

This link [1] has a good description of Sandy Kurtzig's "flinch" pricing method with Enterprise customers (I believe she was the first female startup founder to IPO her company). Her book, "CEO" about her startup journey is a good read, it was one of the first books I read that got me interested in business. [1] http://venturehacks.com/articles/pricing

http://venturehacks.com/ It doesn't get updated anymore, but I think it should have a lot of the basic venture concepts here.

The streaming radio service. You sign up, tell us about your diet, and every week we email you a calendar of lunches from awesome local restaurants. Easily modify the suggestions with our online interface, or just sit back and let the good food come. As for the "X for Y" meme, I agree they tend to oversimplify. Nivi of AngelList provides compelling arguments why they are worthwhile anyway: http://venturehacks.com/articles/high-concept-pitch

I keep hearing this book is a must-read: http://www.feld.com/wp/archives/2011/07/venture-deals-be-smarter-than-… If you don't want to buy it, you should check out the Venture Hacks Bible: http://venturehacks.com/friends I'm not sure any of them mentions SAFEs because they're very recent, you can read more details in YC's announcement: http://ycombinator.com/safe/

A great list of questions here: http://mashable.com/2014/03/20/want-to-work-for-a-startup-10-questions… Also see this if you get an offer: http://venturehacks.com/articles/job-offer

As always, VentureHacks has great practical advice on the board: http://venturehacks.com/articles/one-way-control http://venturehacks.com/articles/board-structure

Read the Venture Hacks book (it's $9 from http://venturehacks.com/ or you can get it from amazon, etc.) as it gives you a lot of the basic advice on pitching VCs.

http://www.venturehacks.com is a good resource. There are a number of good books on the topic as well. And there's a lot of good info on Quora. And, of course, search the historical posts here at HN, there's a TON of good stuff here. BUT... be aware, fundraising is only one aspect of creating a company, and not all companies even want/need to raise outside funding, and of those that do, not all need institutional funding. If you decide to launch something, make sure your focus is on creating something that creates value and has a valid business model... don't just focus on "how do we raise VC money"?

The best source for information about startups is the web, not books. You can probably learn 90% of what you need to know from reading everything on these two links: http://paulgraham.com/articles.html http://venturehacks.com/archives The details of deal terms are not very important until you're actually raising money. You'll have a lawyer at your side when you do that anyway. The hard part is building a product that users love. Focus 99.9% on that.

Doh! I'll have to fix that :) As for the questions, I'm following a method Sean Ellis advocates. You know you've hit product/market fit when 40% of your users would be "very disappointed" (haha, spelled it wrong again. thanks browser spell checker) if your product was no longer available. If you're interested, you should definitely watch the interview with him from venture hacks: http://venturehacks.com/articles/sean-ellis-interview http://venturehacks.com/articles/sean-ellis-interview-2

I'm working on a few right now, but I'm keeping it limited to only Adwords Traffic so I have good benchmarks for future changes. Here are some resources. http://venturehacks.com/articles/minimum-viable-product-examples http://www.quora.com/What-are-the-best-examples-of-Minimum-Viable-Prod…

Get a lawyer. Go check out the list of suggested good start-up lawyers on http://venturehacks.com You do NOT want to sell without a negotiated contract for your (all of you) ongoing employment. You need a lawyer for that, DON'T do it yourself. Some of what the other side is telling you is clearly manipulative (no surprise). If they want to buy you, insist that they do it properly. You owe it to yourselves, and the other side will respect you for it - guaranteed.

I'll let someone else detail why having a comprehensive business plan isn't necessary, but a good primer for you is the Pitching Hacks book (PDF) by Venture Hacks. It's $9 but worth more than the sproutbean catfart health wrap you'll otherwise spend that on. Some of the things you raise here are brought up in their book -- which is actually more like a guidebook than a "book," per se. http://venturehacks.com/pitching

I'm in a similar situation, and am struggling with the same question. From some desktop research and talking to investors/other startups, it seems like "0.1% - 2% of post-Series A stock" is a reasonable range depending on the results an advisor might bring about. (http://venturehacks.com/articles/advisors-part-2) Are you planning to draft a legal agreement of sorts with this person? If yes, it may be helpful to tie in dollar amounts with milestones to determine equity percentages, I think. Personally I find it hard to quantify how much connections and a couple of hours a week are worth in terms of dollars. If it's possible to put a revenue amount to what s/he is bringing to the table, either in a strategic "$X in the first N years" or "$X from this release within N years" kind of way, that may help to crystallize the equity percentage somewhat.

I think he's referring specifically to this: http://angel.co/ ( http://venturehacks.com/articles/angellist ) which is a really great idea. Also it wouldn't hurt to hang out at Bin 38 lolz.

There is a lot of awesome information at http://venturehacks.com

Congratulations. You have solved the problem really well. My biz partner is currently some one I went to school with and a good friend for years, some one I can share my bank account password with. Connections are important but my personal thought is if you have a great product and achieved the market-fit hiring a professional or an advisor to help is at your disposal. But don't partner if the only asset they bring is connections. I recommend looking in your circle first, some one you've worked with in the past, understands you really well, shares your vision and trust you. There is some great advise on http://venturehacks.com/articles/pick-cofounder that might help you. Good luck with the search.

I recommend a contract type relationship for a couple weeks or month, something where you can actually see their work, how they work and if they are a good fit for you. Just arrange it so you own all IP if it doesn't work out. As far as finding co-founders, you can hit up various Hackers & Founders meetups. If you're the technical type then finding user groups or whatever can be a good place too. Startup Weekends can also be a good place to look, but don't be super pushy about it (or you'll just be like everyone else there). Also, this is a great article on the topic: http://venturehacks.com/articles/pick-cofounder

You've got a term sheet, which means you've got something worth investing in (social proof). But, the investor is trying to screw you. I've been in a similar situation before. Trust me, what you need to do is speak to other investors before you make your decision. If you don't know other investors then a good place to start is: http://venturehacks.com/intro Fill in the form at the bottom of the page and submit it.

This makes it sound easy! I'm not surprised AngelList played a key role... Venture Hacks is an awesome resource. Nivi and Naval do genuinely care about helping startups: http://venturehacks.com/intro I wouldn't pitch them until you have an amazing demo and your shit together though.

What is the functionality of your app? Get the MAIN functionality finished and release, don't worry about the "other functionality" right now. Release in small iterations, in amounts that a single person can handle. Follow this process and continually release features and improvements based on user suggestions. It's ultimately up to how you feel with taking a risk, no one can tell you what to do. If you believe in the product, other people believe in it and you feel comfortable then go for it. More resources on MVP: http://www.startuplessonslearned.com/search/label/minimum%20viable%20p… http://venturehacks.com/articles/minimum-viable-product-examples

I love this talk about pricing software: http://venturehacks.com/articles/pricing I've had it on my MP3 player for about a year and I only just noticed it's by Steve Blank! Audio's a bit crappy in the beginning, but gets better.