The Fundable CEO

Many company founders want to be the CEO of their firm, but is that the best approach? Most successful CEOs work for 15-20 years to acquire much-needed expertise. A study of 2.7 million startup companies tells us that the average age of the successful startup CEO is 45. Venture capital investors have many opportunities to invest in companies with proven management teams. Startup founders need to consider all these factors when deciding who will make the best CEO for their company.  Read more at: 

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How Startup Companies Should Compensate Their Advisors

How should a startup company compensate its advisors? This is a tricky question because there are no guidelines and most founders do not have experience in this area. But there are some general principles that can help you arrive at compensation that should be fair to the company and attractive to your advisors.

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How Long Should My Investor Pitch Be?

Have an elevator pitch – a 30 second version of your company in a way everyone will understand it. It needs to be specific and come across in less than a minute. For investor pitches it’s hard to address critical points of a business in just two or three slides. To understand the proposition – what your idea is, how you are going to accomplish your goals and milestones, objectives, team, game plan, and finance in a systematic way. 10-15 slides. Probably would be meeting for 45 minutes or so.

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How Much Stock Should I Share with Management Teams?

Initial implementation team. No easy answer. Negotiate. Make a list of the people who will be involved in implementing the initial product offering, factoring in contributions in the past and the future. Weight future performance higher. Everyone needs to understand that shares will be diluted over time but if you are going for a billion dollar valuation then one percent gets $10M. That might not be a bad deal. Think through what the future value might be worth and discount that back to a net present value. Learn more at the video below. 

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Compete for $$

Venture Capitalists see the best deals. You are not only competing against other good ideas but also successful experienced management teams. If you have a great idea and an experienced CEO, go for it. Otherwise build your team, attract the best people and build as much value as you can. Reduce risk for investors and prove that you can manage the business before approaching investors.

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Where to Find Investors

Venture capital and angel money is out there! Search within your geographic area on Google. There are also some directory listings such as the National Venture Capital Association. Locally the business journals might also have some listings. 

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What An Investor Hears

It’s easy for a seasoned investor to determine if he’s talking to a seasoned track record CEO or a first time CEO who is learning on the job. Examples include: “we have no competition”, “we only need 1% of the market”, “our forecast is conservative”, and more.

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Build Your Team

Unless you are self funding the business or have friends and family giving you a “loan”, you might have to build your business team without money. So you’ll probably want to use stock options and give up some ownership in your company. Maybe it’s just begins with evenings and weekends when work is getting done. Start with worker bees at the lower levels. You don’t need a bunch of Vice Presidents or Chief Executive Officers. You need great marketing, sales, and implementation people. Create a prototype. Even if its in your garage, get your initial product off the ground. Get some customers first. Once you prove you can sell it and get some customers it’s much easier to prove the concept for investors.

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