The 10 essentials of attracting an
By CHRISTOPHER J. GULOTTA
and ALAN M. TARTER
Alley in New York City and the Info River Valley (a growing cluster
of emerging high-tech information technology companies in the Hudson
Valley region) are the venues of downstate New York's fast-growing
new media industry. The combination of emerging computing,
telecommunications and information technologies have provided
businesses and consumers with an exponentially broad choice of
products and services employing these technologies.
entrepreneurs, however, securing financing for their new media
startup is often one of their threshold obstacles. Attracting the
first significant investor(s) ("angels") to fund the
initial phase of development is typically the most challenging
aspect of the financing process. Below are 10 key components in
attracting such an investor:
five-minute business plan: You
must be able to present your entire business plan in no more than
five minutes. While an interactive slide show may be helpful, it
must be simple and visually useful. The plan must describe:
The team: The
diversity and depth of the team (including employees, strategic
partners, independent contractors, advisory board, officers,
directors and technicians), as well as their track record, must all
demonstrate that you have the infrastructure to carry out your
mission. Angels are notorious for betting on the jockey, not just
mass: Be able to
articulate and back up precisely what constitutes the critical mass
point in terms of time to market, capital, strategic alliances,
generating quality content and market share.
the key risk factors, not the least of which is time to market.
Angels want to know that you will beat your competitors to market,
not only in terms of having your new media product up and running,
but also that your advertising and strategic alliances are in place
to fully promote the site.
do you value the company for purposes of angel financing? You should
have different valuations for each round of financing, demonstrating
to angels that their valuation is, in recognition of the higher
degree of risk at this point, more favorable.
base: Angels want
to see the broadest possible business and/or consumer base.
consumer base: You
must be able to demonstrate that the subject business and/or
consumer base has been, and is likely to continue to be, one of
contest: You must
be able to establish that the company has the ability to attract key
employees, strategic partners, board members, etc.
proceeds: You must
flesh out precisely what the capital contributed by the angel will
be used for and convince such angel that the uses are based upon
assumptions that are logically conceived, prudent and likely to meet
the goals you have set forth.