Startup Fundraising 101: Getting Ready To Raise A Round

EGFS COO Sirk Roh and Shayne Veramallay of DLA Piper covered fundraising basics from strategy to tactics to pitching, in our recent Inside Startup Fundraising 101: Are You Ready For An Investment Round? webinar. Be sure to check out the deck on SlideShare for more details. For now, here’s a quick rundown of the highlights: First things first. Why raise funds? This seems like an obvious question but you need to be clear why you’re looking to raise in order to come up with an effective game plan and determine your best funding option. The bottom line is that you should raise to accelerate growth and in order to optimize market timing. You don’t raise as a way to test your idea. It’s about explosive growth and getting quickly to an exit. And when it comes to timing, wait until you’ve come up with a working prototype and developed your …
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How Small Business Owners Can Avoid Customer Delinquencies And Get Paid On Time

This guest post was contributed by Chinwe Onyeagoro, CEO and Co-Founder of FundWell. If you have ever found yourself waiting to collect from customers who consistently do not pay you when their invoices are due, then it may be time to try something new. Waiting for these delinquent customers to spontaneously develop better habits and pay you on time is not realistic. You should definitely reevaluate whether it makes sense to continue doing business with customers who are 90 days or more past due. Don’t be afraid to turn down a client. I know as an entrepreneur, new and repeat sales are hard to come by, so the thought of voluntarily dropping a customer may seem like a luxury that you cannot afford. For example, if you find yourself waiting three months to receive payment on a $5,000 invoice, that capital is not available to put back into your business. …
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Lean Cash Flow: Your Ticket to Better Startup Cash Management

If you missed our recent webinar on lean cash flow or just want a refresher, keep reading for a recap. You can also access the deck on SlideShare: Lean Cash Flow: Simple Steps to Better Startup Cash Management.   What is Lean Cash Flow?   What is “lean cash flow?” We think of the concept of lean cash flow as an offshoot of Eric Ries’ Lean Startup principles. It’s an unfortunate fact that most startups fail. A lot of the time, this is due to a misunderstanding of what customers need. Lean startup principles try to maximize startups’ chances of success by positing a step-by-step process involving a feedback loop of testing assumptions, learning from early users, and pivoting as often as necessary. At the end of the day though, most startups that fail run out of cash. Managing for lean cash flow means understanding where you’re spending money and …
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A Roadmap to Working With Startup Advisory Boards

This guest post was contributed by Adam Quinton, CEO and Founder of Lucas Point Ventures. Don’t confuse an advisory board with a board of directors (BoD). A BoD is a legal requirement that comes with fiduciary responsibility to a company’s owners. The BoD has specific responsibilities, not least of which include selecting and (if it so decides) firing the CEO. In contrast a startup advisory board is pretty much whatever you want it to be. Most people have advisors of some sort -– informal go-to people initially. But there comes a point when you want to widen the net by bringing in outsiders to play a role in supporting your business. When you reach that point, it pays to think through your advisory board’s role: how to structure it, how it will work and if/how the members will get paid. Here are 12 pointers to guide you. The Big Picture …
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What’s In A Term Sheet?

You came, you pitched, you conquered. Congratulations! But do you know what to do once you’re asked to sign a term sheet? Let me say that first, you should have already retained a good startup lawyer. Most investors will expect this. And a good lawyer can be a real advocate for you: by keeping negotiations on track, explaining terms, and making sure any deal you sign doesn’t have problematic (and costly) clauses that could leave you at risk. That said, you should already have a sense of what to expect going into discussions. There’s less chance of you being blindsided. You’ll also have the opportunity to decide ahead of time (and figure out your negotiating strategy on) which points you care about most. It could be the size of the option pool, or maybe the provisions around reverse vesting. I discussed Change of Control, Reverse Vesting, and Liquidation Preferences in …
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How Accepting Bitcoin Can Help Grow Your Small Business

Guest post contributed by Michael Dunworth, Cofounder and CEO of SNAPCARD. You’ve probably heard about Bitcoin in some context or other during the past few years, and you might be curious about how it could affect your small business. If you’ve done any research on Bitcoin, you’ve probably found that much of the information that currently exists can be hard for new users to understand. The truth is that Bitcoin, despite its somewhat esoteric nature, is a revolutionary technology that has the potential to reinvent the way existing financial systems operate. For that reason, many longstanding financial institutions have their eyes on Bitcoin, whether they see it as a threat or an opportunity. As a small business owner, you might not immediately recognize the benefits of accepting Bitcoin, but doing so could open up new opportunities to grow your business. Bitcoin has several inherent advantages over the credit card systems …
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The Key Steps to a Smooth Monthly Close For Your Small Business

Monthly close is the process of recording and reconciling all transactions that occurred during the month, then closing the associated temporary accounts: i.e., “closing the books.” The goal is both to deliver a snapshot of your business’ financial position and provide a fresh start to the new period. Your closing figures are the key building blocks for creating accurate financial statements. Not only is a reliable and efficient process important for tracking performance, it’s also a vital part of your financial management. How you handle monthly close is a powerful statement on the strength of your team, your financial controls, and the health of your business. Clearly this is an important practice to get right! Below, I’ll break down the steps involved and provide some pointers on how to set up your process to guarantee the best results. First start with a good system. I’m not just talking about your …
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When Should You Raise Startup Capital?

Originally published in GeekWire. There’s more than one school of thought about startup financing. After all, there are some very successful companies that have managed just fine without VC money, often on purpose. But as one entrepreneur we polled puts it below, if you really want to see your startup grow and thrive, then the question might be quite simple: “Do you want to be king, or do you want to be rich?” We asked 10 founders, members of the Young Entrepreneur Council (YEC), to weigh in on the bootstrapping-versus-capital debate—and offer some insight about the nuances of raising capital early versus going it alone. Perhaps surprisingly, many advocated for bootstrapping, at least for a little while. Here’s what they had to say about it: 1. Bootstrap First, Fund for the Stage, Then Fund to Scale I’m a big fan of bootstrapping when starting a business. Typically your first round …
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How to Choose the Right Coworking Space

With the movement towards shared office space spreading from freelancers, creatives, and remote workers to early stage startups, the benefits are clear. Not only does sharing space offer cost savings and flexibility versus signing a traditional office lease, it also avoids the hassle and expense of planning a move, outfitting an office, and handling all the time-consuming administrative details. So how do you choose a space that’s right for your business? Consider your stage — Are you literally just starting up or have you been working out of ad-hoc spaces for awhile and are now looking to gather your team in one place? If it’s been just you and the dog at this point, moving into a shared space will bring a welcome sense of connection, enhanced professionalism, and needed office infrastructure. And if it’s you and a couple of others, it can allow you to communicate more easily and …
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Accounting Basics: The Key to Journal Entries Is Asking When

This excerpt was reprinted with permission from Madeline Bailey’s book, “Radically Simple Accounting:A Way Out of the Dark And Into the Profit.” There is only one business bookkeeping system—the double-entry system. Luca Pacioli published the first textbook of double-entry bookkeeping in 1494. Believe it or not, there has been virtually no change since then. His system of debits and credits is so confusing that no one can figure it out, let alone improve upon it, so it remains intact (Just kidding, Pacioli.). The real reason that we’re still using double-entry bookkeeping is because it works, produces balanced books, and has become an ingrained standard. So what exactly is double-entry bookkeeping? And why do you need to use it? Double-entry bookkeeping is what is taught in accounting school. Fledgling accountants learn to enter a bookkeeping transaction using a journal entry. A journal entry has two or more line items (entries) that …
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