Acclaimed Silicon Valley venture capitalist Lo Toney took part in a one-on-one session about how tech startups can secure funding at Black Enterprise’s TechConneXt Tech Summit. The session, moderated by Black Enterprise Associate Tech Editor, Sequoia Blodgett, was a windfall of great advice from Toney for both early and later stage funding. Here are the important takeaways from Toney in what he looks for before giving a funding check to a startup:
– When a company is first getting started that’s a good time to look to an angel or individual investors.
– As a company goes further down the road, it’s a good time to talk to institutional investors (usually venture capitalists).
– Most institutional investors want to see some traction; they want to see you’ve identified your product market fit.
– As an entrepreneur raising money, know the right person to go after [for funding].
– I want to see […] what the problem is that [the entrepreneur] is going to solve.
– I want to understand the company’s solution.
– I want to understand why that solution is better than the other available solutions on the market.
– What makes the entrepreneur’s solution better or different?
– I want to see a “persona”; a description of the person who is going to buy the service (picture of the person, a name, where they live, their occupation, income, if they have kids, how many kids they have, …etc.) I want to see a complete picture so I can understand their customer.
– I want to see how big is the market itself. Is this a big market? Is this a market that even makes sense to raise venture capital?
– I also want to understand revenue models. How is the company going to make money? How much does it cost to acquire customers?
– How much does it cost to be able to produce that item?
– If it’s a consumer company, once they get to me, I want to see millions of users.
– If it’s a marketplace, I want to see they have transactions happening.
– For enterprise services, I want to know, do you actually have customers paying you?
– I like to see if it’s a technical product…at least one of the founders with a technical background
– [A startup] needs a leader who thinks like a product manager.