Technical Due Diligence

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Investing in startups requires due diligence.

In addition to financial diligence, an investor should consider technical due diligence.

Here are the key areas to review for technical due diligence:

Scientific risk.

This is the risk in deep tech startups that comes from basic science.

Look for startups that have de-risked science.

Technical risk.

This is the risk that comes from designing the product.

Look for a clear plan on what to build.

Check the skills of the team to see that they can build it.

Manufacturing risk.

This is the risk that comes from building the product.

Look for a plan for sourcing materials and components.

Check the requirements for producing the product.

Ecosystem risk.

This is the risk that comes from the product needing a specific environment in which to succeed.

Check the requirements for the product to operate in.

IP risk.

This is the risk that comes from a competitor's ability to copy the product.

Look for patent coverage that provides a strong defense.

Check these elements when running a technical due diligence on a startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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Why VC Funds Should Build a Community

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

A community is a network of contacts who come together for a common cause.

Venture capital funds should build a community.

Here are the reasons why:

A community will generate more and better deal flow.

Those in the network will know of the venture capital fund and will send deal flow automatically.

Having a community positions the fund as an anchor for the network.

This generates credibility for the fund.

A community provides additional support mechanisms such as mentors.

Those in the community who can provide mentorship around sales, marketing, and finance are more easily engaged.

A community provides services.

Those in the community who can provide financial forecasting, accounting, and marketing services are more readily available.

Word of mouth.

In a community, news propagates more quickly.

Attract investors.

A community will attract more investors as they look for networks to join so they can learn and find support.

This includes both Limited Partners for the VC fund and individual investors to provide follow-on funding to the startups.

Consider building a community for your VC fund.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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How To Validate the Startup's Potential

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Investors considering funding a startup should test the startup's potential.

Here are some key techniques for evaluating the startup.

Try to sell the startup's solution to a potential customer.

Gauge their reaction to the product and its price.

If accepted, then this validates the value proposition of the company.

Assess the challenge in selling the product.

Promote the product or service to one's social media network.

Gauge the response to see how many would and would not buy the product.

Check the company's need for funding.

Is this a critical step, or is it a nice-to-have to help accelerate the growth?

If they must have funding, check with other investors about their interest in investing.

If no one would invest, then fundraising will become a stumbling block.

Check with other companies in the sector to see how the company compares on traction, team, and position.

If the company compares favorably with other companies in the same industry, then it may be a worthwhile investment.

Consider these steps in validating a startup's potential to succeed.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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For Investors check out: https://tencapital.group/investor-landing/
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Regulatory Around the Fund Manager

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

There are regulations around the fund manager.

A fund manager is considered an investment advisor, which is defined as anyone who provides advice to others regarding securities in exchange for compensation.

VC fund managers must register with the SEC unless they qualify as an exempt reporting advisor.

They are not required to report if they do meet certain asset requirements.

Assets under management less than $25M register with the state rather than the SEC.

Assets under management from $25M to $110M may register with the state or the SEC.

Assets under management greater than $110M must register with the SEC.

Fund managers can be classified as an exempt reporting advisor (ERA) if they solely advise private funds and the total assets under management are less than $150M.

The Venture Capital advisor exemption is for fund managers who solely advise venture capital funds.

They can raise an unlimited amount of capital.

Consider these regulatory rules for your fund manager.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
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On this episode of Investor Connect, Hall welcomes Al McGregor, COO of Perfect Energy, Inc. & AgroEnergy Farms, Co. Through Perfect Energy in Colorado with partners in Texas, Al connects solar and wind generation to practical commercial and agricultural use, arguing renewables and fossil fuels must be balanced to preserve fossil fuels for hard-to-electrify needs like big trucks and airplanes.

Through Agro Energy Farms, he focuses on helping small farms by turning underused land into productive assets with on-farm solar and small wind, controlled-environment greenhouses, and hydroponic systems that can save up to 80–90% of water while producing 10–15x more per area, even in extreme cold and high altitude; he also discusses bees for pollination and more natural pest control. Al shares that financing is a key barrier, notes solar can cut electricity costs 20–30%, points listeners to "growing spaces" and other hydroponics resources online.

Visit Perfect Energy, Inc. & AgroEnergy Farms, Co at www.perfectenergy.us

Reach out to at www.linkedin.com/in/almcgregor and on almc@perfectenergy.us

________________________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
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Regulatory Around the Fundraising Process

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

There are regulations around startup funding.

These regulations provide an exemption from the securities laws.

Here's a list of key regulatory terms to know:

Rule 506b

Founders or issuers of a stock can raise an unlimited amount of capital.

They can raise from an unlimited number of accredited investors.

They are allowed up to 35 non-accredited investors such as family and friends.

They must not use general solicitation.

Rule 506c

Founders can raise from general solicitation.

They can raise an unlimited amount of capital.

They can raise only from accredited investors

They must verify that every investor is accredited.

FormD

Founders raising funding under 506b or 506c must file a Form D with the SEC in less than 15 days after the first close.

Blue Sky Filings

Funds raising funding under Regulation D will most likely have to file with states under the Blue Sky law.

These are state requirements for filing a notice.

Consider these regulations for your fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
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Regulatory for Private Funds

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Regulatory for private funds includes venture capital funds.

VC funds can find an exemption from regulatory requirements by one of the following:

Having fewer than 100 owners in the fund.

This excludes entities created for the purpose of investing in the fund, such as SPVs or Special Purpose Vehicles.

This is known as Section 3(c)(1).

A qualifying venture capital fund can have up to 250 beneficial owners if the fund is less than $10M.

It must pursue a venture capital investment strategy.

It cannot be highly leveraged with debt.

It cannot have redemption rights.

Section 3(c)(7) concerns a fund that requires qualified investors.

A fund cannot have more than 1,999 investors, so it's not a reporting company.

Only qualified investors, not accredited investors, can invest.

Qualified investors have $5M invested or they are an entity with $25M of investments.

Review the regulatory requirements around a venture capital fund before launching one.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
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Automating Your Dealflow Process

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Startup investors see a tremendous amount of deal flow.

Finding quality deals is the challenge.

Here are some key steps to automate the dealflow process:

Set up tools to search for founders with a specific background.

For example, one can set a search to find founders from Y Combinator or Techstars.

Search for founder configurations.

One can search for startups with two co-founders, which in some analyses, have a higher success rate.

Search for early-stage startups in the MVP phase.

Most venture capitalists don't look to invest at the very earliest stage.

Connect with angel groups deaflow by connecting to their pipeline.

Set growth criteria and tune the search for those with a higher growth rate.

Set the search for specific sectors such as life sciences, tech, or consumer product goods.

By determining the key criteria, one can automate the search process to find deals that fit those criteria.

Consider what criteria you are looking for and set up automation tools for it.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

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