[LRUG] Funding a start-up?

Matthieu Stone matthieu.stone at gmail.com
Thu Jan 11 11:05:21 PST 2007

Hi Ellie

I've raised VC funding before - a couple of time both here in the UK & in
the US.

Roughly speaking, if you are going after dot com style VC then these are the

Seed capital - upto £75,000
You savings, family & friends - i.e: Daddy, Grandma, or rich uncle Bill.

Angel funding - upto £300,000 & perhaps £500,000
Wealth individuals - google search "angel funding network" in your area &
also leverage any contacts of accountants, lawyers, business owners, or rich
people that you know.

VC funding - upto £X million
Organisations that invest in businesses looking for a return. This could
mean a VC fund, or an existing business that wants to invest in a market.

If your serious & are going to approach an Angel network, VC's, or other
businesses you should prepare what's known as an Information Memorandum
[known as an IM]

In this you should outline

1. Your business name & how much you are seeking to raise.

2. The business opportunity - this is not the technology or cool rails app
that you've build. But the consumer need/want & the size of the market, &
how you've reached that conclusion. Also talk about potential competitors
here.. & show why your solution meets the market needs & they don't.

3. Describe your solution to the problem, how your solution will meet that
need/want, and how people will pay you for your product or service.

4. Describe your team & how they are qualified to build, operate, & sell the

5. Outline your financials.
 - How you will use the investment capital
 - A rough cash flow [showing when money is going out & when money will be
coming in. No one expects this to be exact.
- How the investor will receive a return on their money [ie: profits, trade
sale, IPO].

Just going through the exercise of the above will give a much better
understanding of your business proposal, & you won't look like a "rabbit in
headlights" when someone asks you a question - such as "when will you be
cash flow positive", or "what ROI can I expect on my investment" - "I don't
know" is not answer & you will be politely shown the door very quickly.

Some people won't want to know you, others will like you for a bit, then
decide that its great opportunity but its not right for them. Its a full
time job looking for the right investor, looking to invest the right amount
of funds, into your idea and team.

You can engage someone to help you raise the capital, but it will cost you
either a fixed fee, % of the capital, or some equity.

Once your prepared,  get on the phone & work the contacts like crazy.

Having said all that.. ruby & rails allow you to produce a fairly
sophisticated app very quickly & creative internet marketing is really cheap
- it just takes time if you've got the skills & the motivation.

I don't know what your doing, but if your aiming at the music or
entertainment space, I might be able to point you to some useful people.

Good Luck.

- matt.

On 11/01/07, benjohn at fysh.org <benjohn at fysh.org> wrote:
> > I've a couple of killer Ruby projects in need of some start-up
> > funding and I don't know where to start looking so if anyone here's
> > been down this route and can offer any advice I'd love to hear from
> > you :)
> My experience is that people fund you when:
>   1) You are obviously going to succeed anyway because you already are,
> but they can help you get there a bit quicker, or get up to "the next
> level", or
>   2) You're in the right place at the right time and meet the right
> person with the right connection and right level of drink lubrication,
> etc.
> Basically, just do it, as quickly as possible, and get it out there. If
> it's good, it might do well. If you're anything like me, what you need
> more than cash is someone else who also thinks the idea is good, and so
> will keep your enthusiasm topped up.
> Regards,
>   Benjohn
> _______________________________________________
> chat mailing list
> chat at lrug.org
> http://lists.lrug.org/listinfo.cgi/chat-lrug.org
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