Raising Startup Funding: Shattering Myths

When it comes to startup funding, many folks are either intimidated by the process or are captivated by the pitches they watch on Shark Tank. Don’t get me wrong, Shark Tank is good TV – it is fun to watch. And yes, there are indeed many pitch contests entrepreneurs can participate in. That said, most funding secured by entrepreneurs is not won by pitching.

Most funding secured by entrepreneurs is earned through detailed preparation and thoughtful conversations. Successful detailed preparation is accomplished by working the processes entrepreneurs learn in our Prepare to Launch workshop series and will be learned in our soon-to-be-released Startup Skillup self-paced web training program. This topic is for another day.

As for thoughtful conversations, sometimes these conversations are with bankers and lead to business loans. Debt financing is an interesting topic for another day as well.

Angel Investing

Today we are talking about Angel investing – the sale of private placement securities. The sale of stock in companies before they “go public” and receive a listing on a public exchange is fairly common today. Our Iowa Lakes Corridor region is home to many active Angel investors that are seeking quality investment opportunities. Over the past 10 years, Iowa Lakes Corridor has provided business coaching assistance to entrepreneurs that launched 104 startups; these startups earned the trust of investors who funded $14,900,000 in startup capital into these businesses.

The process to raise funds is simple:

• Entrepreneur prepares for the raise; this preparation can be aided via participation in...
• Prepare to Launch
• Startup Skillup
• The University of Iowa's Venture School
• Iowa State University's Startup Academy
• Understand this requires a great deal of hard work!
• Entrepreneur meets with folks who are interested in learning more
• Friends and family open to Angel investing
• Angel investors introduced to the entrepreneur by someone they know; the Iowa Lakes Corridor makes these introductions every week
• Entrepreneur listens actively and thoughtfully as prospective investor shares their investment goals and preferences
• Entrepreneur shares their investment opportunity - NO persuasion is involved
• Either the opportunity is a good fit or it is not; if it is a good fit
• In best-fit situations, the investor brings experience as mentor in addition to money
• A Term Sheet is drafted that outlines the terms of the investment
• Due diligence (fancy word for fact-checking and information validation) is completed
• A Subscription Agreement is drafted that reflects the terms of the Term Sheet
• Various filings with state and/or federal regulatory agencies may be involved
• Money and documents change hands

If you are a new or existing business owner interested in seeking Angel capital to fund your business, reach out to our team at Iowa Lakes Corridor for assistance in planning your path forward. Our business coaching services are FREE to entrepreneurs and business owners located in Buena Vista, Clay, Dickinson, and Emmet counties. Take your first step and call our office at 712-264-3474 today.