What Investors are Looking for in a Startup

Written by Riley on April 4, 2014

 

Advice from 12 angel and venture capital investors


 
The UC KIZ Funder's Fair yesterday at the Quorum in Philly was a great chance to see what investor groups are currently looking to fund.  Twelve representatives from local angel and venture capital companies did presentations on what they are looking to invest in.  There was a lot of good advice for startups that are looking to go this route.  Check out the details below to see what each one presented.

 

Angel Venture Fair


Fair is taking place Tuesday, April 29th: www.angelventurefair.com

How AVF Supports Entrepreneurs :
  • Any entrepreneur that applies to the AVF gets listed on our website with a link to their site.
  • They get invited to every event (except the AVF, which is just for investors) at no additional cost.
  • We feature 10 companies every month in our newsletter from the most recent batch of applicants.
  • Make introductions to investors and professional service providers.

#1 piece of advice for companies applying to Angel Venture Fair:
  • Surround yourself with people smarter than you, with different skills and that aren’t afraid to challenge you.



 

Ben Franklin Technology Partners


A Pennsylvania technology-based economic development program.

Funding ranges:
  • Innovation Fund: Up to $100K for prototype refinement and/or very early commercialization efforts
  • Emerging Fund: Up to $750K over multiple funding rounds for product or process development, and/or commercialization efforts
  • Technology Commercialization Fund: $50K for proof-of-concept product or process development

What BFTP looks for in potential investments:
 IMPACT & RETURN
Enterprises who:
  • Develop and/or commercialize advanced technologies
  • Demonstrate a defined and sustainable path to growth
  • Can provide measurable economic benefit to the region, to Pennsylvania.

#1 piece of advice for companies:
  • Be prepared


 

BFTP Life Sciences Connect


What is PA Life Sciences Connect?
  • A new public/private partnership designed to ensure Pennsylvania’s prominence in the life sciences
  • Represents the first comprehensive, regional approach to address the significant numbers of “displaced” life science employee population in southeastern PA (5 county area)
  • Initial funding of $750,000 from PA DCED and administered by the Ben Franklin Technology Partners - SEP

The #1 piece of advice for companies interested in funding from Life Sciences Connect:
  • Funding from the PA Life Sciences Connect program will be tied directly to job creation events that draw from our database of “displaced” life science employees. So whether you are an existing Life Sciences company or are a newly formed business entity whose business is domiciled in southeastern PA (5 county region), direct funds and a number of support services are available to you through this program provided you employee (on a permanent or interim basis) at least 1 person from this displaced talent pool.


 

BioAdvance


Specializes in life science and health IT startups.

What we look for in potential investments:
  • Key decision drivers - can the company reach key value creation milestone(s) with BioAdvance investment to attract further investment, partnership, etc? - and does the ultimate return to investors compensate for the risk investors are taking?
  • We work backwards from the destination to figure out if you can get there from here - every company has a different end point - has management developed the most efficient/effective plan to get there? - and does the company have the right resources (talent, funds) to get there?

Advice for companies interested in funding:
  • Assuming your technology has adequate precedent and solves and unmet need, you need a team that understands how to navigate the financing landscape with different kinds of capital
  • Know your investor before making a pitch - every investor is different


 

Delaware Crossing Investor Group


This is an angel group that usually invests as part of a larger round.  They only work with startups that are within driving distance.

Average award amount:
  • Usually between $100-250K.  We usually participate in larger syndicated investments with other angel groups, early-stage venture capital venture organizations or "super" angels.

What we look for in potential investments:
  • Delaware Crossing invests in companies located within a three hour drive of Philadelphia, PA or Princeton, NJ
  • During the screening process, many factors are considered. Among the factors considered are: strength of the management team, growth prospects, competitive dynamics within the market addressed and the business model
  • For more information, please visit www.delawarecrossing.org

The #1 piece of advice for companies interested in funding:
  • Visit our site and review our investment criteria. Companies applying to Delaware Crossing need not meet all of the investment criteria; however, as optimal investor and entrepreneur fit is crucial in angel investing. Please consider how closely your company matches these requirements before applying.


 

Dorm Room Fund


Student run, and only funds students. Backed by First Round Capital.

Average award amount:
  • We are a student run VS.  Our goal is to provide that first $10-20K of capital to help turn and entrepreneur's dorm room vision into a real world seed stage company

What we look for in potential investments:
  • We like to break general ideas down into product, market and team
  • Explain how you have grown so far and your plan to increase growth in the future
  • Tell us your story

The #1 piece of advice for companies looking for funding:
  • Communicate your unfair advantage - Why you? - Why your solution? - Why now?


 

DreamIt Ventures


An accelerator program for early stage tech and health startups.

Average award amounts:
  • DreamIt invests in companies with which we work in our accelerators (Philly, NYC, Austin, Baltimore and Tel Aviv)
  • Stipends during the accelerator programs: $25K for technology accelerator and $50K for DreamIt Health programs
  • Foloow-on investments in Series Seed, Series A, Series B, ... Range of investments $50K to $500K

What we look for in potential investments:
  • Team, Team, Team!
  • Scrappiness of market testing and validation
  • Indications of execution ability
  • Predisposition to OutThink vs. OutSpend
  • Large market opportunity
  • Entrpreneurs who are unwilling to accept the world as it is today
  • Opportunities where we can add value

Advice for companies interested in funding from DreamIt Ventures:
  • Apply to a DreamIt accelerator program ;-)
  • Leverage intellectual capital before physical capital to validate assumptions through market data and interaction
  • Explicitly define assumptions and metrics, and then constantly measure and analyze


 

Innovation Partnership


A consortium of economic development and business assistance organizations located throughout the Pennsylvania. They specialize in SBIR and STTR grants.

Average award amount:
  • IPart provides free technical reviews to all PA clients applying for SBIR/STTR grants
  • Phase I applicants can be awarded: A $2K MicroGrant to help defray admin costs for proposal prep (to client) or a $3K MicroVoucher for professional grant writing assistance (to provider)
  • Phase II applicants can be awarded from $3-8K to assist with final proposal prep (reimbursable investment if federal award is received)

What IPart looks for in potential investments:
  • PA domiciled and majority operated
  • Small company (less than 500 employees)
  • If entrepreneur/start-up, must have a business plan
  • Business must be technology-oriented or employing technology innovation of process
  • Must work with IPart partner organization to submit pre-proposal for technical review

Advice for SBIR/STTR clients from IPart:
  • Engage with a Partner Organization early to establish a relationship and receive timely assistance and advice
  • Read, Read, Read!
  • Be a good listener - We've been doing this for a while - our advice is meant to help you most effectively grow your ideas and your company!

The #1 piece of advice for companies interested in funding from IPart:
  • Start thinking about your interest in applying for federal grant funding EARLY, and if possible, when writing your business plan, consider when federal funding might play a role in both your capital quest and for the growth of your technology/process/product - Winners start early and plan ahead!


 

Investors' Circle


An early-stage investing network that focuses on companies creating social impact or environmental solutions.

Range of investments:
  • $150-500K per initial investment
  • Examples: Daily Worth, Genomic Expression, Locus Energy, Public Stuff, United by Blue
  • IC Philly syndicates within IC National and with other Philly angel groups

What we look for:
  • Social and/or environmental solutions
  • A qualified and inspiring management team
  • Strong IP protection (if applicable)
  • Achieved some degree of attraction
  • Contracts, revenues strategic partnerships, etc...
  • Plan to scale and ultimately pursue exit strategy
  • Have been referred from other investors and investment groups
  • Have previously raised capital and/or have an open round with capital already committed

The #1 piece of advice for companies interested in funding:
  • Get involved early with Investors' Circle - don't wait until you need money


 

Keiretsu Forum Mid-Atlantic (K4-MA)


Angel group that functions like a fund. They focus on high tech, clean green tech, consumer products and life science.

Average funding amount:
  • Our sweet spot is A & B round investment opportunities in the $250K to $3M range
  • We have done a $6.2M Series B round!
  • We have had one member write an investment check for $1M
  • Our members typically invest $25-50K in 3-8 deals/year
  • We create Single Purpose LLCs for smaller investments

What K4-MA looks for in potential investments:
  • Our "Perfect Inflection Point" is the company that has just or is ready to convert from an R&D to a sales and marketing organization (life sciences deals excepted)
  • We look for a strong, coachable management team that is open to our hands-on, shirt-sleeve, support style.  We are active advisors, board members and opportunity referrers.

Advice for companies interested in funding from Keiretsu Forum Mid-Atlantic:
  • We are womb to tomb investors - from application to liquidity event - and we expect our portfolio companies to be led by professionals who are both invested 110% and passionate about what they are doing.
  • We do not suffer fools lightly.  Be sure you know your stuff before you engage with us.


 

PA Angel Network


The PA Angel Network is made up of 16 different angel groups in the region. 

Member list:
Examples of what they look for in potential investments:
  • Meet their investment criteria - industry, valuation, geography, etc...
  • Great management team
  • The team is coachable
  • Scalable business
  • Differentiators - IP, secret sauce
  • Exit opportunities
  • ROI of 10X

Advice for companies interested in funding:
  • Networking is key - go to events and meet as many people as possible
  • Get a referral - a warm introduction is always better than just submitting a blind plan
  • Find a champion - find that investor who gets what you are doing and will help your efforts
  • Find an early adopter (client) to prove your product/service is viable
  • Research the angel and/or angel group and make sure your company matches their investment criteria
  • Nail down your pitch, presentation and materials - you only get one shot to make a good impression
  • Make sure the amount of funding you are raising is correct to hit the next level of milestones


 

Robin Hood Ventures


Average award amount from Robin Hood Ventures:
  • First round is generally between $250K and $500K
  • Robin Hood invests up to $2M over the life of a company

What Robin Hood Ventures looks for in potential investments
  • Good, agile management team
  • Sustainable and scalable business model
  • Potential for high return (10-20x)
  • Line of business matching members’ expertise
  • Valuation in line with early-stage opportunities
  • Within a one-hour drive from Philadelphia
  • Proprietary technology or other proprietary position

Advice on getting funded by Robin Hood Ventures:
  • Be clear
  • What's the problem you are trying to solve?
  • How are you going to solve it?
  • Why are you the team to solve it?

Please apply using our website: www.robinhoodventures.com

Meet us by attending events that we publish on our website: PSL, Philly Tech Meetups, Angel Venture Fair, etc. or by going to our Office Hours or Coffee and Capital.