Ideal Size of a Due Diligence Team

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

Due diligence works best when it’s a shared endeavor.

It can take a substantial amount of time to diligence a startup.

The ideal size of a due diligence team is six people.

Here are the key roles and responsibilities of the team:

The lead.

Takes responsibility for the overall diligence process and typically recruits the others on the diligence team.

Sales, marketing, and competition.

Investigate the sales of the startup, as well as the marketing strategy and the current competitors.

Financials.

Reviews the financial pro forma, income statement, and balance sheet to understand the financial health of the business.

Product and technology.

Reviews the status of the product and the technology underlying it.

Team.

Reviews the skills of the team and the commitment of each one to see if it meets the needs of the business objectives.

Terms sheet.

Builds and negotiates the terms sheet, including the valuation.

Consider joining an angel network to find others to help with due diligence.

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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Good Design Techniques for the Pitch Deck

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

The pitch deck is the primary tool in fundraising.

It’s important to develop a pitch deck that’s clear and engaging.

Here are some key techniques to improve the design of your pitch deck:

Use graphs and charts to show numbers and data.

Increase the impact of the data through charts with bold lines and colors that stand out.

Use colors and contrast to highlight key points.

The colors should be consistent with the color theme of the deck, which should complement the startup's logo.

Choose a font that’s clear and legible.

Avoid big blocks of text and break paragraphs down into bullet points.

Align the style of the pitch deck with the startup and its mission.

Use glyphs and other design elements to communicate the message.

Add background images to create additional effects.

Show how the product works using a 3 to 4-step sequence.

Create a flow in the deck to tell the startup story in a seamless fashion.

Consider these steps in adding good design to your pitch deck.

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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In this episode of Investor Connect, host Hall Martin engages with Ron Ondechek Jr., a seasoned investment executive and the founding managing director of South Highland Ventures LLC.

With over 15 years of experience and a track record of leading more than 100 transactions totaling over 1 billion dollars, Ron shares insights on South Highland Ventures' investment mandate, deal sourcing, and diligence processes. He discusses the firm's strategic partnerships, including collaborations with family offices like Nova Stone Capital Advisors, to secure proprietary deal flows in the low mid-market acquisition fund sector. Ron emphasizes the importance of aligning motivations, communication, and the ability of entrepreneurs to navigate markets and work effectively as a team to ensure successful investments and growth. Drawing from his extensive experience,

Ron also highlights key factors that contribute to consistent value creation and pitfalls that destroy value in venture capital and private equity spaces. The conversation delves into specific strategies for working with under-recognized markets and mid-market companies, the importance of operational improvements, and the structure of search fund acquisitions. Ron also touches on the balance necessary in structuring deals, ensuring fair compensation and alignment of interests among all parties involved. For more insights and to connect with Ron, you can reach him via email or phone as provided in the show notes.

Visit South Highland Ventures LLC at shvllc.com/

Reach out to at www.linkedin.com/in/rondechek/

_______________________________________________________

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

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How To Invest in Vertical SaaS

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

Vertical SaaS is a recurring revenue business that focuses on a specific application or a narrow vertical sector.

By narrowing the scope of the target application, the startup can focus its efforts more effectively on solving the problem.

Here are some key points to consider in investing in a vertical SaaS play:

While the target application may be narrow, make sure the market is big enough to support a venture business.

A vertical SaaS business starts with a specific application to win a place in a customer’s business.

Once inside, the vertical SaaS seeks to take on additional applications.

Later, the vertical SaaS business can extend to other businesses connected to the customer.

The key to a vertical SaaS play is to have a control point in the business, such as the core customer data, or an efficient platform for managing applications, or a technology such as Artificial Intelligence.

Once established, the control point opens the door to other areas in the customers’ business.

Investors should look for the control point to see how the vertical SaaS play will grow.

Vertical SaaS businesses require less capital to launch and scale.

This reduces the amount of funding the startup needs to raise.

Consider these steps in investing in a Vertical SaaS business.

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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Advisor Shares

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

Startup founders can find additional support through advisors.

Advisors are typically experienced operators who previously ran a startup and now provide coaching and consulting services.

The startup brings in an advisor to coach on areas that are unfamiliar to the founder.

They often have industry connections, sales experience, or funding contacts.

The advisor should have enough time and experience to provide value to the company.

Advisors are compensated with advisor shares.

They earn them over time through vesting with their consulting work rather than their investment dollars.

Advisors typically aren’t in a position to be an employee through lack of time on their part or lack of resources on the startup's part.

Compensating with shares incentivizes the advisor to do their best, as they’ll receive their payout when the company exits.

Equity shares paid to the advisor are typically a quarter to half of one percent of the outstanding shares.

These shares vest over a one to two-year period, typically without a cliff.

This means the shares start vesting immediately.

It’s best to sign one-year agreements and no longer, as the startup will grow and its needs will change.

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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Impact of VC on the Entrepreneur Ecosystem

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

Venture capital plays a key role in entrepreneur ecosystems.

The VC sits at the nexus of startups, innovation, and entrepreneurship.

While not all startups receive VC funding, most startups seek investment from the VC.

Here is how the VC impacts the entrepreneurial ecosystem:

Providing funding for startups with venture-level potential.

Applying business skills to early-stage startups that may have inexperienced founders.

Attracting capital to the ecosystem.

This means drawing other investors into the ecosystem to provide funding.

Networking the key players in the community together.

VCs foster needed interactions between startups, providers, and investors.

Creating new jobs for the ecosystem.

Funding creates new jobs that propel the startup forward and grow the ecosystem.

Fostering entrepreneurship and innovation.

The VC catalyzes the development of new products and business models.

Venture capitalists help spur the growth of entrepreneurship.

Consider attracting key venture capitalists to your entrepreneur ecosystem.

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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How To Write Concise Investor Updates

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

Founders should keep their investors up to date on the business.

Investor updates on a regular basis are important.

Here are some key elements to include in your investor update:

Remind the investor what you do in one sentence.

Investors often have dozens of startups ongoing, so it’s helpful to remind them.

Start with the current month’s focus for the team.

Talk about wins as well as losses.

A few bullet points on each should suffice.

Next, show the metrics for key areas such as cash, revenue, and product development.

Discuss the team by showing who is coming and who is going.

Indicate where you need help at this moment.

Give a shout-out to those investors who helped you in the past month.

This will encourage other investors to contribute.

Summarize each topic into one sentence.

This gives the investor an overview in a short amount of time.

The investor update should show them how they can help.

Finally, always be open and honest with the investors.

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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The Challenge With Solo-Founder Startups

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

Many investors avoid investing in startups with a solo founder.

Here are some reasons why:

The company is at risk in case something happens to the founder.

There’s no one there to pick up the business.

The lack of additional founders often means the company has limited growth potential.

It takes multiple skills and people to grow a business.

It takes longer for the startup to accomplish the work because there is only one founder.

The solo founder startup has fewer family and friends for funding.

Early-stage funding is built on the founders' network.

The fundraising takes longer as there’s only one founder to hold the meetings.

Multiple founders can cover more ground in following up with investors.

The startup has limited resiliency.

With more founders comes a stronger base to lead the company.

For startups with a solo founder, consider building a more robust team around the founder to avoid these issues.

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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