The New Entrepreneur’s Guide to Startup Funding
We want all entrepreneurs to understand how to work with us to get the best deal possible, as painlessly and quickly as possible.
As with any VC, the evaluation of a business and the required due diligence materials vary with the round and size of investment. This document covers how we work with “Angel” and “Seed” rounds.
What We Look For
We invest in two types of companies:
- Those who provide enabling technologies and services without which, the blockchain ecosystem will not thrive
- Those with a blockchain at the core of their DNA, and the use of the blockchain provides meaningful value to approaches without blockchain
A company can be in both categories, e.g., with identity and wallets. However, since focus is important to all stages of corporate growth, a tight focus within a single category is better than a loose focus on both.
While we understand that many of our investments may launch their own app or market token, an investment needs to depend on blockchain’s immutability, distribution, and resiliency. For us, the use of a token is not qualifying on its own.
The Three Angel Fundamentals
For an Angel round investment, we don’t need to see a formal corporation or even a complete team. We can help you with both challenges. We do want to know that you will be able to make significant progress with an initial investment.
What we’ll want to see are three fundamentals for every business:
- A great idea
- A team competent to begin executing your idea
- A few paragraphs about why your idea provides value to your chosen market segment
The Seven Seed Fundamentals
For a seed round, you should have the Seven Seed Fundamentals, which are the three Angel fundamentals listed above, plus these four:
- Validated Value Proposition
- A clear value proposition for a specific set of customers
- Something – data, a demo, a deal, or a competitor you can beat – that validates the financial or social value proposition
- Initial Market Research
- A description of the total market
- An understanding of what market segments are addressable by your business
- A clear path from the initial validation to the broader markets
- Names of key competitors and your positioning relative to them
- Financial and Equity Plan
- An outline of likely customer acquisition costs
- A simple financial plan that shows the required outlays on development, marketing (if any), and expansion of the management team
- Current and planned equity ownership of management team and seed backers
- Management Team
- An overview of key staff with a history of succeeding at current or related roles
- An understanding of gaps in the management team and a plan for how to address them
- At least one external advisor with experience that demonstrates they are competent to help guide the management team
How Our Funding Process Works
We use a simple, three-step process:
- Work with a partner at Pithia to hone your pitch
- Present to our full team
- Respond to due diligence and get your check!
For new entrepreneurs, the longest step is typically honing your pitch. We hope the above guidelines make this as easy as possible. While some deals can take longer, we try to complete the entire process in less than 6 weeks.
Our team’s experience makes you smarter! Your upside can be limited by who your money came from and whether they’re going to continue believing in your technology and team. There are some truly amazing VC firms, but there are many others who didn’t make their money the hard way. Because they don’t know what it takes, they can’t help you succeed when you need help the most.
You need real-world experience on your side. A team comprised of those who have lived the life of an early technology entrepreneur. That’s us. We’ve been there, and we’ll be there with and for you.
Our Team’s Technology Wins
- Early high-speed and interactive Internet applications
- Discover Card – Design of Merchant Systems and NOVUS network
- Unified Model Language (UML)
- Industry recognized loyalty systems for Safeway, The New York Times, Discover
- Re-engineered Dun & Bradstreet core systems
Our Team’s Cryptocurrency Wins
- We started in the late 1990s, back with Motorola’s experiments trying to combine cryptocurrency and mobile phones
- Founding members of RChain
Our Team’s Startups Win
- Founded and sold the core enabler of Sony’s PlayStation Network
- Previously backed or launched 20+ startups
- Public and private board experience