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Every day, I get a dozen messages on LinkedIn that say: “Hey Palter — I’m the founder of a great startup building an incredible app and looking for angel investors for our pre-seed round. Want to see our deck?” Sorry kids (and elderkids), but that isn’t going to work.

Without a doubt, pre-seed is the toughest round of fundraising. Finding investors is challenging and your valuation will be low. If there’s any way you can bootstrap through this stage, do so. …


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What’s My Valuation?

The most common question I hear from founders is: “How do I calculate the valuation of my startup?” Ah, if it was only as easy as putting numbers in a spreadsheet like they teach in business school.

The number 1 reason you will or won’t get funded is your valuation — most challenges of your current situation: not enough traction, a skeletal team, too small a market, can be compensated with a lower valuation; conversely, too high a valuation can turn a great business into a bad investment. So what valuation is right?

Theoretical models like discounted cash flow, replacement…


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The first rule of sales is to conclude your presentation with the ask — buy my product, hire my company, give us a chance — it’ll be the best decision you ever make. Every web page has a call to action at the bottom, and usually at the top, too, and in an annoying pop-up: buy our product, sign-up for our newsletter, download your free trial. So why do most pitches end with a wimpy “thank you for your time”? Come on, people. Never forget — your pitch is a sales pitch but instead of selling products, you’re selling equity…


How Does the Investor Make a Return?

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How Does an Investor Made a Return on Investing in Your Startup?

Let’s say I’m a real estate developer and I’m offering you a deal: if you pay me $2 million, I’ll buy a plot of land, build a big house, sell it for $3 million, and split the $1 million profit with you. Sounds like a great opportunity, don’t you think? But you’d have a lot of questions to evaluate the investment before plunking down big bricks of cash: how big will the house be, how long will it take to build, and how much have other houses in the area sold for? Common sense, really. You want to make sure…


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Hockey Stick Revenue Projections

For a pre-revenue or early revenue company, even 1-year revenue projections are pure fantasy. Demanding to see 5-year revenue projections seems perverse. No company in the entire history of the universe has ever come within telescope view their 5-year projections. They’re completely useless, and yet, absolutely necessary.

When someone sends me a pitch deck, I turn straight to the 5-year revenue projections. When we’re in the Q&A session at the end of a pitch to an angel group, it’s not the product slide or the team slide or even the critical traction slide that ends up on the screen but…


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Need Traction!

The best way to overcome investors’ concerns with the team, market and every other challenge in your business is by demonstrating traction. I’ve been through countless pitches where I’ve noticed other angels in the room, bored expressions on their faces, playing with their phones in the middle of a pitch when the CEO put up the traction slide and said, “We did $100K in revenue last month and are growing 30% month over month.” All eyes lit up, phones set down on the tables. Oh, now this is something interesting said the expression on every face.

Entrepreneurs believe that angels…


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They Can Swing a Bat But Can They Get Funding?

Every startup claims to have an all-star founding team. But let’s be brutally honest — if you really had an all-star team of seasoned executives with multiple exits under your belts, you’d (1) be able to fund that million dollar seed round yourselves without needing our little dribs of cash, or (2) you’d be able to call Tim Draper or Peter Thiel or whichever VCs funded your last big IPO and have a check for $10 million in your hands tomorrow. …


Betting on the Jockey, Not the Horse
Betting on the Jockey, Not the Horse

It’s a truism among investors that we bet on the jockey, not the horse. We often say the three most important factors in startup success are the team, the team, and the team. While that’s an exaggeration, there’s no doubt that with early stage investments, investors examine the team through a microscope.

At this stage the product hasn’t advanced much beyond MVP and market traction is minimal. Your product is still an experiment that will inevitably need significant tweaks if not a complete pivot before it takes over the world. …


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Yeah, yeah, I know, you don’t have any competition. Your product is so revolutionary, there’s never been anything like it.

I hear that at least five times a day. Every entrepreneur says they have no competition. But you do. And frankly, the fastest way to lose credibility with investors is to tell us you have no competition. Because while you’re on the stage zooming through your pitch, we’re on our laptops looking up your competition. The first question during Q&A is often, “What about this other company I found that seems to be doing something similar.”

Even if you’re first…


Your Grandma Sara had a secret recipe for out-of-this-world pancakes. When you make them for your family and friends, they always beg you for more, and encourage you to turn those pancakes into a business. Working long and hard with contract food packers, you’ve created a unique heat-and-serve pancake that can be sold at supermarkets, reproducing the same fantastic taste of pancakes fresh off Grandma’s griddle. Now, after years of scrimping, scraping, and small-scale trials, your pancakes have gone nationwide in supermarket chains and they’re selling like, well…hotcakes. Revenues are exploding, investors are calling to congratulate you, General Mills is…

DC Palter

Entrepreneur, angel investor, writer, and sake snob. Author of the series on pitching your startup to angel investors at https://pitchingangels.com.

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