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Founder's Institute Finance[1]

Founder's Institute Finance[1]

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Published by: nordmarknancy on Aug 19, 2010
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By Drew Massey Entrepreneur Chief Maniac | maniaTV.com Founders Institute August 2010

Quickie Background…

maniaTV Founder & Chief Maniac Trademarked maniaTV in 1998, waited for broadband to reach critical mass, assembled a key advisory board, secured charter advertisers, and launched the World’s 1st Internet Television Network on Labor Day 2004. Closed Blue-Chip VC Investment. Grew the company to deliver over 10 million monthly viewers to top advertisers like Coke, Levi’s, GM, P&G and 80 others. Prior to moving to Chairman in 2007 and selling some founder stock, had grown the revenue of the company to $500,000 per month and had launched shows with Tom Green and Dave Navarro. VCs ran in circles. Bought back in 2009. Refocusing on mission of the next revolution in television with LIVE Celebrity TV Shows. Prior to maniaTV, launched a company for Forbes, Inc. and then P.O.V. magazine which was named Adweek’s 1997 Startup of the Year as well as Adweek’s 1999 Top 10 Up & Comer.

Case Study…

Pre-Raise Angel Finance VC Finance FYI… 21 Questions

Pre-Raise: Customers

TIPS Can Spend Time Chasing Financing or Building Business Be Resourceful—Pre-sell to Customers, Partner with Vendors/Suppliers, Get Interns, Factoring Control Costs—Avoid Consultant Fees, Maximize Other Income, Expand As Needed SELL, SELL, SELL—Easier to Get Financing if You have Customers/Orders SBA: Unless Factory Equipment then SBA Seems Futile to Me, But TRY Finance/Factor Receivables Be MORE Resourceful MY CASE STUDY High School Business: College Coupon Book—Pre-Sold Ads Men’s Magazine—Sold Ads, Lived on Credit Cards, Factored Receivables at 20% for 63 Days, Industry Partner/$$$ maniaTV—Sold Ads, Credit Cards, Raised Angel, Raised VC, Raised More VC maniaTV Redux—Selling Ads

Angel Finance

TIPS Convertible Note Venture Hacks MY CASE STUDY Friend Asked. I said No. Asked Again and again. I said, yes, BUT Don’t Pay Self (or agree to very little) In Escrow Until $200k or Return Expect NEVER TO SEE IT AGAIN—no promises on huge upside, etc.

VC Finance

TIPS Keep Building Company While Meeting with VCs—often like to follow you Network to get to VCs If No Connections, Take Any VC Meeting and Get a Referral WATCH OUT!

MY CASE STUDY Met many during 90s heyday, Adam Dell Offered to Fund a Yahoo for 20 somethings Networked, name dropped, email pounding Got into Sequoia, DFJ, etc. Intros from other entrepreneurs—Jon to Benchmark Train Leaving Station Mindset—Customers, Angels, Live Product… Terms: Focus on 20-30% for VC for An Amount That Will Get You to Milestones that Will Radically Increase Your Value (Preferably Profitability) Clean Terms (No Participatory Preferred)


TIPS VCs Are Motivated by Many Factors—Ego, Insecurity with Limited Partners, Indebtedness to Bigger VCs (ie., Get New Hot Deal), Time Value of Money Fiduciary Responsibility Double-Talk Will Never Act in the Way They Ask You to Act. Ever. Founders/Mgmt Make Money Last

MY CASE STUDY “#1 VC in the World” and Local “Most Insecure VC in the World” #1 VC Motivated by Not being a One Hit Wonder Most Insecure VC Motivated by Napoleon Complex Great Lawyer Schooled Them—Structured Board Control that Got Approved by Lawyers from 2 Venture Capitalist Groups and Intel.

21 Questions to Ask Yourself Before Starting a Business

Are you passionate about your new business? How much are you willing to lose? Your savings? Mutual funds? Stocks? House? Kid’s college fund? 401k? Everything? Can you quit your job? Skip the paycheck? Lose your health, dental and vision benefits? Ask friends and family for angel investment? Can you convince your friends, girlfriend/boyfriend/spouse and family to stay with you? When it takes you longer than you told them? Give up five years of your life? At minimum? (Plan on 10!) Forget that twilight golf exists? Primetime TV? Or any other normal weeknight activity besides late fast-food dinner and sleep? Mind wearing EVERY hat? Roll up the sleeves to deal with time-consuming headaches-phones, computers, lights, and more? Endure competitive slights from bigger organizations while launching? Work 168 hours each week? 52 weeks a year? (You can escape the office, but it won't escape you.) Mind stressful nights of sleep with business nightmares? Stomach not getting that sale you expected?

21 Questions to Ask Yourself Before Starting a Business

Stomach exceeding your credit card limits? Worse, can you stomach success? And then endure the big competitors using their resources to duplicate it? Ready for a frivolous lawsuit from an employee or customer (faulty product, unfair firing, sexual harassment, racism, etc.)? Or lose revenue because your employees--unrelated to your business--did something completely crazy, like bomb a school? (No joke. Just ask the owner of BlackJack pizza in Colorado) Ready to pay lawyers thousands of dollars to protect your idea, name and product which is now being infringed upon? Ready to continually prospect for customers and financial partners? Never-ending process. Again, ready to risk and lose everything? Face bankruptcy? Face your angel investors? Finally, are you ready for your idea of success to not mean cashing-out and traveling the world, but that you forget all of these obstacles and risk everything you create just so you can do it all over again? No to any? Think again. Yes to all. Go for it!

Final thoughts: Be passionate. Persistent. And listen to your gut.

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