THE SHOW: Why You Shouldn't Chase Venture Capital
Episode 3.4: The Last One With Thad Lewis
click an icon above to see more posts on that topic





In our final episode with special guest Thad Lewis, we talk about sales and we talk about funding, the way they're related, and how they're different. Thad Lewis is an NFL quarterback, and in that, he's got a couple of things working in his favor that the average entrepreneur does not, namely, connections and money. But this doesn't necessarily give him a leg up.

We talk about Venture Capital. Thad doesn't need it. Thad doesn't want it. But he could get it, and he can also get money from other sources (friends, the bank, etc.) Outside funding should be the last thing on the entrepreneur's mind until they absolutely know they need it, so we talk about that here.

read the rest


Kick Off Your Summer Of Startup


Starting June 6th, Teaching Startup will be reposting every single chapter of Everything You Should Know About Startup as well as reposting every single episode of The Show to keep you educated and motivated.

One catch! In order to get ALL the content, you need a free Teaching Startup beta account.

Get started by entering your email address. You'll get an email which will guide you through the rest.

Email Address
Caveat: By joining, you'll opt-in to our weekly email update. It's valuable, and it's MailChimp, so you can cancel at any time with one click.

Then follow us on Facebook or Twitter for daily new content updates.



Five Funding Sources for Startup: Venture Capital
Accelerators & Incubators, Seed Stage, Early Stage, Expansion, Exit
click an icon above to see more posts on that topic
There's so much to talk about with Venture Capital funding, so here's what I won't be talking about.

I'm not going to discuss all the varieties of financing that can be a part of VC funding, like bridge financing or down rounds. I'm going to stick to the basics and compress a few things. I like to cover the entire universe at a high-level, so you know what the game looks like. There will be plenty of time to drill down into specifics here and elsewhere.

I'm not going to give any advice on how to find, contact, or pitch VCs. That's been done to death and, in my opinion, there's no single right way.

I'm not going to talk about the funding process, i.e. term sheets, preferred shares, amended articles of incorporation, and so on. Why? See the previous two things I'm not going to talk about.

I'm not going to tell you whether or not you SHOULD focus on VC, but I will tell you this:

Fundraising, especially when it involves VC, is a long, painful, time-sucking process. It is a full time job. It will drain your resources and your sanity. It is not a measure of success, but it can pave the way to success. It can be dangerous, depending on who ends up with their hands on which control levers. It can be life-changing, when it comes at the right time for the right reasons.

If you don't know whether or not you need VC funding, you don't need it, because you're not ready. You should know exactly how much you need to raise and exactly what you're going to do with the money. You should already have relationships in place at a handful of Venture Capital firms before you make the decision.

But if you've already run the investor gauntlet of Customers, Self, Friends and Family, and Angel, and if you know you need VC funding, and if you know who you're going to reach out to first, second, and fiftieth, then it's time. Here's what the universe looks like:

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Venture Capital investors are firms that manage funds that invest in startups. VC is what we think of when we think of traditional startup investment, and their money is often referred to as institutional capital (which mostly means the money is not coming from a single individual).

VC firms are usually staffed in a chain with Partners at the top. Limited Partners are investors in the fund, while General or Managing Partners are investors in the fund and also run it. Venture Partners and Principals find and make deals for the fund, and may or may not be invested. Associates are at the bottom of the chain. They create relationships and do research, but often don't have the authority to green light a deal on their own.

Some VCs will invest small amounts as early as the Seed Stage, alongside the founder, Friends and Family, and any Angel investors. However, most VCs won't invest until there is progress beyond the Seed Stage, what's called a Series A round. From there, additional rounds will be called Series B, Series C, and so on.

VCs are always looking for a return on their investment, either through the sale of shares in an Initial Public Offering (IPO) or via merger and acquisition, where the company is sold to another company or to another financial entity like a Private Equity Fund. Sometimes VCs are bought out in future Series rounds when new VCs come in.

In almost every case, once you're in the VC world, you're not getting out until the company sells, which is called the exit. Oh, you're going to need legal and accounting help on hand during the fundraising process and retain that help through the actual funding.

read the rest


Be a Better Entrepreneur
Join Teaching Startup


More content. More interaction. More education. Sign up here to get a free beta account for Teaching Startup.

Email Address
Caveat: By joining, you'll opt-in to our weekly email update. It's valuable, and it's MailChimp, so you can cancel at any time with one click.



When You're an Entrepreneur, Confidence is Everything
Episode 3.3 featuring 49ers QB and Athlete Entrepreneur Thad Lewis
click an icon above to see more posts on that topic





We continue our discussion with NFL QB and entrepreneur Thad Lewis. Here's another way startup and sports run parallel. When you're an entrepreneur, confidence is everything. When you're an athlete, confidence is everything. Talent can only take you so far, it's confidence that's going to give you just enough of a boost to separate you from the pack.

But if a lack of confidence will kill you, overconfidence will kill you just as quickly. Finding the right mix, and how to go about getting to that mix, is one of the things we talk about in this episode.

On your startup journey, you're going to come across a lot of people who will tell you you're doing it wrong. What exactly will they tell you you're doing wrong? Just about everything. Wrong product, wrong market, wrong time, wrong place, wrong team. You need to have the wisdom to listen and adapt but still keep enough backbone to follow your mission when you know you're right.

read the rest





Five Funding Sources for Startup: Angel
Established Angels, Angel Groups, Entrepreneurs, Retail Investors, Investment Crowdfunding
click an icon above to see more posts on that topic
In the prior three installments of the five funding sources series -- and I do recommend that you read all three -- the sources I covered share a common trait in that investing in your startup is not their primary role.

Customers, of course, play a much more vital role as your company's lifeblood. If an investor sours on you, you're in trouble. If your customers sour on you, you're done.

Self is you. And your role is to build the best product and best company that ever existed. Your investment, in terms of cash, will play its part in getting all of that started, but your time, your energy, and your leadership are the most valuable resources you can contribute.

Friends and Family bring their own issues along with their investment, and those issues will mainly revolve around managing your relationship with them as investors. That said, their existing relationship with you -- as friend or family member -- will, in most cases, come first.

With each of the final two funding sources, their primary role is as your investor. There should and most likely will be added value from these sources, in everything from connections to advice to even office space. However, when the documents are all signed, these investors are expecting a return on their investment.

So let's talk about who they are.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Angel investors are individuals who invest in private companies as a part of, or in lieu of, a portfolio of retail investments, like stocks or real estate.

Angel investors are actually kind of hard to pin down, and thus are sometimes the most overlooked source of capital in startup. This is not surprising though, because it's easy to get confused about the definition of an Angel, their role, and how to find them.

If you think of Angels as people with a lot of money and high risk tolerance, you're not too far off. They invest their own money. They can operate independently or as a part of a group. Some specialize in certain sectors or technologies, while others invest in whatever they think is cool. Some take almost no active role with the startup, others will want to be a formal advisor or even a part of the management team. Some make a lot of investments, others might make only one or a few.

So just about anyone with money can be an Angel, right? Well, that's close.

read the rest





THE SHOW: Hire What You Suck At
Episode 3.2 featuring 49ers QB Thad Lewis
click an icon above to see more posts on that topic





As an NFL quarterback, Thad Lewis has a couple of things working in his favor that translate well to becoming an entrepreneur, including available capital and great connections. But there are also areas he's not 100% versed on, like technology and marketing. Oh yeah, he also doesn't have a lot of time on his hands. His day job is a little more than 40 hours a week.

Even the best entrepreneurs aren't going to be good at everything. And even the most well-funded entrepreneurs don't want to lose too much control by farming out too many parts of the business. Startup is be a constant struggle of learn versus hire, no matter how long you've been at it.

So where do you start? And how do you start?

read the rest





Five Funding Sources for Startup: Friends and Family
Family, Friends, Associates, Network
click an icon above to see more posts on that topic
"Hey Dad, can I borrow $50,000?"

I know. A single sentence that's so wrong on so many levels.

When we talk about Friends and Family investment, there are a lot of landmines to tiptoe around, and most of them have to do with personal circumstances. So let's look at that opening sentence again. We'll break it down and we'll start stepping on landmines. Together.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

First of all, most people think of Friends and Family investment as an opportunity reserved for an elite few. This is not the case. You don't have to have wealthy parents or run with a Wall Street crowd to tap Friends and Family money. The fact is, a lot of people, including people you know, invest their money one way or another.

And that's what you're after. This isn't a handout, this is an investment. A sale. The exchange of cash for a piece of your company.

You're not likely to luck into a $50,000 windfall -- those dreams of fully funding your startup via a rich uncle or a friend of a friend of a friend are just that, dreams. With Friends and Family investment, you ideally want to raise just enough cash to get to your first customer.

But even if your family and friends have the means to invest, there's the gross part of having to ask. There's always something sketchy-feeling about asking someone you know for money, no matter how much you believe in your ability to create a return on their investment.

Finally, we're going to have to talk about relationships, and it's going to get sticky. If you've ever borrowed from or lent to a friend or family member, you know that the odds of your relationship changing are pretty high, especially during the time that the loan is active. The same relationship dynamics (the rules and the feelings) apply to investment, and you are beholden to these shareholders regardless of how much blood or water is between you.

So let's get started:

read the rest





Five Funding Sources for Startup: Self
Out of Pocket, Day Job, Consulting, Co-Founders, Loans
click an icon above to see more posts on that topic
In the last installment of the Five Funding Sources series, we talked about getting money from your customers as your first, earliest, and preferably sole source of funding for your startup.

Now let's talk reality.

I'm kidding. But we're all aware of the fact that starting a company costs money, and if you're relying solely on money from customers, you're going to be restricted in how fast you can grow, especially in the beginning.

Let's face it. Everything costs money. Incorporating your company costs money, developing a product costs money, marketing that product costs money, waking up in the morning costs money. If reason number one why people don't become entrepreneurs is that they fail to act on their ideas, reason number two is that they're unwilling or unable to spend the money necessary to execute on those ideas.

I fall victim to this more often than I'd like. I don't enjoy spending money, even other people's money. I'm frugal by nature, just ask my notoriously under-privileged kids. This frugality has been more of a plus than a minus on my entrepreneurial journey, but it's also made things more difficult, and probably kept me from acting on one or more ideas that could have returned a lot on any initial investment.

So you'll most likely need some money before you get your first customer, or if your future plans cost more to implement than your revenue stream can support. That money is going to have to come from somewhere, and the best place for it to come from is you.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Self is the next best way to fund your startup after Customers, and self-funding is always going to be a requirement. An entrepreneur should always have some of their own money in their startup, and the more money they put in at the beginning, the better off they'll be at the end.

In fact, I'll go so far as to say you should never go after Friends and Family, Angel, or VC funding without having your own money invested first.

read the rest





THE SHOW: Why Startup is Like Being an NFL Quarterback
Episode 3.1 featuring 49ers QB Thad Lewis
click an icon above to see more posts on that topic





This episode features a very special guest and extremely cool human being: San Francisco 49er quarterback and entrepreneur Thad Lewis. Aside from being a working NFL QB, Thad founded TL9 for his future after football and as a way to give back to the system that got him where he is. He's not alone as an athlete entrepreneur, and that's because there are a ridiculous number of parallels between sports and startup. We start covering them here.

Thad is funding TL9 himself. He's also overseeing all production, marketing the company -- hell, he's even shipping hats himself at the moment. You need to go to thadlewis.com and buy a hat, if just because Thad will be the one sending it to you.

read the rest





Five Funding Sources for Startup: Customers
Early Adopters, Licensing, Future, Strategic Partners, Crowd
click an icon above to see more posts on that topic
OK, let's talk about money.

No matter the reasons you embarked on your startup journey, you're going to need fuel for the engine. Ideas, talent, and technology are crucial, but if they don't lead to cash, you'll be wasting them.

It's money. Money is the fuel.

When I talk about funding, I'm going to ignore your intentions as a founder -- in that, I mean I don't care how noble and altruistic your reasons are for doing what you do. Startup street is littered with the burned out carcasses of enterprises whose founders had the best of intentions, but couldn't or wouldn't focus on making their mission sustainable.

Don't let that be you. You need to be funded.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Customers are your primary source of funds. I can't state this emphatically enough so I'll just repeat it a number of different ways.

I'm not leading off this series on funding with venture capital or angel investing or friends and family money or even self-funding. While all of those are certainly valid and important, and I'll get to all of them, the value brought by money from all of those sources is completely eclipsed by the value brought by money from customers.

In fact, you can start your company without ever raising money from any of those four other sources. You can't survive without revenue, and you should be in this mindset from the very beginning.

There. I think I beat that to death, and we can move on.

read the rest





VIDEO: How To Build Relationships With Investors
Teaching Startup: The Show - Episode 2.4
click an icon above to see more posts on that topic





Just because your startup landed venture capital, that doesn't mean you're successful. And just because you've been offered investment doesn't mean you should take it.

If you and your investors don't have a solid relationship, it could spell the end of your startup. Or maybe just the end of your leadership there.

What starts as a discussion about emulation versus experimentation (and maybe a little man-crush from Colgan), turns into the finer points of authenticity, honesty, and relationships with investors. Investment means the clock is ticking and the runway is getting shorter, every day. Those relationships are going to get real critical, real quick.

read the rest





Pick a Topic
Get Educated


Teaching Startup has lessons -- written, video, and audio -- covering 25 important foundational areas of startup: Stages, Roles, Kinds, Funding, and Reasons.

Each lesson on the site covers at least one and up to five of these areas. Pick and choose what you need to know and how you want to learn it.

Click here. Choose a topic. Read, watch, listen, and learn