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4 tips for raising a successful seed round of funding

(Business Finance) After seeking a seed round of funding, one entrepreneur learned some difficult lessons and offers a fresh insight into the process.

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I couldn’t believe what I’d just said.

I don’t think my boss could either, so I repeated “That’s right, we just got a $50,000 check for my new startup and I’ll be leaving in a couple of weeks.” I was on cloud nine. Our funds had just hit the bank and I was on my way to fulfill my entrepreneurial dream, but it wasn’t always this way.

Here’s what I learned through raising a seed round of financing.

1. Have a product and market penetration

In today’s tech landscape if you can’t put together your first product and get some decent validation working out of a garage, dorm room, or basement you are going to have a rough go at raising any good money. When we approached our first investors we already had a product with about 2,500 people using it in our target market and we were growing rapidly every month without much paid advertising. Growth and penetration is so key to raising money. Investors know it’s difficult to do all of this without funding, but that separates the doers from the people that only have an idea.

2. Don’t be afraid to turn people down

Our first “nibble” from an investor was the kind of offer that feels a bit more like an insult, but we didn’t know if we could do better so it was tough to turn it down without a lot of other options out there. We did turn down that offer and we’re glad we did. Our next offer had double the valuation and a lot better investors behind it.

While we were considering this afore mentioned offer I called a board member from my previous company to ask his opinion about that investor. He invited me to his offices to talk about it and ended up writing us check a few weeks later. We didn’t know what a round would look like yet so we agreed on a convertible note for $50k. He liked our idea and started sending me to pitch his friends. They were all kind and told me I could come to them with strategic questions in the future but most said that they weren’t investing at the time.

I reached out to a few investors per week and was networking the best I knew how while working late nights to keep working on our product and marketing efforts. I kept in close contact with the investors that said I could go to them with strategic questions as I continued to reach out to new potential investors. Eventually one of the investors I contacted wrote us another $50k check, but we were still $400k shy of our target seed round. When the new investor came onboard I reached out to those that said I could come back with “strategic questions” to tell them about the exciting news. In short order a few of them wrote me checks as well.

LOOKING BACK: As I look back on this time I have identified a few keys to my success. The first was building good relationships. When I got turned down I maintained as close of a relationship as the potential investor was okay with. That is where most of our money came from. We also had to have good growth, so I couldn’t leave our business behind while raising. When you have a small team you have to continue to grow your business despite the demands on your time to raise money because the people you are raising money from care about your growth.

Once we had 4-5 investors onboard I would get an occasional meeting setup with an angel that wanted to invest in a hot tech startup. Our investors would refer that angel to me, we would talk for 30 minutes, and they would cut me a check in the next few days. These were the good days, but I started to get worried about taking in too much capital and diluting ourselves as founders.

3. Raise money when it wants to be raised

At this point in the fund raising process one of my investors taught me a valuable lesson. As I struggled with whether or not we actually needed more money I gave our lead investor a call to discuss the matter. He laughed a little at my dilemma and said, “Jordan, you raise money when it wants to be raised.” What did he mean? You’re not always going to be the hot company that everybody wants to be involved in. There will be ups and downs. You’re worth more during the up swings. Take the money then, and take as much as you can, within reason.

4. Startups fail because they run out of money

Speaking of taking in as much money as you can I thought I would share this last tidbit on how to think about money as a startup. One day while speaking with one of our investors he mentioned a recent conference he had attended. At the conference a question came up that he gets asked regularly. The question was, “Why do startups fail?” His answer? “Because they run out of money.” I know, it’s super profound! But while it might sound a bit obvious I think there’s a lot to be said for his answer. I firmly believe that most startups can be successful given enough time and resources to pivot and nail a product and market. The problem? One day you’re going to fail if you run out of money. As a founder you have to watch your resources like a hawk and raise as much money as you can. You have to do amazing things regardless of the limited resources, and you need to make sure your company has enough resources. You have to be scrappy.

There are so many other things that go into the process of getting a startup off the ground including achieving product-market fit, building a great team, designing and building product, creating an investor presentation, identifying and understanding your market, growth hacking techniques, and more. Stay tuned as I share what I have learned about these topics through my experiences being a product manager at a small B2B startup that was acquired in December of 2011 by Proofpoint (now a publicly traded company), and starting my own consumer-facing business that is currently disrupting the student housing search.

Most recently Jordan was the Co-founder and CEO at Unbill - a FinTech startup that was acquired by Q2ebanking (QTWO) in January of 2017. Before that, Jordan was an early employee and product manager at NextPage which sold to Proofpoint (PFPT) in December of 2011. Jordan is happily married and has 3 children.

Business Finance

Millennial women share about how they spend (and save) money

(ENTREPRENEUR) A group of millennial women were surveyed about how they save their money. These are their stories…

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This year, I turned 24, and while I know this isn’t old, I never thought I’d be this old. With this in mind, I’ve been asking all of my friends and family members the same question: “If you could give any piece of advice to your 24 year-old self, what would it be?”

While I’ve been getting varied and interesting pieces of advice, the one I need to focus on more is working on saving more money. This can be tricky, especially when you first start making money, so it helps to hear how others do this.

Recently, Bustle surveyed over 1,000 millennial women, in their 20s and 30s, and they shared how they save money. Their incomes ranged anywhere from $30k to $150k. Included below are some of the individual responses that include innovative ideas that anyone at any age could potentially implement.

1. Samantha, 30: Uses a budget for her finances. Rather than enjoying instant gratification, Samantha makes a wish list of things and experiences she wants to save money for. Then if she accomplishes a goal, she treats herself to something on the list.

2. Ronnika, 33: Instead of continuing a habit of meeting friends for drinks every week, Ronnika has found it is more fiscally responsible to invite friends over. Also, She takes any extra money from her paychecks and puts it in a checking account that is not locally accessible.

3. Michelle, 24: To save on entertainment, Michelle has opted for only using WiFi rather than getting cable. Additionally, she keeps her thermostat set at 62-64 degrees and uses layers and space heaters to save on costs. She also encourages packing a lunch everyday, as that is a big saver.

4. Kelly, 24: Kelly attributes her money saving to living with her parents. She also suggests an app called Qapital: “You can set your own rules for how you want to compile your savings — for example, I have a ‘Round-Up Rule,’ which rounds up every purchase to the nearest dollar and puts that change into savings, as well as a ‘Set and Forget Rule,’ which just automatically takes out a pre-selected amount. For me it’s $10/weekly.”

5. Libby, 24: Libby only uses her credit card for necessary expenses (such as payments for her car) and puts anything else on debit. With her credit card, she makes sure she pays off the balance in full each month so that she does not fall into debt.

6. Savannah, 25: Savannah keeps a peaceful mind savings to fall back on in case of emergencies. “I’ve found having a savings account balance equivalent to two months of my salary is a good cushion.”

7. Alexandra, 26: Alexandra keeps an Excel spreadsheet that tracks all of the money she has coming in as well as what is going out. She helps herself save by setting goals of what she wants to save and by when.

8. Lyn, 29: Lyn saves her money by looking at it as a way of paying herself first. She puts a large portion of her paycheck into her 401k and puts the maximum amount of her paycheck into her Roth IRA each year. She will then spend liberally on the things that are important to her, and harshly cut anything that she deems frivolous or won’t make her happy.

9. Marissa, 26: Marissa budgets her money and attempts the tactic of cooking for herself as much as possible. She has found that one meal out is equivalent to five meals at home.

10. Danielle, 23: Danielle saves by setting up two automatic transfers from her paycheck to budgeted savings. “So it’s like I don’t even notice the money is there. One transfer goes to ‘future me’ in the form of RRSPs or other investments, and one transfer goes to ‘fun times,’ like trips abroad.”

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Business Finance

You got an LLC and you’re ready to hire – 3 things lenders look for

(FINANCE NEWS) Yes, securing a small business loan of any kind is tedious and depends on varying lending organizations and business needs, but there is a list of general requirements small businesses should be aware of before getting knee-deep in conflicting information about lenders.

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If you are reading this, you probably have an LLC for your small business already, or money talk gets you going. If it is the former, let me say CONGRATULATIONS, and insist you pat yourself on the back in honor of your small business’s progression. Your arrival at a point where expansion is necessary is no small feat given half of small businesses fail in the first year. So, kudos to you.

Now, back to the money talk…

For LLC businesses looking to expand, please don’t fret about all of the information you’ve seen on the web. Yes, securing a small business loan of any kind is tedious and depends on varying lending organizations and business needs, but there is a list of general requirements small businesses should be aware of before getting knee-deep in conflicting information.

After some extensive research posing as the owner of imaginary businesses and annoying every loan officer who’d take my call, I’ve found three general lending requirements. I also provide a collection of the tangible information banks will likely review to meet those requirements. Take a gander:

Assets
Small businesses must have necessary assets: steady cash flow, financial reserves, personal collateral to support a variety of business fluctuations (i.e. unexpected employee loss), and a realistic pay off plan. These assets and financial safety nets are necessary for any lending organization to be confident in your business’s ability to support employee expansion in lieu of current expenses.

Proof of past
Just as you will come to expect from your soon to be employees, lenders want proof of the past and how you’ve managed past loans to align with your business goals. Historical evidence will further determine if your expansion is feasible, but also if it is worthy for the company to accept the lending risk.

Specific plans
Finally, be prepared to provide your small business’s explicit expansion plan, including how you arrived at your suggested loan amount and how you intend to divvy out the funds. It is important that you are as specific as possible in your projected numbers, seeing as one employee could make a $60,000 difference, and largely affect your expansion plan and financial need.

Before you go…

Now that you’re equipped with the magic three, you’re probably feeling empowered to walk into your nearest bank and demand your small business loan. Let’s first be sure you have all of the necessary information on-hand and ready to produce.

Lending companies that look for the magic three before investing arrive at their conclusion after collecting data from the following pertinent information:

– Proof of collateral
– Business plan and expansion plan
– Financial details
– Current and past loan info
– Debts incurred
– Bank statements
– Tax ID
– Contact info
– Accounts receivable information
– Aging
– Sales and payment history
– Accounts payable information
– Credit references
– Financial statements
– Balance sheet
– Profit and loss history
– Copies of past tax returns
– Social Security Numbers
– Assets and liabilities details

Now, my friend, do I release you as proud as a parent unto your nearest bank to secure your small business loan and begin growing your staff the way you’ve dreamed. I’m confident you will find the aforementioned information helpful in said quest, and would like to wish one last time (because it’s impossible to over-congratulate) a sincere CONGRATULATIONS on your businesses growth.

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Business Finance

Financial impostor syndrome – what it is and how to fix it

(FINANCE) Financial impostor syndrome is more common than most know, but seeing polished people in your industry may make you feel like your struggle is unique – it’s not.

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If you’ve ever felt like a fraud when it comes to your success, you’re not alone. Impostor syndrome is recognized as a “a psychological pattern in which an individual doubts their accomplishments.”

Typically, impostor syndrome is discussed as it pertains to your career, but it can manifest in other areas, like with finances.

Financial impostor syndrome has many components. You might feel as if you are bad with money and can’t be any different. Maybe you’ve made some bad decisions in the past.

You let these mistakes define your financial future.

Or maybe you dwell on the endless Instagram posts from people in your industry that depict the glamour of their financial successes (not knowing that they don’t own that jet, their client rented it for the weekend, or that they have a Ferrari but are potentially hiding it from being repossessed).

Some people believe money is bad or that they don’t deserve financial stability. Especially freelancers and entrepreneurs.

Alternatively, you may have money in the bank, but feel like a fake or fraud for earning it. You might think it was just luck that you have any resources, rather than believing in your own capabilities.

Financial impostor syndrome keeps you from reaching your potential.

Most people who have impostor syndrome also have low self-confidence and fear that they’ll fail. This can self-sabotage success. Instead of taking initiative and making positive changes, someone with impostor syndrome may bury themselves in work and avoid taking on extra responsibilities that could prove themselves.

When it comes to money, you might think that you can’t make changes, so why try? This type of thinking limits you.

Overcoming financial impostor syndrome isn’t going to happen overnight, but it is possible with some work.

1. Talk about it. You have to look at the reality of your situation versus your perception. Work with a mentor or mental health professional who can help you get information about impostor syndrome and help you manage your symptoms. You may want to consider getting a financial coach or manager.

2. Make a list of your accomplishments and successes. Celebrate your achievements. Learn to recognize what you contributed to your successes.

3. Create a new script for times when you feel like a failure. “I can improve my finances.” “I am able to stick to my budget.” I deserve financial freedom.”

4. Change your habits. Take small steps towards financial success. Spend cash only. Automate your savings and your bills. Cut up credit cards. Learn your strengths and weaknesses. Stick to your budget.

Additionally, you must forgive yourself for past mistakes.

Everyone has at least one or two regrets when it comes to their money. We don’t always see those mistakes, because we only hear about the person’s success. If you can’t learn to forgive yourself, you restrict your ability to make changes. Blame and shame never help anyone change behavior.

Make a plan to change your financial impostor syndrome. No matter what you’ve done in the past, you can start making small changes to your financial situation to find a way out. You deserve it.

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