Dave Berkus
Dave Berkus is a noted speaker, author and early stage private equity investor. He is acknowledged as one of the most active angel investors in the country, having made and actively participated in over 87 technology investments during the past decade. He currently manages two angel VC funds (Berkus Technology Ventures, LLC and Kodiak Ventures, L.P.) Dave is past Chairman of the Tech Coast Angels, one of the largest angel networks in the United States. Dave is author of “Basic Berkonomics,” “Berkonomics,” “Advanced Berkonomics,” “Extending the Runway,” and the Small Business Success Collection. Find out more at Berkus.com or contact Dave at dberkus@berkus.com
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Create a Ten Percent Profit Model
Most entrepreneurs, when starting to model their business operations using a spreadsheet, start with expected revenue by month. Then they calculate cost of sales, and then project their expenses, to find the bottom line profit or loss each projected month.
Don’t Be Defensive, But Defend
When meeting with investors, during the period devoted to feedback after your presentation, you will hear comments and recommendations that don’t resonate with you.
Don’t Get Hung Up On Valuation
I can’t tell you how many times I’ve walked away from deals where the entrepreneur insists on a start-up premoney valuation that is so high, no angel could expect to make a return upon the investment, even with a reasonable sales price for the company down the road.
Don’t Overestimate the Knowledge of Your Audience
When making a presentation to a new audience, the smart thing to do, if there is an opportunity, is to ask your audience by show of hands, if they have some knowledge of your industry or space.
Turn the Table: What’s an Angel Look Like?
Angel investors, particularly those in organized angel groups, are typically former entrepreneurs who have had successful liquidity events in their pasts, or executives of companies who’ve retired with the funds from their stock options.
Find Your Champion
If you seek funds from an organized investment group such as an angel fund, venture capital entity, or even an investment club, the first thing you want to do is to find one person to buy into your vision.
The Rule of Thirds
It is rare when one person starts a company, supplies all the funding, and shares no management tasks or equity with others, and still grows the company to any significant size, worthy of a multi-million dollar opportunity to cash out at exit.
Eyeballs Aren’t Everything
Back when we were all trying to figure out the real value of traffic on the web, we investors—and acquiring companies—got a bit crazy with metrics used to value acquisitions and investments.
Both Sides Must Be Fair in a Term Sheet Negotiation
After being an active angel investor for about fifteen years, I realized that many of the discussions I was involved in were virtually identical to ones I’d had many times before.
Can You Finance Your Company with Grants?
There are some grants available even for one person shops, from cities, corporations and even non-profits for just your type of business, especially if you support a social cause, can employ more people, or help turn around a geographic area in need of upgrade.