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An excellent overview of the kinds of funding available for entrepreneurs (startup funding). But this can be very misleading in a way: The “money available” and amounts invested absolutely do not reflect the likelihood of attracting funding from each source – nor do the amounts indicate how effective the funding source is towards the success of the startup.

Startup Funding Infographic

 

It was a brilliant observation from Tim Huntley of An Entrepreneurial Life, based on an exchange with an entrepreneur. The entrepreneur is stuck in some sort of circular-loop thinking preventing him and his team from making progress. In a rather rare display of self-awareness, the entrepreneur likens his dilemma to a concept taken from an obscure documentary called Waiting for Superman.   In this case:

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bad-news 
 
Ordinarily it takes an act of God to make me spill a drop of my morning coffee, but reading the news this morning nearly caused a grand-mal seizure:

“Jilted Kickstarter Backer Neil Singh Is Now An Assistant Attorney General Of Arizona”

 
My first, second and third reaction was “This is really bad news for Arizona Entrepreneurs.”   
 
Arizona:  The state celebrated recently for being #1 in the US for entrepreneurial growth, has just turned towards a cliff.  Maybe I am being shrill, but read on:

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The infographic below is a very good overview of startup funding, particularly for first-time entrepreneurs,  from our friends at Funders and Founders.  how-startup-valuation-works-infographic

For new entrepreneurs the chart can be a tad overwhelming.  When you’re scraping for your first few dollars from friends and family it’s hard to look ahead at the metrics for your IPO in 5-10 years.

The math, logical and psychology surrounding the premoney and postmoney valuation is the most important aspect that every first time entrepreneur has to grasp. Entrepreneurs are focused on the cash that they need to make the idea a reality, or to take it to profitability. Investors’ issues are entirely different. Most entrepreneurs quickly realize the chasm, and start to pitch in terms of a huge return-on-investment potential. This is too simplistic. Experienced investors think of start-up funding in terms of stages – with each stage ideally making their on-paper investment more valuable.

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abc logo2_fullUsually, I am cynical about pithy posts proffering advice such as “5 steps to …” – particularly when it is about becoming a successful entrepreneur, or raising venture funding.  Most often, I find these posts written by articulate armchair quarterbacks (who have never really done it themselves) or by what I call accidental passengers :  people who have been lucky enough to have been aboard a rocketship just as it launched, but somehow think that they piloted the thing.   Every so often though, a very self aware first-timer, is able to explain the journey in such a way that not only makes sense, but contains universal lessons for all.  Such is the case with  Eran Galperin, co-founder at Binpress, in describing in detail their fundraising process.

His opening line is particularly interesting:

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(Originally published as a Guest Blog on CX.com  on December 11, 2012) 

Crowdfunding. You’ve heard of it — sexy projects by entrepreneurs who buck the establishment by going directly to the public for funding. Or maybe you’ve heard of the other crowdfunding — fraud, deceit and boiler room brokers bilking widows out of their pensions and life savings.

It’s a familiar tune. New technology disrupts an established, elite industry and empowers us to do it better, fast and cheaper. And, in the beginning, the professionals, pundits and predictors of doom tell us how bad the world will be if the industry is democratized.

Anyone over the age of 35 can remember the same dire warnings about eBay and the entire eCommerce industry — typing in your credit card number online was insane.

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After I spoke about Crowdfunding:  Past, Present and Future, at the Arizona Innovation Summit, FunditTV decided to conduct a video interview.   During the interview, I talk a bit about my new Crowdfunding initiative, called Propel Arizona.

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