How Got Startup Funding in 15 Days

Last October, came to Lighter Capital looking for an injection of capital to scale their business. The Chicago-based company creates tools that simplify stakeholder relations, communication, and ongoing performance tracking for more than 1,600 businesses.

Just 15 days after CEO Mike Preuss’s first phone call with the Lighter team, the company received a tranche of funding directly wired to their bank account. For those used to the typical six-to-nine-month process to secure venture capital funding, the speed of this transaction may seem hard to believe.

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How to pitch investors

8 tips for pitching startup investors

Scoring capital for your early-stage company can feel like winning the lottery—it can seem more about luck than skill. VCs and other investors are notoriously opaque, with decisions based on concerns you don’t know and can’t control: who they funded last year, their recent successes and failures, what industry reports they read over breakfast.

From a heartburn-induced bad mood to suspicion of anything that resembles a prior startup disaster, funders have myriad reasons to say no. So what factors can you control? How can you optimize your pitch to get them to yes?

Start by ensuring you’re nailing the basics. Here are eight tips to guide you.

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4 milestones to reach before raising your Series A

While seed funding is more abundant than ever (the number of seed-funded companies has quadrupled in the last four years), Series A funding is actually harder to get than it used to be. With a super-abundance of competent seed-funded companies, investors can afford to get choosy about their Series A bets.

Many companies want to raise their Series A before they're ready, but coming unprepared to such a competitive space can be detrimental to your company's future funding prospects or even harmful to your reputation. Investors who might have taken your business seriously six months down the road will write you off as someone who doesn’t take being prepared seriously. While there are few hard and fast rules about when to raise a Series A, there are milestones that will help you demonstrate to your future investors that you have traction and a road to profitability. Let’s take a look at four of the biggest indicators that your company is ready to seek its Series A.

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Exploring venture debt: benefits, risks, and tradeoffs

Everybody knows what venture capital is, but many entrepreneurs are fuzzier about its loan-based cousin, venture debt. Venture debt has exploded in popularity in the last few years. Tomasz Tunguz notes that it’s 16x as popular as it was only six years ago. For some startups, venture debt can be a solid option to boost their cash flow and supplement their VC round with very little dilution to their remaining equity. But like anything, there are trade-offs and you need to educate yourself on the basics.

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How venture capital is like a hamster wheel

Entrepreneurs fighting to reach $1M in annual revenue have a one-track mind. Ask one how they plan to raise capital to meet their sales goals and the response you’ll likely receive is, “Venture capital.”

Trading precious equity in exchange for capital is usually the first funding option entrepreneurs consider. TechCrunch headlines about multi-million dollar rounds and jaw-dropping startup valuations have fed into the notion that VC must be the way to go. That it’s the only way to go.

However, many first-time VC fundraisers don’t realize that what looks like the end of the journey—earning that VC round your company needs—is actually only one step in an exhausting cycle. Look for money. Raise money. Grow. Look for money. Raise Money. Grow. You’re never one round and done. In fact, you may wind up running in place, going through the motions of the cycle, without gaining real traction. And you’ll sacrifice far more than equity.

I call this the hamster wheel.

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5 reasons to choose debt over equity financing

When CEOs of early-stage companies think about growth capital, they rarely think of debt financing. Venture capital has a larger mindshare, and a lot of founders are anxious about taking money that has an interest rate or repayment cap attached.

They shouldn’t be. Financing your healthy growing company with debt isn’t the same thing as maxing out your credit cards to fund your product development. You have paying customers, maybe even a few enterprises. You have revenue. You (hopefully) have an accounting function. This infrastructure makes debt easy to account for: you know your repayment obligations ahead of time and you can plan for them.

In addition, debt financing may offer its own hidden benefits. Here are five reasons not to be skittish about financing your company with debt.

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Introduction etiquette: How to land a VC introduction

In the fundraising world, personal introductions and referrals are king. Word-of-mouth is still one of the most common ways deals get done. In order to land a meeting with a venture capitalist, you need to get introduced and referred.

The world of VCs is notoriously exclusive, but despite how hard it is to land an introduction, there are ways to manage the process and maximize your chances of success.

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Why VCs only invest in C corporations

In the very early stages of your company, you need to make a key decision: What type of business entity to form. Will you be an LLC (a limited liability company), an S Corporation, or a C Corporation? Your choice will have an immediate impact on your company, as well as lasting implications for your ability to raise funds, especially if you decide to pursue venture capital.

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Beyond Sand Hill Road: can debt be growth capital?

Sand Hill Road in Menlo Park, California is the epicenter of VC. While many tech founders dream of scoring a deal with one of the prominent VC firms that make their home on Sand Hill Road, the reality is that less than 1% of U.S. based startups receive venture money every year. Another reality: many entrepreneurs never consider the less glamorous but more accessible (and cheaper) startup financing option: debt.

Here are some insider tips from Molly Otter, Lighter Capital's Chief Investment Officer, and David Ehrenberg, CEO of Early Growth Financial Services, to help you understand the alternatives to Sand Hill Road.

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Take the money or run? 3 reasons to take VC money and 3 reasons not to

When your company is poised for exponential growth, you may have a shot at convincing venture capitalists to take a gamble on you, your team, and your product.

But should you go down a VC-backed path if offered the opportunity? What are the advantages and disadvantages of taking venture capital? Some entrepreneurs take the VC plunge and others are nervous about sharks in the water—loss of control and a significant equity dilution are two elements that scare away many entrepreneurs.

The right decision is the one that will benefit your company most, which largely depends on your long-term funding and business strategy.

Here are three reasons why you should take VC money—and three equally valid reasons why you should run.

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