Monday, March 24, 2014

Raising the Dough: How CED, successful CEOs and Investors are Educating Entrepreneurs on the Startup Funding Landscape

On March 11th and 18th, more than 70 technology entrepreneurs from around the state gathered at the RTP Foundation to learn about funding their venture at CED’s “Raising the Dough” Series. Jay Bigelow, CED’s Director of Entrepreneurship, commented, “this funding series is specifically designed to help early-stage tech entrepreneurs gain valuable knowledge about how to successfully raise capital.” In addition to becoming more investor ready, Raising the Dough is designed to equip attendees with an understanding of the current funding landscape and realistic strategies for funding their company moving forward.

More than 25 successful entrepreneurs and early-stage investors participated in Raising the Dough as speakers, panelists, and coaches throughout the two-day program series. These individuals shared their diverse and candid perspectives on what it’s like to raise outside capital and the elements involved in building a successful company.

Bootstrapping Your Venture

Joe Colopy, CEO and founder of Bronto Software, spoke on the sacrifices he made when starting out and the importance of capital efficiency to the survival and success of his business today.

If you haven’t heard, Bronto provides a cloud-based marketing platform for retailers and other commerce-focused companies to drive revenue through email, mobile, and social campaigns. Its 1,000+ clients are diverse, including international online women’s retailer Nasty Gal, Timex, and the Durham Bulls. Today, Bronto employs more than 200 individuals and has offices in London and Australia. In 2002, Bronto was a small business that Colopy ran out of his spare bedroom. Colopy shared with us that without successful bootstrapping and a strong knowledge of the financial environment, none of this would have been possible.

Crowdfunding Campaigns

Worried that bootstrapping isn’t enough to sustain your company’s development? Crowdfunding is another option we explored at Raising the Dough. Typically, crowdfunding involves raising many small amounts of money from a large number of people, usually with the help of an online platform.

Freeman White, CEO and co-founder of Launcht, moderated a discussion on what crowdfunding involves, why it is an important tool for entrepreneurs, and how to effectively utilize crowdfunding to gain capital. White has dedicated his life to revolutionizing the crowdfunding industry. In 2010, he co-founded Launcht as the first software as a service (SaaS) company to offer crowdfunding software. In 2012, he successfully advocated for legislation that legalized equity crowdfunding.

2014 is the first complete year in which using general solicitation to raise capital is a reality, and companies will continue to use funding portals, websites, and social media to broadcast their financial needs. Check out this document on raising capital using Rule 506(c) to learn more about the current state and future of crowdfunding.

Early-stage Investor Perspectives
Sourcing funds from angel investors or venture capitalists is another funding option that often takes center stage in the mind of many entrepreneurs. In a panel lead by Fred Hutchison, founder of Hutchison PLLC, investors from regional venture capital and angel networks discussed a short overview of their fund, how they source deals, and their portfolio investments. As you might imagine, each investor’s portfolio varies based on what types of companies they typically gravitate towards and their desired level of engagement with the companies they invest in.  Advice to the startups - do your research and find the investor that is interested in and knows your business, then find a warm introduction. Attending local entrepreneurs events like Raising the Dough are a great start at building those relationships with local investors.

We provided attendees with Garage Venture’s white paper  “Getting to Wow,” which provides an overview on how to distill the crux of you proposition into something clear, credible, and compelling, which increases the chances that an investor will believe in your idea and, thus, invest in it.

Term Sheets and Negotiation
Day 1 concluded with an in-depth discussion lead by Justyn Kasierski and Scott Bryant, partners at Hutchison PLLC reviewing the process of receiving and negotiating a term sheet from the perspectives of all parties involved in a business transaction.  We know this seems like the “not fun” part, but according to the CEOs and investors in attendance, it is absolutely essential to get this part right and can truly make or break the success of your company.  Hutchison has shared a list of VC terms that are helpful when navigating this space.

Next Steps
Day 2 of Raising the Dough emphasized the next steps of planning and executing a funding strategy, whether you are looking for angel investment, venture capital, crowdfunding, bootstrapping, or simply assessing future options.

Bob Creeden, executive director of Blackstone Entrepreneurs Network, led a panel on the “Do’s and Don’ts” of Raising Capital featuring Tony Atti, CEO of Phononic, and Robbie Allen, CEO of Automated Insights. Each entrepreneur spoke a bit about their company the many lessons they have learned along the way. Themes that continued to resurface throughout the panel were the importance of doing your research and being 110% prepared for every conversation with a potential investor as well as the utmost importance of building an honest relationship with any investor you work with.  Phononic Devices, which focuses on improving cooling technology, has already raised $21 million in Series C funding in December 2013. Automated Insights has raied $5.3 million in two rounds several years ago, and now relies on paying customers to fund the company. Automated Insights will also be competing against eight other startups in Google’s first Demo Day this April in an attempt to raise more money.

The series concluded with one-on-one coaching from investors and entrepreneurs. Attendees took a Funding Assessment, which was used to determine which type of funding is best and how to obtain it. If you weren’t able to attend the series, take the Fundability Assessment and see where you stack up.

This program was brought to you by Hutchison PLLC and Scale Finance, two strong supporters and partners in the Triangle’s entrepreneurial community.  Looking for further clarification on the funding landscape for startups? CED’s director of entrepreneurship Jay Bigelow hosts regular office hours in Raleigh and Durham.  Shoot Jay ( or CED’s Jane Royall ( an email to set-up a meeting to learn more and get connected. 
Life science entrepreneurs stay tuned!  Raising the Dough will run a life sciences track June 3 and 5, 2014.

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