3 Tips to Raise Money from Angel Investors with Hall Martin | Ep. 160 | Business Podcast
Summary
Hall Martin is CEO of TEN Capital and joined us in episode #94 where we had a great conversation about how to raise money from angel investors.
If you enjoy these three tips, you’ll love the full episode #94.
Brandon:
Hello friends, welcome to the show. Today we are jumping back to episode 90 for where we talked with Hall martin the ceo of 10 capital. And we talked all about how to raise money from angel investors for your business. These are halls three H. P. T. S. High percentage tips.
But you’re going to want to go back to episode 94 and listen to our whole conversation where Hall and I discussed a ton of information that you need to know to raise angel money for your business.
Here we go.
Welcome to build the business success secrets.
The only podcast that provides straight talk for entrepreneurs whether you’re an entrepreneur starting with an idea or growing your business. This show is for you. We’ll teach you how to build a strong mindset, powerful body and profitable business so you can achieve success and here’s your host Brandon. See White.
Hall:
What last piece of advice do you have for entrepreneurs out there who who believe that their company is funding worthy.
Hall:
My advice is to figure out how to articulate that because this is what we got into evaluation is when they started put out their number and the investor pushed back.
Hall:
They really didn’t have an answer for it in many cases. And the way I always say is you have to demonstrate what values you have in the business. And I came up with what I call the rule of four back in the day and I don’t know if it still applies all the time.
Brandon:
Here is people would ask me about evaluation and I say okay we’ll give yourself $1 million a pre money valuation for each of the four things sales team product and intellectual property.
Brandon:
So if you have 10 fortune 500 companies that have bake you in and you have recurring revenue from all of them and it’s going right give yourself a million dollars if you got to beta customers and they paid you a little bit of money will give yourself maybe 100 and 50 K.
Brandon:
For it.
Brandon:
So it’s not a sliding scale and then you do the same thing for team if you have everybody hired in place working great. Give yourself a million dollars If you have half the team hired.
Brandon:
Well let’s give ourselves maybe 400 for that.
Brandon:
And the same thing for intellectual property. If everything has been submitted and signed and approved and awarded, give yourself a million dollars. You get three provisional patents submitted. Uh give yourself 100 K. And then the same thing for the product if it’s working great, you know it’s all working fine. And uh so full fully featured version one.
Brandon:
Give yourself a million dollars. If you have a beta that can kind of work but crashes from here to there we’ll give yourself 100 and 50 and then you add up all four and that’s your pre money valuation. But I do I do that because not because I want a number is because I want them to think through what are the value props in their business, What do they have so far?
Brandon:
And when they push back, articulate those value propositions explain why you have a great team and what value they bring, explain what you’ve done so far with the product to show there’s value in the business today and then explain what you have with customers so far and then explain what you have with intellectual property.
Brandon:
Have the value of I. P. Is with the investors. So get some provisional patents to give you something to hang your hat on for that.
Brandon:
But don’t show up to the investor empty handed. That’s what I get. A lot of people have an idea for a business. They come in but they have no cells, no team, no product. No I P. There’s nothing developed so far. And this is a tough sell because investors know that how much work is in front of them when it should be behind. Some of that should be behind you already.
Brandon:
And that demonstrates execution that you can put this stuff together. Even if you don’t have a lot of money, you should be able to demonstrate some traction on those things. To show you got some something there for people to get excited about. My last one is always never go to an investor unless you have new information from a customer.
Brandon:
And I used to get people coming into me saying, well I’m pre revenue.
Brandon:
Well before you even built that product, you should have gone out and talked to a customer and even when you’re building a beta, you should be talking to that customer. And when you’re rolling out that product, you should be talking to a customer. You should never go at this alone Because those who raise money are the ones that can come in and say, yeah, we went to IBM and they had this problem and we said, we think we can solve it.
Brandon:
They told us more about it and we came to the beta and they liked it and they tried it until now. They’re paying 250 k to build it out for them.
Brandon:
And these are the guys that are going to get funded because they, they’re connected to the market. They have market reality. The guys who said, I had this great idea. I built something in my basement and now going out to see who wants it.
Brandon:
That’s a risky proposition. We all know how that goes.
Brandon:
My favorite quote is I think it came from Eisenhower who said, no battle plan survives first contact with the enemy. So in my case, no business plan ever survives first contact with the customer.
Brandon:
So you have to have market reality before you go too far down the path. But if you have that, you’ll find investors much more engaged because you’re getting real world feedback and there’s somebody in the picture that can actually buy the product and this is starting to look like real business versus I’m building a product.
Brandon:
I’m here by myself and we don’t know who will ever buy it if anybody, so it gives them confidence.
Brandon:
So those are the key issues I bring up is no the value props in the business and make sure you have customer reality with you before you hit the investor pitch circuit.
Brandon:
I love that and I’ve never heard I’m not that old, but I feel like I’m old enough to know, I’ve never heard the rule for so that was absolutely great.
Hall:
Thanks for being generous with your time and joining us for this episode of build a business success secrets Before we go, let me ask you a quick question, Are you the type of person who wanted to get 100% out of your time, talent and ideas?
Hall:
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Hall:
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Hall:
Tell me
