Startup Fundraising: Three Things to Think About Before You Open a Round

You have idea, you’ve found a co-founder and maybe even built a product and have some early customer traction. The next step? If you’re building a venture scale company, you probably want to open a Seed Round.

Raising you Seed Round of Funding

Raising you Seed Round of Funding

  1. Incorporation: In the United States, investors won’t even look at you unless you are a Delaware C Corp. Limited Liability Companies (LLCs) and other business entities are not as well set up to take on outside funding, so it’s often too much legal work for investors to carry.

    Many founders go with a LLC structure in the beginning because a C-Corp is “double taxed”, whereas an LLC only pays taxes once. HOWEVER, in reality because startups reinvest most if not all of their profits, they rarely actually get doubled taxed.

  2. The SEC (Securities and Exchange Commission) Fight Club Rule: The SEC passed a rule in 2015 called Rule 506(c) which prohibits companies from “General Solicitation”. This means that companies are not allowed to advertise or publicly disseminate information about the round (or anything that involves exchanging money for equity). This includes: how much money you are raising, your valuation, what you would do with the money, burn rate or runway.

    A lot of startups and publications are unaware of this rule and can get in trouble with the SEC, which as a cash strapped startup, in the last thing you need. So who can you talk to? According to the SEC, only accredited and sophisticated investors. Generally, anyone at a VC firm and accredited angel investors. A person will know if they are accredited or not and don’t be afraid to ask. In closing: the second rule of fundraising: you don’t talk about fundraising.

  3. The Checklist: Despite not being able to publicly talk about your raise amount, valuation and burn rate, milestones, and runway, these are things that you will need to know when you do land a meeting or call with an investor. For Seed Rounds, investors typically like to see a raise amount that will give you 18 months or more of runway.

    When calculating your pre-money valuation, keep in mind that you don’t want to give away more than 25%-30% of your company in your first raise. For example, if you are asking for $1M and your pre-money valuation is $3M, once you raise $1M you would have given up 25% of your company ($1M / [$1M + $3M] = 25%). Your burn rate and runway is completely dependent on what city you are in (overhead) and how much you need to pay yourselves and your staff to remain competitive.

This is far from a complete list, it’s merely the top three things I wished I’d known when we started getting into venture capital. If you want to know more gritty details, check out Venture Deals by Brad Feld:

 

and these other books on building a startup.

Your Instagram Captions Are Annoying - Tips for Personal & Business Accounts

Every marketer under the sun is touting long captions as a method to increase engagement on Instagram. It can work BUT if the caption is 500 words for the sake of having 500 words, followers keep on scrolling.

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The TL;DR: Words matter. You need to provide value so we put together the top three instagram caption tips:

1.     Economy
Make every word matter. Study websites that you admire. Don’t be afraid to go big. Look at Facebook ads, Nike, Coca-Cola, Apple, Amazon. They have almost unlimited ad budget and have likely perfected boiling down information into its purest form. Just. Do. It.

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2.      The Hook

Movies, newspapers, magazines, and radio all use a hook at the beginning to pull the reader/viewer/listener in. Craft a one-liner to open your caption using who, what when, where, why. What is the problem, what is the solution and why should the reader care, right away.

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3.     Evoke Emotion

Try to evoke an emotion with the first three words. This sounds impossible, but it can happen. Using the “when +  I + [blank verb] ” construction is the most effective. “When I saw…”, “When I was…”, When I fell…” make people want to know more, enticing them to click on the ellipsis to read more. For example, “When I jumped out of a plane…” or “When we launched our million dollar product…” makes people want to know more. A word (or three) or caution: constructions with was/were as the verb are the weakest you can use. Try to keep the verb active.

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A scroll-stopping image is key as well, and nowadays, doesn’t even have to be particularly related to the caption content, so long as both provide value.

How To Get A US Tech Internship

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As a founder I get emails, DMs and even the occasional tweet from people asking about internships. A lot of the time those people are overseas or students in the US on a visa. As an immigrant I have gone through this process myself and am sympathetic to the international student struggles, so I compiled the below guide that covers everything from visa requirements to resume etiquette. If you are looking for general working in the US advice, read this instead.

***I am not an attorney and this is not legal advice. You should always consult an immigration lawyer for personal legal counsel***

Visa Options

There are two visa options for people seeking an internship: An F-1 Visa and a J-1 Visa. If you are already in the US studying, odds are you are there on an F-1 Visa. If you are coming to the US solely for an internship, you will likely need a J-1.

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F-1 Visa

If you are already in the US on an F-1 visa for university, you can get unpaid internship or an on-campus job without any extra paperwork (except maybe getting your Social Security Number). Both campus jobs and internships on an F-1 must be “part-time” and under 20 hours a week.

If you want a paid internship and an off-campus job, there are two options: Curricular Practical Training (CPT) and Optional Practical Training (OPT).

CPT internships are more strict about the type of internship you can get, but they can be paid or unpaid. CPT internship must meet the following:

  • Be related to the your degree,

  • Receive some academic credit for the internship.

  • Cannot be taken during the first year (freshman year) of university

  • You must apply for authorization on their student visa and receive an updated I-20 form before you start the internship (the international student advisor at your school can usually help with this).

OPT internships are less strict, but require more paperwork. OPT internships do not have to be part of the academic curriculum or directly related to the degree. OPT internships must meet the following:

  • Does not have to be related to your degree or program of study

  • Can be taken while still in school or post-graduation

  • Does not have to be for credit

  • You must apply to have the internship approved U.S Citizenship & Immigration Services (USCIS)

If you are in a STEM field you can intern for 17 months, otherwise OPT internships are 12 months, full-time. From the employers perspective, there isn’t really any red tape or burden on them at this stage, so from their perspective you look the same as a US candidate.

When I got my Master’s at NYU, I saved my OPT for after graduation and used my CPT while I was enrolled. I started applying for my OPT about six months before graduation, but that was back in 2013, so be sure to check with you advisor to get an up-to-date timeline.

J-1 Visa

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If you are already in the States on a J-1 visa, you can:

  • Take 18 months of “Academic Training”, similar to OPT on the F-1 visa.

  • This academic training can take place during the academic program or after you’re done.

  • You must get written approval from the J-1 Responsible Officer before you start

  • And the internship has to be related to the your field of study.

If you are not currently in the United States but want accept a US-based internship, the J-1 Intern visa or the J-1 Trainee visa is the best option.

If you are apply for the “Intern” category (there are several categories, make sure you pick the one most relevant to you), you must:

  • Be enrolled in a foreign college or university,

    • OR have graduated in the last 12 months.

  • For traineeship, need a degree AND one year of work experience,

    • OR a total of five years’ work experience, in the same field that you want to get an internship

On a J-1 you can intern for 12 months or train for 18 months.

In either case you need a sponsor to get a J-1 visa. You can pay for sponsorship, but this is far from my area of experience. I do know that AESIC (website here) is an awesome non-profit (that a Future Sight AR Co-founder worked for), helps place recent grads in such visa programs around the world. If you are considering this type of internship, I recommend you check them out.

Living Expenses

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While you can take a paid internship on a J-1 (and sometimes with an F-1) you still need to make your own living and transport arrangements. Sometimes your employer/sponsor will help you out, but it isn’t a guarantee. I can tell you, from experience, it is very difficult to get a short term rental in the US with no local credit or rental history. Be prepared to pay it all upfront or get something like an AirBnB for four months.

Depending on what office you do your visa interview at, they may ask for financial proof that you can support yourself while in the country, so make sure you have that ready too, if necessary.

Expectations

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First, if you apply for an internship at the big companies like, Apple, Facebook, Google, Amazon or even the unicorns like Slack, Uber, WeWork, Pinterest, Future Sight (okay, wishful thinking there…), you need to be the best of the best, so temper your expectations. It can’t hurt to apply but you really need to be top of your class and industry to realistically have a shot. (Hint: AESIC can help you land some of those brand-name opportunities). You’re much more likely to land something at a smaller start-up, and possibly learn more, so don’t ignore the little guys.

The other expectation that needs to be kept in check is about the US itself. A lot of people think that if you can land a job or internship in “the land of opportunity” that all your problems will go away and it’s just sunshine and rainbows for here on out. This is good Hollywood marketing and SO FAR from reality that it isn’t funny. There is a ridiculous amount of opportunity out in the world, not just in the US. And I can tell you, again from experience, that living and working state-side generally creates more problems than it solves when you don’t hold a US passport.

Resume

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One last note: before you apply be sure to “Americanize” your resume. Pretty much everywhere outside the US, a curriculum vitae (CV), is standard, but unless you’re applying to an academic role submitting a CV will raise some eyebrows. Most career centers will have resume templates that you can use. Different job types have different resume structures, so make sure you are including the correct information. For example, a software developer resume looks different to a financial analyst resume.