The Road to Round A: Part 1 of 3

* This blog post is based on Natan Chosnek’s presentation at the Alternative Finance Conference on March 4, 2013.

 

So you’ve decided to make your dream reality. Some will say you are merely a dreamer – but I will say that you are totally awake. You are, however, in the age of innocence.

You have a great idea, and you go for it. You attend events; do lots of networking; learn how to pitch your idea; listen to smart people who know things that you don’t; you work from coffee shops; you do lots of brainstorming; you drink lots of coffee. You don’t have any money, but you’re happy. Everything is fresh, the sky’s the limit.

And apparently, you’ve done something right. Someone is willing to take a risk on your vision – you have raised seed funding.

You should be happier, right?

Wrong. Everything just got much more complicated. We call it “Reality Bites”, or, even better, we welcome you to the age of awareness!

There’s a real office and a bigger team; many more demands; investors to manage (they were angels before, now they want results); lots of demads.

Wait, shouldn’t this be the easier part?

Wrong again. This is where it gets tricky.

In the US market alone, 7 million start-ups are formed every year (yes, 7 million). Out of them, 50 to 60 thousands get initial funding.  And only 1,500 get to the next stage, and raise Round A. It’s a tough funnel – about a quarter percent chance of success.

Let’s face it: Raising Round A is much harder. Why, and how do you beat the odds? Read more in Part 2 of this blog post.