Harvard i-lab | What Do You Want to Know About Funding? | Summary and Q&A

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August 13, 2014
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Harvard Innovation Labs
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Harvard i-lab | What Do You Want to Know About Funding?

TL;DR

This investor panel discussion covers topics such as angel investing, venture capital, funding for non-profit and social entrepreneurship, and the importance of choosing the right investors.

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Key Insights

  • ๐ŸŽ Revenue royalty financing can be an alternative to traditional equity financing for startups, particularly those with predictable revenue streams.
  • ๐Ÿ—ฏ๏ธ Choosing the right investors is crucial for the success of a startup, and thorough due diligence and references are essential in the selection process.
  • ๐Ÿคจ Entrepreneurs should raise enough capital to last at least 15 months and consider market conditions and potential fundraising timelines.

Transcript

so i'm super excited about this panel today this is going to be really great we're actually bringing in more chairs because it's getting filled up quickly um so the idea with today's panel is that we brought in um these amazing investors and we wanted to represent a lot of different types of investors that you might be talking to so we've got uh jo... Read More

Questions & Answers

Q: What is revenue royalty financing, and why is it considered an alternative to equity-based financing?

Revenue royalty financing is a form of financing where an investor gives a company funds in exchange for a percentage of its revenue. This model is seen as an alternative to equity financing because it allows companies to access capital without having to give away ownership. It is especially suitable for software-as-a-service (SaaS) businesses that have predictable revenue streams.

Q: How involved are investors in a company's operations, and how can entrepreneurs choose the right investors?

The level of investor involvement varies, but entrepreneurs should choose investors who are experienced and have a good track record. It is crucial to do thorough due diligence and speak to other entrepreneurs that the investors have worked with. Entrepreneurs should also seek investors who align with their vision and can provide valuable insights and connections.

Q: How should entrepreneurs approach raising funds for their startups, and is there such a thing as raising funds too early?

Entrepreneurs should have a compelling business case and focus on milestones that are achievable within a defined timeframe. While it is possible to raise funds too early, it ultimately depends on the specific circumstances and goals of the startup. The general rule is to raise enough capital to last at least 15 months and to consider potential fundraising timelines and market conditions.

Q: How do biases, such as gender bias, affect the fundraising landscape, and how can entrepreneurs navigate these biases?

Biases exist in the fundraising process, and studies have shown that gender biases can impact investment decision-making. While biases are difficult to change, entrepreneurs should focus on creating the most compelling business case possible and remain confident in their abilities. They should also strive to build diverse teams and seek out investors who are open-minded and supportive.

Summary & Key Takeaways

  • This panel features investors from different backgrounds, including angel investor John Landry, venture capitalist Eric Paley, and social entrepreneurship funder Brendan from Draper Richards Kaplan Foundation.

  • The panelists discuss their experiences in investing and provide insights on topics such as raising capital, the role of incubators, and alternative financing models.

  • They emphasize the importance of choosing the right investors and the need for entrepreneurs to lead their boards effectively.

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