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Elevate Northeast Indiana

Federal Match Program for Indiana Business Expanded

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July 27, 2021

INDIANAPOLIS – Elevate Ventures today announced the expansion of its Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) matching program, giving Indiana companies more access to early-stage funding.

Elevate, which manages the SBIR/STTR program in partnership with the Indiana Economic Development Corp., now supports Phase II matching in addition to its longtime support for Phase I.

The SBIR/STTR program is designed to address federal needs for research and development (R&D), as well as to drive technological innovation. The funding is available through 11 federal agencies.

Phase I is used to establish feasibility and potential for R&D efforts and to evaluate company performance and is matched 50% by Elevate.

Further support can be sought through Phase II, which is used to continue the R&D initiated in Phase I. As of July 2021, Elevate will match up to $75,000 per Phase II award and $150,000 per company. Unlike Phase I matching, which comes in the form of a grant, the Phase II match is a standard convertible note.

“The SBIR/STTR program is one of the largest sources of funding for innovation-driven companies at their earliest stage of development,” said Ting Gootee, chief investment officer at Elevate Ventures. “This additional support provides another edge for Indiana companies to compete nationally.”

For fiscal year 2020-2021, 25 companies received $1.3 million in funding from Indiana’s SBIR/STTR matching program, in addition to nearly $6 million in federal Phase I grants. These companies are:

  • Advanced Science and Automation Corp., Indianapolis
  • Akanocure Pharmaceuticals Inc., West Lafayette
  • BDYWR LLC, West Lafayette
  • Consensus Networks LLC, South Bend
  • Continuity Pharma LLC, West Lafayette
  • Engine Research Associates Inc., Fort Wayne
  • Eperture LLC, Columbus
  • Flightprofiler LLC, Newton
  • Grannus Therapeutics LLC, Indianapolis
  • Health Smart Technologies Inc., Zionsville
  • Heliponix LLC, Evansville
  • infoSentience, Bloomington
  • Miftek Corporation, West Lafayette
  • Multiscale Integrated Technology Solutions LLC, Carmel
  • Next Offset Solutions, Inc., West Lafayette
  • Ocella, Inc. (d/b/a Ateios), Newberry
  • Pierce Aerospace LLC, Carmel
  • RightFit Analytics Inc., West Lafayette
  • Spirrow Therapeutics LLC, West Lafayette
  • Star Voltaic LLC, Indianapolis
  • Terran Robotics, Bloomington
  • Trek10 Inc., South Bend
  • Valgotech LLC, Indianapolis
  • Vasculonics Inc., Indianapolis
  • Vennli Inc., South Bend

To apply for Phase I or Phase II matching dollars, support letters or assistance, please click here.

SBA and Millennium Challenge Corporation Announce Strategic Collaboration to Advance Emerging Technologies from Small Businesses

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| SBIR- STTR

May 21, 2021

The U.S. Small Business Administration and The Millennium Challenge Corporation (MCC) signed a Memorandum of Understanding today to advance emerging technologies and innovations developed through the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) programs.

SBIR- STTR Logo

The SBA/MCC partnership will identify, pilot, and scale innovative technologies to address country-specific needs in sectors such as renewable energy, agriculture and irrigation, health, water, sanitation, and hygiene.  It will also help U.S. small business innovators gain access to international markets.

“This agreement continues the incredible collaboration between our two agencies as we support small businesses that are discovering innovative technologies to solve some of the world’s most complex problems.  By combining our focus on renewable energy, climate, and the environment, we’re demonstrating American leadership and commitment to sustainable economic development,” said SBA Director of Innovation John Williams.

“Our collaboration with the U.S. Small Business Administration will allow MCC partner countries to more easily access proven, cutting edge technologies to solve some of their most pressing development challenges,” said MCC’s Vice President of the Department of Compact Operations Fatema Z. Sumar. “We are pleased to be joining with other U.S. government agencies to maximize our joint impact, while also providing opportunities to scale private sector involvement in MCC’s blended finance work.”

The SBA’s Office of Investment and Innovation coordinates the SBIR/STTR programs across the participating federal agencies, now totaling over $4 billion a year in R&D awards for small businesses.  Through this role, the SBA has contributed to the creation of MCC’s new Innovation and Technology Program (ITP), providing private sector technology solutions for developmental impact and commercialization with MCC programs and partner countries.

In November 2020, the SBA and MCC hosted a virtual roundtable that focused on technologies in the water, agriculture, and irrigation sectors. Occurring jointly with the signing of the MOU, the SBA and MCC convened a second virtual roundtable to bring together agencies and program managers from the climate resiliency and energy sectors to discuss innovations that may align and create opportunities in MCC partner countries.

Learn more about MCC here.

About the SBIR and STTR Programs

The SBIR/STTR programs represent the nation’s largest source of early stage research and development funding for small businesses. The programs are administered by the SBA in collaboration with 11 federal agencies that collectively supported more than $4 billion a year in federal research and development funding. www.sbir.gov.

About the U.S. Small Business Administration

The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start and grow their businesses. It delivers services to people through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov

Startup to Expand Portfolio of Medical Instruments

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| Inside Indiana Business

July 1, 2021

Warsaw-based RAZOR Medical Instruments Inc. has raised over $2 million in a Series A round of funding. Investors included Indianapolis-based Elevate Ventures and several angel investors.

The company says Elevate’s investment was made through its Smart and Advanced Manufacturing Fund

RAZOR Medical Instruments Logo

“Attracting RAZOR Medical Instruments to Indiana is a big win for the state,” said Dan Meek, Elevate Ventures entrepreneur-in-residence serving Elevate Northeast Indiana. “The company’s single-use surgical instruments offer confidence to patients and healthcare providers in the battle against contracting infection from orthopedic surgery.”

RAZOR, which was launched in 2016, develops single-use instruments that it says increases efficiencies, reduces overall cost and reduces risk of surgical site infections associated with orthopedic joint replacement surgery.

RAZOR says its products allow ASCs to increase surgical capacity by eliminating the need to clean and sterilize reusable instruments.

“Our Series A funding will allow us to introduce the RAZOR Single-Use Acetabular Reamer System into the U.S. market,” said RAZOR founder and President Bruce Khalili. “We’re excited to proceed with our plans towards completing the development of equally innovative single-use instruments in building out our portfolio.”

Earlier this year, the company relocated its headquarters from New Hampshire to Warsaw.

RAZOR says it will use the funding to expand the launch of the Single-Use Acetabular Reamers. The company is also developing a portfolio of single-use joint replacement instruments for the hip, knee and shoulder.

Startup Offering Software for Writing Projects Secures Funding

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Elevate Ventures

May 25, 2021

 Slice, a startup offering cloud-based software for writers and writing teams, today announced a $20,000 investment from Elevate Ventures through Elevate’s Community Ideation Fund.

Slice was founded in 2019 by CEO Joe Bellavance. While starting a freelance writing service, Bellavance searched for software tools to help him serve clients. Realizing the tools he needed did not exist, Bellavance decided to build them himself.

Whether you write for work, school, or fun, Slice makes writing projects easy by streamlining your workflow.

Slice’s software can be used to manage multiple types of writing projects including reports, proposals, class essays, blog posts, scholarly articles, and novels. Within the platform, users can work individually or with a team to collect content, notes, and other files in one place. Users can collaborate in real-time by editing and managing workflow.

“Slice seeks to transform the way we author, edit, source and organize original content,” said Dan Meek, Elevate Ventures entrepreneur-in-residence serving Elevate Northeast Indiana, a partnership focused on startups in northeast Indiana. “This investment will assist the company with early adoption and technology enhancements.”

Bellavance said the funding from Elevate will allow Slice to improve the user experience, gain additional customers, and share the software with more people.

“Over two billion people rely on a workflow that’s forty years old. Both of those numbers are staggering, and we have an opportunity to help a lot of people,” Bellavance said. “Funding is life to a startup, and we’re very grateful for Elevate’s investment that will enable us to grow.”

Elevate’s Community Ideation Fund is made possible through its partnership with Elevate Northeast Indiana. The Community Ideation Fund is available through the state’s 21st Century Research and Technology Fund, which is overseen by the Indiana Economic Development Corp. and promotes economic growth and innovation-driven public-private partnerships in Indiana.

ELEVATE PERSPECTIVE: Searching for Entrepreneurial Best Practices in Midsized Cities

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| Elevate Ventures

May 13, 2021

In 2020 I set out to find if any midsized U.S. cities had discovered the “secret sauce” of building successful, innovation-driven startups and entrepreneurial communities.

The first step was to find metrics to identify which cities have truly achieved outsized results. Nowadays, every city has its own flavor of coworking/incubator/accelerator, so it was necessary to cut through the marketing to find cities that were actually producing more venture-backed startups.

My first thought was to look at the total venture dollars raise averaged over a three-year period (2017-2019). While total dollars raised appeared to be a good indicator of success, the metric was extremely vulnerable to outliers. A single $100 million raise could push a city to the top of the list. Subsequently, I shifted my focus toward measuring the total number of venture-backed deals over the same three-year period, which was less affected by individual deals.

As anticipated, the top metropolitan statistical areas (MSAs) were also some of the most populated (San Francisco, New York, Los Angeles, etc.), and a quick correlation calculation validated that population was indeed correlated with venture dollars invested. However, venture dollars per person/population were much less correlated, meaning that while larger cities had more venture investment because they had more people, the larger population did not appear to produce significantly outsized results due to any sort of population or talent multiplier effect.

Eric Steele, Entrepreneur-in-Residence, Southwest Indiana

I defined “midsized” cities as those with an MSA of less than 500,000 (the smallest MSA was 56,000) AND those within a combined statistical area (CSA) of less than 1 million. Trenton, N.J., for example, has an MSA of 367,000 but it is also in the New York City CSA of over 22.5 million, so it was not included. Additionally, for comparison purposes, I eliminated cities with a designated tier one or tier two research university. While I did not dig into the exact statistical significance of this, it was clear that these research universities provided an advantage, as every one of the top 10 mid-sized cities had one of these institutions. So, for the purpose of finding best practices that could be replicated in my home market of Evansville, Ind., I eliminated these cities.

Below are the top five midsized cities:

  • Bend, Ore. MSA, 9.3 deals
  • San Luis Obispo-Paso Robles, Calif. MSA, 9.0 deals
  • Asheville, N.C. MSA, 8.7 deals
  • Anchorage, Alaska MSA, 7.7 deals
  • Evansville, Ind.-Ky. MSA, 4.3 deals

While Bend, Ore., and San Luis Obispo, Calif., were clear leaders, the difference between No. 6 (four deals/year) and No. 16 (three deals/year) was only one deal per year. Therefore, an exceptionally good or bad year could significantly affect the rankings.

Additionally, in several cities the presence of angel and venture investment did not necessarily reflect a strong, innovation-driven economy. For example, the majority of deals completed in Asheville, N.C., were centered around angel groups investing in restaurants and tourism, while Anchorage, Alaska, was heavy in natural resource harvesting (oil, timber, etc.).

As a final step, I reached out to companies in Bend and San Luis Obispo to hear what resources they identified or have used to help them along the way. Ultimately, I reached out to 13 companies, each of which had raised over $2 million. To my dismay, there were no resources or organizations providing that secret sauce (at least none identified by the startups I spoke with), only a combination of standard entrepreneurial services such as coworking, networking and educational content.

Ultimately, I was unable to identify any specific program(s) that altered the course of these cities. However, there are numerous possibilities not included in this analysis (culture, talent, etc.) that may have played a role in the success of these communities.

While I love to see that Evansville is ranked fifth, I am hard-pressed to claim that it has found the secret sauce. Perhaps the  sauce is not a singular program but multiple incubators, accelerators and support organizations addressing problems collectively and helping entrepreneurs from all angles. Or perhaps it is a cultural and/or talent movement built over years upon past successes?

Whatever it is, it gives me encouragement to know we are moving in the right direction.

Disclaimer: Please note that I do not claim to be a statistician. My conclusions, while interesting for directional inferences and discussions, most likely have implicit biases based on Evansville being my anchor and comparative city. Also, the conclusions are only as good as the data I was able to attain and that which was provided to Pitchbook. While I attempted to utilize the most complete data, even in my home MSA I noticed several deals that were not included or incorrectly categorized in the Pitchbook database.

Entrepreneurship Initiative Announces New Board Members

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ELEVATE VENTURES

April 30, 2021

Elevate Northeast Indiana, a recently renewed partnership between Indianapolis-based Elevate Ventures and the Northeast Indiana Regional Partnership that promotes entrepreneurship, has added new members to the board who bring experience in startup commercialization and business development.

​​“Northeast Indiana is fortunate to have a partner like Elevate Ventures to bring new opportunities to startups through mentoring, investments and partnerships,” said Charlotte Gabet, director of Parkview Health’s Innovation program and Advanced Simulation Lab. “Between my experience in the startup world and my time at the Parkview Mirro Center for Research and Innovation, I plan to bring those skills and that knowledge to bear on behalf of startups in northeast Indiana.”

Tony Armstrong, one of eight new Elevate Northeast Indiana board members

The three-year partnership includes new funders and a refocus on the core mission of assisting, mentoring and funding high-growth, high-potential northeast Indiana companies.

The new board members include:

  • Tony Armstrong, president and CEO of Indiana University Research and Technology Corp. d/b/a IU Ventures. Armstrong, an Indiana native, has cultivated economic growth in Indiana.
  • Jason Blume, executive director of Innovation One at Trine University. Blume is a northeast Indiana native and has an extensive knowledge of lean manufacturing principles, product development, problem solving, quality systems and customer service.
  • Sarah Earls, chief financial officer of Ruoff Home Mortgage. Earls has over 10 years of experience in the financial institutions industry and is active in the Fort Wayne community.
  • Charlotte Gabet, director of Parkview Health’s Innovation program and Advanced Simulation Lab. Gabet has a background in developing teams and supporting startup growth.
  • Brandon Noll, director of business development for the Northeast Indiana Regional Partnership. Noll has a strong background in sales and business development and is passionate about northeast Indiana and the region’s rural communities.
  • Eric Ottinger, executive vice president and chief commercial banking officer of Lake City Bank. Ottinger graduated in 1992 from Ball State University, where he majored in Entrepreneurship, and from Indiana University-Purdue University Fort Wayne in 1999 with an MBA.
  • Lisa Peckham, director of soft project management at Medical Informatics Engineering. Peckham has more than 20 years of experience in healthcare and discovering innovative ways to use technology to create business value.
  • Rick Poinsatte, vice president of business development and treasurer at Steel Dynamics. Poinsatte holds a bachelor’s degree in accounting from the University of Notre Dame and has worked in domestic and international finance.

To find the complete list of board members, visit Elevate Northeast Indiana.

“I’m really excited to be joining the board at a pivotal time in the growth of northeast Indiana,” said Armstrong. “I am anxious to help get Indiana University more closely connected to this work. We can make northeast Indiana an attractive destination for entrepreneurs leaving the coasts with Elevate’s programs.”

A five-member executive committee of the board will be formed to vet Community Ideation Fund opportunities.

Throughout the next three years the board will designate up to $500,000 to entrepreneurship initiatives throughout northeast Indiana, including the Eleven Fifty Academy partnership. An event will be held in May to explore the initiative further.

Entrepreneurs looking for assistance in northeast Indiana can visit the Elevate Northeast Indiana website.

Indiana Entrepreneurs Graduate From Startup Training Program

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ELEVATE VENTURES

April 23, 2021

Elevate Ventures today announced that over 125 participants graduated on April 16 from the spring cohort of Elevate Origins, a program that helps entrepreneurs as they start and grow their business. Participants came from all over the state including students from the following universities: Butler UniversityFranklin CollegeIndiana TechIndiana UniversityPurdue UniversityPurdue University NorthwestTaylor Universitythe University of Evansvillethe University of Notre Dame, and the University of Saint Francis.

“We were encouraged by not only the record number of applicants from across the state but also the quality of startups represented in both the Pre-Seed and Seed categories,” said Landon Young, executive director of university initiatives and entrepreneur-in-residence at Elevate Ventures. “From software to pharmaceutical, to advanced manufacturing, the diversity of startups shows the breadth and depth of Indiana’s startup ecosystem.”

Elevate Origins Pre-Seed and Seed programs provide virtual group learning, one-on-one coaching, and live pitch practice to startups. The Pre-Seed program is for aspiring entrepreneurs and startups that have not yet generated revenue, while the Seed program is reserved for revenue-generating startups and life science companies that have completed pre-clinical trials. Both programs help participants develop investor-ready pitch decks and executive summaries appropriate for their business stage.

“The Elevate Origins program helped me break down many of the troubling questions new entrepreneurs may face, and effectively refine my executive summary and pitch deck,” said Eddie Davis, co-founder of Anytime Sports. “To anyone interested in Origins, I would say it is well worth the application. The training and access to high-quality information, paired with live pitch practice, has pushed me to become a better founder.”

“Elevate Origins helped us clearly define our value proposition and express to potential investors our novel technology,” said Jim Donahue co-founder and CEO of ReproHealth Technologies. “As a team, we learned a lot about ourselves and encourage other startups to consider Elevate Origins. It really helps.”

Since the program launched in 2019, over 300 entrepreneurs have graduated from Elevate Origins, 45 of which have gone on to receive a total of $1.1 million in funding from Elevate Ventures. Some have also won Elevate Nexus Pitch Competitions.

Applications for the spring 2021 Elevate Nexus Regional Pitch Competitions are open through today, April 23. Finalists will be selected on April 27 and invited to compete virtually on the following dates:

  • Northern Region: May 18
  • Central Region: May 19
  • Southern Region: May 20

Elevate Nexus Pitch Competitions are organized into Pre-Seed and Seed classes. Each region will be eligible for three pre-seed ($20,000 investment) and two seed ($80,000 investment) winners.

Details and eligibility requirements can be found here. To apply, go to www.elevateventures.com/apply/ and select Elevate Nexus Pre-Seed and Seed Awards from the topic dropdown. The April 23 deadline is at 11:59 p.m. EDT.

GUEST PERSPECTIVE: Federal Support for Technology-Based Businesses

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| Elevate Advisor

April 8, 2021

The federal SBIR/STTR (Small Business Innovation Research; Small Business Technology Transfer) programs enable businesses to expand their technological efforts. While the programs can be competitive, they offer business development tools that are highly desirable and well worth the time required to develop a convincing Phase I proposal. In fact, the SBIR/STTR programs are the largest source of early-stage technology financing in the United States. On top of this, Elevate Ventures helps with polishing the content of your proposal and supplements the resulting Phase I award. Using state dollars, Elevate matches 50% of up to three SBIR/STTR Phase I Awards ($150,000 maximum match) per recipient.

So, why bother applying for SBIR/STTR grants? Developing a Phase I SBIR proposal takes serious thought about your technology/intellectual property and the logic behind its planned development, competitive advantage, and market – which can be a pain.  But this is what you need to do anyway! The formal organization of the SBIR proposal helps you structure your thinking about the relationships among these crucial business development elements. Creating a coherent argument addressed to national experts in both technology and business development will help you better frame your company vision for the broader investment community. And, winning an SBIR/STTR award from a federal agency brings with it much more than non-dilutive funding to move your ideas forward. The award is an important validation by a national review body of your ideas and business goals. In sum, the mental discipline of creating the proposal, the financial support (with significantly more future support implied by the Phase II process) the award provides, and the implicit validation of your vision are all important and necessary elements of growing your business.

The central focus of the Phase I proposal is a technical plan that validates your ideas and provides a solid basis for your Phase II development plan leading to Phase III, commercialization, and market entry. Phase I awards are generally between  $150,000 to $250,000 and Phase II is generally substantially more. In addition, the federal agencies backing your idea often offer financial incentives for external support during Phase II.

Now, let’s discuss timing. The federal SBIR/STTR review process is not fast and typically takes up to six or seven months after you submit your proposal. A number of things occur in those months; your proposal is assigned to an expert review group,   your proposal is given to group members, time is set aside for reading and writing a review critique, and finally, the review group is brought together to discuss the current proposal cohort and rank their quality. Often, companies complain about this ‘time lag’, but the time passes quickly, and you are not actively involved once you submit your proposal to the agency. It would be nice to have the funds in one month, but patience is often well rewarded.

Whether you win an award or not, the SBIR/STTR submission process strengthens you and your company. The process requires time management, strategic thought, direct business application planning, and patience. The agencies provide written feedback which is generally useful as you continue to craft your pitch and develop your business plan.

Elevate Northeast Indiana Focuses on Continued Growth

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| Inside INdiana Business

March 31, 2021

A consortium of organizations that works on boosting entrepreneurship in northeast Indiana says it will continue its collective efforts for at least three more years. Indianapolis-based Elevate Ventures and the Northeast Indiana Regional Partnership have announced a renewal of Elevate Northeast Indiana, which launched in April 2017.

The partners seek out opportunities for local high-growth, high-potential businesses, portfolio services, and events for entrepreneurs and investors.

“We are excited to continue the great work of Elevate Northeast Indiana with the continuation of the partnership between the Regional Partnership and Elevate Ventures,” said Dr. Michael Mirro, Elevate Northeast Indiana board chair. “Our corporate investors are integral and truly catalyze the growth and success of the northeast Indiana communities by investing in our entrepreneurial ecosystem.”

Elevate Northeast says it will expand its partnership with Eleven Fifty Academy, a non-profit coding academy, by offering training of new cybersecurity and programming talent.
The organization says since the partnership launched, 16 transactions have been completed through various Elevate programs totaling $3.7 million. Companies receiving the investments currently employ approximately 125 people.
“I believe this partnership is crucial for Northeast Indiana to be a leader in our state as we focus on innovation and entrepreneurship as a key driver of high-skill, high-wage jobs, building new headquarters and attracting and keeping our talent,” said Chris LaMothe, Elevate Ventures chief executive officer.
The partnership says it has received commitments totaling over $800,000 in its goal to raise $1 million. Elevate Northeast says several funders renewed their commitments and the initiative garnered support from new donors as well.
Current funders include:
  • Ancora
  • Fort Wayne Metals
  • Huntington University
  • IU Health
  • IU Ventures
  • Lake City Bank
  • Micropulse
  • MIE (Medical Informatics Engineering)
  • Mirro Family Foundation
  • Olive B. Cole Foundation
  • Parkview Health
  • Ruoff Mortgage
  • Steel Dynamics Inc.
  • Sweetwater Sound

ELEVATE PERSPECTIVE: 10 Considerations When Building Relationships With Investors

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| EIR, Elevate Northeast Indiana

March 11, 2021

As you advance your startup, relationship building is critical, especially with investors. Depending on several factors, an investor could be there from the very beginning stages of your company all the way through an “exit”. While the relationship with your investors may change over time, their support and advice could help guide you through some of the biggest decisions you’ll have to make for your company.

So, how do you go about growing those initial relationships? How do you ensure that you don’t give an investor reasons to dismiss your opportunity?  Your company? Your pitch? Below are 10 considerations that will help you build investor relationships, and also prepare you for questions and discussion points investors may ask of you.

  1. First Impressions: Realize that the first five minutes are extremely important. Each investor is different, but most want to figure out the investment opportunity quickly. If you are pitching an investor, make sure it is easy to understand your business, its value proposition, market traction to-date, and the investment opportunity. Professionalism and business acumen are very important.
  2. Relationship Building: Build relationships with investors through regular communications by providing written updates each month on the status and growth of your business. This will build trust with the investor and show the progress of the company. Most importantly it shows how seriously you take milestones and goals. It is best to have a consistent format for your update and can be written and delivered via email.
  3. Coachability: Be responsive to questions and suggestions by investors. Investors know what information they need to make a decision, so make sure you provide it to them in a reasonable amount of time. If an investor suggests you talk to someone, make sure you do it and communicate back how the meeting went with some key takeaways. This will show the investor that you’re coachable and willing to seek outside advice and help.  Remember you are trying to build a long-term relationship that is mutually beneficial to your company and the investment firm.
  4. Value Proposition: Spend a lot of time on your value proposition and how your product/solution truly meets a market need. Investors want to see that you are solving real problems with real solutions. Quantify your problem statement by expressing how many people have the problem you are aiming to solve. Be honest with yourself and make sure you know if you have an incremental improvement to an existing product or a revolutionary new approach. Investors will be asking themselves the same question as they evaluate your opportunity.
  5. Social Platforms: Don’t post stuff on social media or on public forums that will hurt your chances of being seriously considered for investment by an investor. Enough said here.
  6. Product vs Company: Truly assess if you have developed a product versus a company. Some products are better to license early on to larger companies with existing product portfolios. This is why financial and business acumen are so important because some products just don’t lend themselves to building out an entire company. Sometimes the economics don’t work out either due to scale, margins, intellectual property, industry, or distribution challenges. In those instances, it’s best to try and monetize your solution via licensing or technology sale. Make sure you’ve thought through this before you approach an investor for investment.
  7. Investment Terms: Make sure the amount of capital being raised and the investment terms match up with the investment firm’s thesis. If the investor only invests in priced Series A and B rounds with preferred stock, don’t offer common stock (unless you can justify it!). If an investor only invests in SaaS or technology companies, don’t pitch your life science or manufacturing opportunity to them. Ensure you are asking for the right amount, make it clear how the investment advances your company by explaining the milestones and goals you plan to hit, and know the runway the investment will provide (in months).
  8. Investment Vehicles: Learn the investment vehicles so you don’t come off as clueless. Know the basic differences between SAFE notes, convertible debtKISSes, and a preferred stock Series raise to ensure you understand how each vehicle impacts your ownership and the ownership of the investor. There are plenty of resources on these topics, but one can use the National Venture Capital Association (NVCA) website, the Angel Capital Association (ACA) website, various books on startup financing, etc. to understand the differences.
  9. Team: Do you have a team and is it a team with applicable and complementary skills to grow a company at the stage that you are in? Teams generally illustrate your ability to attract talent to a competitive business opportunity. Your team’s experience can show an investor how viable your product is and instills validation that the product/solution is needed. Building and incentivizing a team can also signal that you are willing to give up equity for investment.
  10. Financials: Provide them in the format that an investor asks for and get help from professionals if numbers aren’t your thing. Please note, if numbers aren’t your thing, it’s best to start the process of making it your thing. Financial fluency is necessary for your business to be successful and as the company grows, understanding how numbers are impacted will ultimately enable you to make better decisions.

If you’re new to entrepreneurship, work with a CPA that understands startup financing to get you started properly.  I cannot emphasize this point enough, as strong financial records and financial projections are a critical piece to investors’ assessments, and ultimately investment decisions.

Finally, it’s highly recommended to study common business terms and know where the business is headed using these terms. Common examples include:

  1. Monthly Recurring Revenue (MRR): is income that a business can count on receiving every single month
  2. Annual Recurring Revenue (ARR): refers to the monetary value of a subscription-based company’s subscriber base or the yearly value of a single subscription
  3. Run Rate: The run rate refers to the financial performance of a company based on using current financial information as a predictor of future performance.
  4. Cost of Customer Acquisition (CAC): Customer Acquisition Cost is the cost of winning a customer to purchase a product/service.
  5. Gross Margin: often expressed as a percentage and represents the percent of total sales revenue that a company keeps after subtracting the cost of producing its goods or services
  6. Lifetime Value (LTV): an estimate of the average revenue that a customer will generate throughout their lifespan as a customer

In general, most investors will be honest with you if there is absolutely no interest on their part to invest in your business. The common reason is that your business just doesn’t fit their fund’s investment thesis. But beyond this, the highlights and suggestions above can and sometimes do turn a relationship into an investment.