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Why You Should Join Startup America Partnership

The Startup America Partnership is new and largely unknown, but this independent, private-sector coalition of corporate tech titans, advisors, financing firms, mentors and sundry service providers won’t be undiscovered for long.  Any business owner or entrepreneur – from startup (newly created), to rampup (initial growth stage), to speedup (going like gang busters) – should be ready to tap this free resource when the help starts flowing.

The way in will be through a free Startup America membership (via application) that isn’t yet available, but will be soon.  So sign up now to be notified by email when details on the membership application process are released.    

The group’s mission is mighty:  To inspire and accelerate high-growth entrepreneurship in the U.S. with services, product discounts, special access, resources, connections and “insider information” from a start-studded lineup of business power hitters.   It’s not a loan or grant program, do ditch that thought. Because Startup America is still starting up itself, most of what’s coming is still in development.  But here’s a sampling of what’s coming:   

  • Google will provide up to $100 million worth of online advertising to Startup America Partnership member companies to over the next year.
  • Intuit will offer special discounts on its flagship products and services, including QuickBooks Online, Intuit Payroll Services, QuickBooks Merchant Services and Intuit Websites. Value: $37 million
  • Angel Capital Association (ACA) and Angel Resource Institute (ARI) will double the number of high caliber investors in angel groups across the country, increasing annual investment by $1 billion.  Qualifying Startup America Partnership member companies will be matched with angel investor mentors to build their success in starting and growing their businesses.
  • Salesforce.com will provide products and technology to power Startup America Partnership member companies. This includes CRM, a collaboration platform, a resource catalog built on Force.com, and a workflow engine to connect entrepreneurs with resources from private-sector partners.    
  • The National Venture Capital Association (NVCA) will create the NVCA / Startup America Partnership Network, providing access to its 400 venture capital firms, 4,000 investors and thousands of venture-backed company CEOs via events around the country; and will provide access to StartUpHire.com, a free online jobs board for member companies.
  • American Express OPEN will provide special access and advantaged pricing for products and services to help businesses attract and retain customers and improve cash flow. Estimated value: $125 million
  • Cisco will provide training (through intermediaries trained and supported by Cisco) to approximately 6,000 entrepreneurs within 50 cities by January 2014.  Estimated value: $3 million.
  • Ernst & Young (EY) will provide access to EY professionals and the firm’s Entrepreneur Of The Year (EOY) network as advisors and mentors, plus on-line resources and other analytical tools.  Estimated value: $7.5 million.
  • First Data, a major electronic commerce and payment processing firm, will offer discounts on processing services including credit and debit acceptance as well as point-of-sale terminals to Startup America Partnership member companies.
  • HP will offer discounts on laptops, desktops, workstations, Palm smart phones, tablets, printers, wireless routers, servers and more to Partnership members.  Estimated savings for startups will be $100 million over three years.   
  • IndieGoGo, a platform for raising money online via “crowd sourcing,” will offer a 50% discount on campaign fees on the site and feature members on the company’s website.
  • LinkedIn will provide a special platform for Startup America members to build an identity and grow a network. LinkedIn will also contribute training, services, and products to members.
  • Microsoft will offer its BizSpark program to all qualified software startups.  BizSpark provides access to Microsoft software free for three years including support, training and access to Windows Azure, Microsoft’s Cloud Services Platform.  Participants are also connected to a global network of 700,000 mentors, partners and investors. 

AOL co-founder Steve Case chairs the partnership and the Kauffman and Case Foundations are founding partners, providing initial funding and strategic guidance.  

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Finding Startup Funds Made Easier

Websites hoping to play matchmaker between investors and startup entrepreneurs have come and gone with great regularity.  FindVenture.com looks like a player.  The site has partnered with a long list of venture capital funds to create a kind of exchange that connects VC and other investors with biz owners and entrepreneurs seeking capital.  FindVenture uses a special algorithm to match investors and entrepreneurs — a time saver for both sides — and carries detailed profiles of VC firms and other investment companies.  Biz owners and startup entrepreneurs can post a funding request on the site and get themselves quickly on the funding map.

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How to Find an Angel Investor

Need money to fund or expand your startup?  Forget venture capital.  For 99% of today’s startups, VC money is a pipedream.  Angels are the way to go.  They are more plentiful and better organized than ever, and hooking up with them has never been easier (not easy, mind you, but easier than it once was).

Consider Mark Risher who recently sought funding for his internet security firm Impermium. He found funding heaven at a new place called AngelList.  “Within hours of posting we had dozens of qualified, top-shelf investors and by the end of the day we were 100% oversubscribed,” he says. “At first we were reluctant, thinking the semi-impersonal list might be a last resort after personal introductions dried up. But my only regret is that I delayed for so long.”

Angel investors have become a key force supplying startup and early stage capital to tens of thousands of promising young companies yearly.  Angel investors are actively looking for ventures to back. Once conducted largely behind the scenes, the angel investment process has moved more into the open. Some angels act solo, but today’s angels are more likely to work through angel investor groups that have proliferated nationwide.

Angel investors and venture capital (VC) firms are different animals. Angels invest mostly in startup and early stage businesses. VCs provide growth capital for businesses further along. The good news for entrepreneurs is this: Locating angel groups, learning how they work, what types of startups they are interested in, and finding out the exact process for how they can be approach, has become easier thanks to websites such as AngelList as well as organizations such as the Angel Capital Association (ACE) and the Angel Capital Education Foundation (ACEF).

ACE is North America’s professional alliance of angel groups, bringing together over 6,500 angel investors. ACEF is a non-profit founded by the Kauffman Foundation, a premier organization that supports entrepreneurship. ACEF does not make investments, but provides information and links to support the process. The “Entrepreneurs” section will tell you:

  • If your type of business is right for an angel group investment
  • When to approach an angel group
  • What criteria angel groups use to select entrepreneurs to back
  • What process you can expect to apply for group funding
  • Whether you should expect to pay fees to participate.

The investment process has numerous steps, including an initial application, pre-screening, screening, investment meeting, due diligence and, finally, a term sheet offering if you make it all the way through. About one in three angel groups charges a fee to present your idea. For those groups that do charge, the average application fee is about $150, and the average presentation fee is $500.

FindVenture.com is another great place to look.  This site has partnered with leading venture funds and angel groups to form a kind of “capital exchange” that connects investors with small biz owners and entrepreneurs seeking funds.  FindVenture uses a computerized system to scientifically match investors and entrepreneurs. Getting your funding request on this site is a great way to help get yourself on the map.

You can also search for angels on the ACE website at AngelCapitalAssociation.org.  Go to the “Directory” section which lists most members of the organization. Groups are organized by state, region or country, such as California, New England or Canada. The directory includes a link to each member’s website where you can learn more about that particular group, including investment preferences and application process.

Here are three “must know” tips about finding and approaching angels, from the non-profit Angel Capital Education Foundation:

  1. Angels are not venture capitalists (VC).  Angels invest their own personal funds in a business. VC money usually comes from institutional sources. Angels also back startup and early-stage businesses, while venture capitalists prefer later stage companies. Individual angels invest $5,000 to $100,000, while VC investments go $2 million and up.
  2. To attract angel interest, be willing to give up some ownership or control of your business, and be able to show a significant return within 3-7 years, as well as a profitable exit strategy.
  3. Seek angel funding when: a) your product is fully developed; b) you’ve already invested your own money and exhausted other alternatives (like family and friends); c) you have existing or confirmed potential customers; d) you can demonstrate that the business is likely to grow fast and can pass $10 million in revenues within 3-5 years.

For small sum, tech startup backing, check out Y Combinator. If you have a startup idea in the software or web services area and need between $5,000 and about $20,000, step up and submit your idea. These savvy startup funding folks are more interested in good ideas than slick business plans.

Thinking of placing a pitch on AngelList?  Here’s their advice on how to write it:

“We look for the same things that early-stage investors look for:  traction, market and team. Social proof also helps when you’re trying to get a first meeting. So you need to kick ass in at least one of these areas.  Before you pitch investors, build a minimum viable product, put it in front of customers, and learn something about product/market fit.  If you can’t get this far on your own, find some idea investors instead.  Then write a 150-word elevator pitch and apply to AngelList. Our elevator pitch template is a good place to start. Spend time writing and re-writing the pitch until it’s awesome. Get feedback from good writers and entrepreneurs who have raised money.”

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