Tag Archives: Crowdfunding

Seed Round Capital

Notes on Raising Seed Round Capital

Throughout the past year I’ve helped lead a couple of seed round funding for company’s that I’m a co-founder of. While I’ve assisted and consulted many startups prior to that with raising money, doing it from this perspective was quite different. I won’t admit to knowing absolutely everything, but I’ve certainly learned a few things along the way that are worth sharing if you’re in a similar situation or considering it.

Seed round funding takes significantly longer than you think it will, even if you’re just going after “friends and family”. Start reaching out to potential investors at least 6-9 months before you think you’ll need the funds as it can easily take that long to close the deal and collect the check.

How are you going to structure your company, and the investment? Delaware C-Corp’s are a common favorite structure and get a ton of attention, but you don’t necessarily need to structure it that way. Do you want to offer a convertible note or do a straight equity investment (or equity crowd funding – which is a whole other game)? There are pros and cons to each of these decisions, so it really just comes down to preference and seeking expert counsel.

Get serious about documentation as there’s a ton of it required. These deals are a negation, so anticipate there to be red lining for edits on a term sheet contract, additional concessions will be asked for, etc. Secure an attorney to assist you with this side of things. While you can start with a template, always get approval from a professional before executing the deal and finalizing documentation. It will help you later.

Your valuation is likely too optimistic. But even then, a valuation is always subjective. Your true valuation is essentially what you can convince someone your company’s worth. Remember no business plan or pitch book in the history of the world was 100% accurate with their projections. Make sure your work comes across as thoughtful and realistic however to show the potential investor that you did the work and aren’t just flying by the seat of your pants.

A “yes” isn’t really a yes until the money has been transferred. Don’t count your chickens and start deploying capital until you have received it. You can get a yes (or what you perceive to be a yes) on a deal but then when it comes time to complete a wire transfer the investor can get a little gun shy. Things happen, whether they get push back from their spouse, the market takes a downturn, or perhaps it’s some other random unexpected occurrence, a deal isn’t truly closed until you have the money in hand.

Collecting the funds isn’t where it ends, rather it’s just the beginning. After you receive the investment capital, then you have to execute the vision, deliver on what you said you were going to, provide further documentation along the way, communicate progress regularly, and ideally turn a profit so you can return the capital back along with a sizable return on their investment. Not sure which is the hard part? They all are.

What are some of the things you’ve learned along the way? There are so many others to consider. I always love hearing, and learning from, a good case study about your personal experience raising funds if you’re willing to share.

Hathrup Logo

Hathrup.com Entering Beta Testing Phase

Hathrup.com is launching the beta testing phase of it’s website and platform that primarily focuses on making access to capital for entrepreneurs more convenient and significantly easier.

April 9, 2015 (USA) – Hathrup Capital Funding, LLC (HCF), a website platform that offers entrepreneurs, start-ups, inventors, and investors an opportunity to connect and help each other, has announced the launch of the beta testing phase for it’s socially interact website and “FundMeNow” program.

“As entrepreneurs and investors ourselves, too many times we have seen and experienced numerous ideas fizzling out because of the lack of capital. As a team, we have struggled to raise seed capital in ventures we have done in the past and met with too many people that gave us a reason why we could not create and achieve our dream,” states Henry Norom, Co-Founder and CEO of Hathrup.

This recurring problem spawned the idea of using the peer-to-peer business model, made popular by companies such as Uber and AirBNB, to bridge the vast gap that exists for entrepreneurs seeking funding to achieve the American dream. The idea evolved over time, leading to the social media like platform, which is now something of a cross between Facebook, LinkedIn, and Kickstarter, but for primarily geared towards connecting entrepreneurs, investors, and the many ancillary people that help support them.

Further, most of the existing solutions out there focus primarily on start-up tech companies that offer innovative products and services, yet the vast majority of entrepreneurs with service business (80% or so of small businesses) are left out. They may not have a sexy idea that will change the world, but they have solid businesses that need access to start-up capital as well. Whether someone wants to open a hair salon, photography business, or even an independent legal or accounting firm, Hathrup will help facilitate. These businesses may not get the attention of some of the larger VC funds, but they deserve the opportunity to achieve the American dream as well.

As Hathrup’s mission states, it wanted to bridge elements of what makes all these ideas and companies successful, while stripping away the downsides in order to create a more complete product specifically tailored to improve the lives of users, not exploit them.

An excerpt from their mission reads:

“Hathrup is a free, capital-funding facilitating technology company. We are a non-bank/untraditional finance company. We are a social media/social networking company specifically for entrepreneurs and their family and friends. We are a crowd-funding company, without the strangling limitations of high minimums and the must-reach-your-arbitrary-goal-to-actually-get-funded restrictions. We are a peer-to-peer company that allows you to receive a direct financial contribution to your company via our FundMeNow program, which is facilitated by PayPal, giving you access to the capital you desperately need as it comes in and when you need it, i.e. ASAP. We are a capitalism facilitator. Hathrup takes the technological advancements of today, mixes them with the philosophy and ideals of the American Dream of yesterday, in order to bring you a better way to make your dreams become a reality tomorrow.”

Initially, Hathrup.com is narrowing its focus to entrepreneurs who need between $500-$25,000, for either building a prototype, purchasing inventory, or are looking to launch or expand their business.

As they now begin to enter their beta testing phase, they are seeking other like-minded thought leaders to take their site for a spin and to offer feedback. Those who are interested in participating, you can email contact@hathrup.com to get access.

###

Hathrup.com was founded in 2013 and is a LLC registered in Delaware. For more information, please visit the website at www.hathrup.com. You can keep track of their progress in real-time by following along on Twitter @Hathrup, and/or at www.facebook.com/hathrup.

Media Contact:

Mike Simmons, CMO

Hathrup Capital Funding, LLC (HCF)

PH: 305.562.9639

mikesimmons@hathrup.com

Hathrup Logo

The Hathrup Manifesto

What is www.Hathrup.com?

Hathrup Capital Funding, aka Hathrup, is a free, capital funding facilitating technology company. Hathrup is a non-bank/untraditional finance company. Hathrup is a social media/social networking company specifically for entrepreneurs and their family and friends. Hathrup is a crowd-funding company, without the strangling limitations of high minimums and the must-reach-your-arbitrary-goal-to-actually-get-funded restrictions.

Hathrup is a peer-to-peer company that allows you to receive a direct financial contribution to your company via our FundMeNow program, which is facilitated by PayPal, giving you access to the capital you desperately need as it comes in and when you need it, i.e. ASAP. Hathrup is a capitalism facilitator. Hathrup takes the technological advancements of today, mixes them with the philosophy and ideals of the American Dream of yesterday, in order to bring you a better way to make your dreams become a reality tomorrow.

We believe in the power of the human mind, and we belief that anything is possible when one is determined. We want to help remove the barriers created by the world around you, to clear the way and let you run with your innovative and potentially world changing ideas. Hathrup represents a newer and better way of doing things, one that puts PEOPLE first. We look forward to working for you, and to watching all of you change the world for the better.

As we now begin to enter our beta testing phase, we are seeking other like-minded thought leaders to take our site for a spin and to offer us feedback so that we can go live with the best service possible. If you are interested in participating, please send us an email at contact@hathrup.com. We understand that perfection is impossible to attain but we will continue striving for that unreachable ideal daily as we relentlessly work to enhance the value we provide for our users.

You can keep track of our progress by following along on Twitter @Hathrup, and/or at www.facebook.com/hathrup.

Hathrup Logo

The New Entrepreneurial Landscape: Not Just an Ol’ (White) Boys Club Anymore

American’s born abroad are now responsible for launching more than a quarter of new businesses in the US. This is a substantial trend as that percentage continues to grow each year and doesn’t appear to be slowing down. Hathrup Capital Funding, the company I’m thrilled to be the CMO of, is extremely proud to be one of these businesses as our CEO, Henry Nnorom, was born in Nigeria, and continues to pursue his American dream. At Hathrup, It is our mission to help entrepreneurs of all backgrounds succeed regardless of gender, ethnicity, religion, or any other demographic.

Henry Nnorom

Henry Nnorom, CEO of Hathrup, realizing it’s time to get back to work!

It’s no secret that the American economy as a whole is vastly different than it’s ever been. While there haven’t been too many changes to the top of the food chain other than the emergence of the tech titans, the landscape in the middle class is evolving at a rapid pace. The reemergence of growth in this country can largely be attributed to the groundswell of start-up businesses.

Entrepreneurs are inspiring and creating a revitalized level of innovation enabled by the rapid progress of technology. Because of this the world has become very small, and much easier to make an impact. One of most important components of this increase in new businesses is that it is largely attributed to women, immigrants, and minorities, creating one of the most unique opportunities for commerce in the history of the world. This is better than the Silk Road, the rail road, and just about every other commercial quantum leap combined. It is the opportunity for literally everyone to become a member of your target market and the potential to spread commerce to a global scale without having to leave your couch.

Collaborating across multiple cultures and backgrounds and biases inspires innovation and growth. Differing ideas that complement and challenge each other lead to better ideas. The fact that people from other countries are coming here to start a business is a huge win for the US. This not only expands our tax base, improve our markets by increasing competition, but it also opens up a gateway to the rest of the world. This enables any small mom and pop shop to have the potential to create a global impact. Collaborating and working with businesses from a variety of backgrounds opens up your opportunity as well. In the event they maintain connections in their home country, new markets emerge and become a realistic opportunity.

At Hathrup, it is our goal to facilitate funding of businesses locally in the US initially; we especially want to service people of all backgrounds and ethnicities as we subsequently want to export capital around the world. When we help a business get started here, after they become successful, hopefully they will then want to pay it forward and fund businesses not only locally but from their home country as well. That is how we help create and facilitate a more global economy and enhance growth for all. This will enabling people to be able to make their dream become a reality and gain an entirely higher level of pride and self-worth.  We want to encourage everyone to take the chance and start the business of their dreams. Even if they maintain their day job while they build it, that’s ok with us.

Stay tuned as we gear up to launch our beta testing program in the next few weeks. If you’re an entrepreneur, planning to become one, or if you’re open to the possibility of becoming one of our investors please reach out and let us know. We’re opening up our testing program to those interested in getting a sneak peak at the platform in order to get user feedback and implement improvements before going live on a much larger scale.

Funding Gap

The Gaping Hole in Capital Funding

Along with countless other entrepreneurs out there it has been nearly impossible to acquire funding for my consulting firm, WIMS Consulting. It’s a constantly looping game of “chicken or the egg.” You can’t get a business loan or start-up funding without demonstrating two-three years worth of income. Simultaneously you can’t grow your business to a sustainable level without having an appropriate amount of capital. See the dilemma?

While I’ve been fortunate enough to walk this tight rope since I launched my business back in March, at some point the only way my business can truly grow is with additional external funding. Only that’s much easier said than done, as you can only operate on retainers and short-term projects for so long before the bills start piling up. But for professional service businesses like mine it’s difficult to show predictable and sustainable revenue in the beginning. It’s not only the case with consulting; it’s the same whether you want to start an accounting firm, a law practice, a hair salon, or photography studio among countless others.

Perhaps I’m just going about it all wrong? I certainly realize that’s a distinct possibility. To quickly digress, this isn’t meant to be a “woe is me” post, I may have to struggle now but don’t get me wrong, it’s been the most exhilarating and rewarding experience I’ve had in my professional life to date. But in case I’m not the only one stuck in this catch-22 let’s review the existing options out there along with their shortcomings.

The first one that comes to mind is going to an actual bank. Theoretically their sole purpose of existing is to give access to capital to those that need it, right? Ha! Unfortunately that is far from the case. They only loan money to those that already have it and don’t need it. Even when they do consider shelling out a measly slice of the multi-billion dollar pie they’re hoarding they make you jump through insurmountable hoops while holding you hostage throughout the entire process.

After banks the idea of peer-to-peer lenders came to mind. Companies like the Lending Club would be more understanding that I can’t provide two years of my business’ tax returns because I just started it, right? Wrong. It doesn’t matter how much money you made at your previous position, starting your own business deems those years of income moot.

Unless you have a world-changing technological innovation or company that can prove solid cash flow over multiple years, venture capital and private equity aren’t really an option. Not too mention the equity hit you’ll have to take for them to give you the time of day typically isn’t worth it either. Moving on.

I finally found the ideal solution, or so I thought. Crowdfunding is all the rage these days and the success stories receive a ton of media attention. While it has been a step in the right direction, and has done wonders for things like financing movies of old TV shows and launching innovative new products like the Coolest Cooler, it doesn’t help much when you’re starting another “boring” service business. I tried getting in on the action by setting up a GoFundMe account; sadly it still remains bare after several months. There remain challenges with this approach, but at least upcoming (still pending) changes allowing the incorporation of equity provides hope.

What’s left is the dreaded and awkward “friends and family” option, another far from perfect one however. This is especially true in my case as I personally come from a very poor family. While I’m generally very proud of that fact, it’s an unfortunate one when you’re trying to raise capital for your business. Yet, even when you get past the awkward ask and get to pitch to wealthy friend, it’s quite challenging to assure them that you will be able to generate enough revenue to be able to pay them back as these can be quite unpredictable businesses. You can’t blame them for being concerned, like any reasonable person they just want that elusive guarantee that their investment will be returned to them.

Despite this ongoing challenge, starting my own business from scratch has been one of the best decisions I’ve made in my life, and one I’d remake over and over again. And on a sort of related note, the best businesses always solve a huge problem that a large number of people face. Therefore there is a huge opportunity here.

When I became the CMO of the start-up (and soon to go live) Hathrup Capital Funding it’s clear that this is a problem that I personally can become part of the solution for, while helping potentially millions of people in the future so they don’t have to go through the same experience I have. I’m very much looking forward to the challenge.