Entrepreneur Kelly Hoey’s advice on startups and funding
By Kelly Hoey
Monday, November 30, 2015
Which situation demands bootstrapping, incubator or angel investors?
Depends on the opportunity, the industry or segment of a market being disrupted and whether the solution presented is truly scalable. It depends on the condition of the investment market (i.e. tech bubble or frothy). On top of that, it depends on the needs, experience and resources of the founding team. I know it would be easier for aspiring startup founders if there was set formula to follow for “when” a venture was perfectly situated for funding or an accelerator (or incubator) program. I will say I’m a big fan of bootstrapping for as long as possible. Why give away equity if you don’t have to.
Which things should be considered while approaching series funding? What are the steps needed to get funding?
Understand your financials. Understand what you are negotiating and what you are giving up (as well as gaining) by taking outside investment. Be smart not only about what your first round of funding will be but what the next round(s) will enable you to do.
Spend time researching potential investors. Why are they the right ones to help you realize your vision? Why are you a good fit for their portfolio? Funding is as much about “fit” and non-financial assistance (contacts, experience) as it is about money.
What advice do you have for emerging tech start-ups (with gender diverse teams) for seeking out angel investments? Does gender matter in seeking out angel investors?
Seek out the right investors, regardless of gender. On your cap table you want investors who have the experience and contacts to help you grow your business.
What advice would you give to women interested in starting their own company?
If you have an idea, act on it. Surround yourself with the right community of mentors and advisors to help you make your idea a reality.
What qualities in a startup make them probable for seed funding?
Putting aside the idea and market, investors look for passionate founders. That is, people we know are going to pursue an idea whether or not they get outside funding. People who believe in something so deeply, they will do whatever it takes to succeed.
What are your strategies to create a repeatable and scalable business model?
Pay attention to the data and get customer feedback, from the start. Ask yourself “who will pay for this?” as big ideas with no paying customers are a dime a dozen these days.
What are some principles of investment you follow when you have to make a decision about investment?
I have my personal values that relate to how I see the world and play a big part in my investment approach. I’m not particularly interested in investing in sexist, racist or homophobic founders, regardless of how big or disruptive their ideas are. I rather miss out on the next “big” thing than invest in a founding team whose values clash with my own.
Additionally, I like very capital efficient companies and I have a preference for B2B opportunities.
Do you have any advice in terms of how to brainstorm great start-up ideas?
Look to solve your own problem rather than seeking to solve a problem for someone else. Pay attention to friction or problems you’re experiencing at school or work or as a consumer.
What is the most difficult part of starting your own business?
Starting a business is the easy part. Scaling it is the tough part, and the Internet hasn’t changed that. We tend to confuse the two business stages.
What are the advantages or disadvantages of starting a non-profit over a for-profit?
The question is, what is the problem you are trying to solve? And is it better to solve that problem with one model versus another? However, if you can create a scalable and repeatable business model to solve a problem (even a problem which is being served by existing not-for-profits), why wouldn’t you do that?
What is some advice you would give to someone who is completely new to fundraising for a non-profit or for-profit? Where would one start?
Start by learning everything you need to know before you go knocking on doors asking for money. There are so many resources from blogs to conferences. Start with a company or not-for-profit you admire and understand how they are funded. Unravel their story. What part of their funding journey scares or excites you?
What's the most interesting startup story that you have heard?
I recently had the great pleasure of hearing Shazi Visram, founder and CEO of Happy Family Brands speak. From her immigrant roots to giving up a successful career to maintaining true to her values, it was a story I admired and resonated with my own world view. Google her – she writes for Inc.com and was profiled in New York Business Journal when she sold control of her company to Danone.
What are you biggest recommendations for female entrepreneurs in a male dominated VC world?
Find the investors in the industry who get “you” – it may take more time but why do you want to make money for someone who doesn’t believe in you as a founder and leader?
Do you have any tips for successful crowd funding? What types of ventures does crowdfunding work best for?
Read my friend Kathryn Finney’s post on Medium entitled “How To Win At Kickstarter” and remember strangers don’t determine your crowd fundraising success – it all starts with your own network. Crowdfunding platforms are only there to facilitate payments. Can you ask your own network for money? Can you rally a community to get behind your idea? Can you market relentlessly for 30-days to achieve a funding target?
I know you focus on investing in women-led startups - do you also factor in the purpose of the startup? For instance, do you invest more or more readily in products or services targeted towards or beneficial to women?
Investing in a female founder is just one factor I take into account. After that it is the market and the solution. It could be a product or service which benefit women but it doesn’t have to be.