The keys to obtaining Angel/VC Financing:
· Understand the process
· Attracting Interest
· Managing the process
· Selection
· Negotiations
· The On-going relationship

Understanding the Process
The following list is intended to give a potential company an idea of the actual process of raising money through an Angel Investor or a Venture Capital firm.

- Business Plans are typically only considered by a VC when that plan is referred to the VC by a trusted source.
- Angels are difficult to find and typically do not have access to local or regional deals within their personal guidelines.
- 1 in 30 Companies are actually funded by a VC
- Understand the Angel's/VC's Criteria
- Geography, Industry
- Stage of Development
- Size of Investment
- Lead or Follow other investors
- Actual involvement in the company
- VC's talk to each other constantly
- Angel's typically only have their personal counsel or accountant to review deals with.

Attracting Interest
How are you going to get the attention of the investor at any level or size? Remember, "You only get one chance to make a good first impression", make it great! It is also very important to remember that Angel Investors and Venture Capitalists invest in people, rather than a product, idea or technology. Put your best foot forward.

- Management Team "People are the Key"
- Business Model (timing & type, stable)
- Recurring Revenue Models (Profitable at ALL Levels)
- Matching with the right firm or angel
- Have a Clear Financing Strategy
- Strategic Partners with the correct Exit Strategy
- References from VC or Angels
- Plan for Revenue Issues Early (Unexpected stuff)

Managing the Process
You are not going to drop everything and neglect your business or family JUST to get money, recognize that raising money is now part or your business until you actually cash the check. Time management becomes critical.

- Timing pressures and distractions (delegate properly)
- "Pushing Progress"
- Getting to "NO" (do not waste time, either parties)
- Coordination among firms (Key lead)
- Clear/Concise Executive Summary
- 20 minute PowerPoint Presentation
- 30 Day Due Diligence
- Under commit and over deliver
- Major Customers add credibility
- Continue to build a solid company

Selection
These investors are going to be a part of your company, just like your attorney, banker, or accountant, due YOUR due diligence and feel comfortable with the investor. You have only just begun the dating process; know who you are going to marry.

- Terms Sheet, what to expect
- Referencing by VC
- Degree of active involvement
- Ability to make introductions
- Helpfulness
- Management Team Assistance

Negotiations
Third party objectivity is key to negotiating the RIGHT deal for you. Rely on your TEAM of trusted advisors and consultants. You may not always agree with their opinion and it is your company, but at least listen to what they have to say.

- Valuation
- Founders Stock
- Option Pool
- Board of Directors
- How many seats, founders/insiders
- Tax & Accounting Issues
- Equity-Related Issues, Revenue Recognition
- Preferred/Founders Stock
- Stock Based Compensation to Employees & Non-Employees
- Stock Splits, Options/Warrants
- Ownership Changes (Code 382)
- Revenue Recognition Rules /SAB 101
- Predetermine the Overall Tax Accounting Method
- Independent Audit, from the beginning, Quarterly Reviews
- Mistakes: Stale Financials, Cutting Corners, Not Managing the Process, Costs getting out of control, wasting time on unexpected problems

Documentation
You will need to have your "Ducks in a Row" before you can even start the process. Here are some, but certainly not all of the key elements.

- Business Plan
- Executive Summary
- Fully Developed Corporate Structure for Raising Capital
- Appropriate Articles of Incorporation
- Minutes of Organizational Meeting of Directors
- Officers and Directors Questionnaire
- Subscription Agreement
- Private Placement Memorandum
- Warrant to Purchase Common Stock
- Incentive Option Plan defined
- Corporate Buy/Sell Agreement
- Board of Advisors in Place
- Potential Insurance Issues
- Errors & Omissions Insurance
- Directors & Officers Insurance
- Key Man Insurance
- Kidnapping & Ransom Insurance (For the Traveling Executive)