Mark MacLeod

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• Hi Mark...heard great things about you...I am a new Entrepreneur in Saskatchewan heading to San Francisco shortly...Quick question...We often here of traction as the main component to receive funding or a really strong team, in what if any are there instances where you will fund a company that has great potential, a lot of personal investment and a beta prototype that is testing? Thanks!

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    As seed investors, we routinely invest pre traction. To raise $ you need to have 2 it of 3 of great team, traction, big vision / opportunity.

    That being said, nothing gets investors more excited than traction and momentum.

    Good luck in the Valley!

• Is there ever a time that its unadvisbale for a startup to raise venture capital?

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    Yes. VC is about acceleration vs creation. So if you are just starting out you may want to consider angels or seed funds. If you already have investors, it’s a bad idea to go for new investors until you have proven that you’re onto something. You need to achieve new, value-creating milestones before you can go out for new VCs. Finally, it’s generally advisable not to try and raise in the summer. It can be done. I have done it, but it’s painful. Especially in August

• I'm concerned about the deal terms that are being offered to me by local investors... are there standards to compare to?

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    Yes, check out the series seed documents. http://www.seriesseed.com/ these are default early stage terms in the US and probably a good base line for you.

• Hi Mark, do you know of any good templates for start-up budgets? ie. 18 months and 5 yr projections

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    Here is a good one that I have used before http://unstructuredventures.com/

• Mark, how to you put valuation to a company during the seed round, when there is no enough sales data to justify any valuation?

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    The short story is that valuation is determined most often by the investors. The longer answer is that valuation is a function of many variables:

    • opportunity size
    • team
    • track record
    • team
    • vision
    • team
    • momentum
    • demand for your deal (from other investors)

    It’s all about you and your track record and your team. If you have a good story there, valuations will be higher. If you’re a 1st timer, you can still raise, but at lower valuations.

    Seed rounds in my experience are valued in a range from sub $1M to $2M max. Some companies have done $3M, but that is rare outside of the Valley.

    You also need to look at how much you want to raise. Investors usually look to own (collectively) 20 – 30% after a round. So, that can give you a valuation range as well.

• Where can I go to introduce an idea for a cool mobile app and hopefully partner to get it develop?

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    Depends where you are based. There are many good agencies that specialize in mobile app development. Where is your company?

• I'm developing a website and mobile app that connects customers with local businesses. My challenge is that I need merchants to sign up before I can launch. How can I get merchants to sign up as beta testers or early adopters?

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    I suggest you do a beta test in one city or even one part of a city and just go door to door and pitch them. Many others have done this, including our portfolio company Thinknear.

• I am starting a business where the customer is not the the user, i.e. we are giving away free services (a mobile health platform) to a population that actually cannot afford to pay for them, so the financing will come from non-users. How do you recommend balancing the interests of both groups?

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    I would need to know more to offer any valuable answer. There are plenty of free apps out there that are monetized indirectly. i.e. linkedin, facebook, any media property. Can you learn from them?

    I would need to know if you’re monetizing data or leads, etc before offering any useful advice.

• I'm looking for ideas on how to structure an agreement to enable incremental equity acquisition for developers as the company grows. Any good ideas, links, etc are appreciated.

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    Why not just give a decent grant now but have it vest over time? The standard is 4 years. Plenty of time for them to earn that equity. If you give them a smaller one now, they’ll just compare it with other companies who use the method I suggest and then they might leave

• Would you invest in a startup with a solo entrepreneur?

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    I have done it before, so yes. But we have a strong preference in our fund to invest in companies with co-founders. Startups are hard. Best if you have at least one partner.