Welcome to Feel the Boot: The Science of Startups! On this channel, I will share the knowledge and skills you need to launch and grow your startup. I know what it is like. I took my company from zero to a successful exit, and I’ve coached countless other founders. I will take you down the path from overwhelmed entrepreneur to successful CEO. I will help you through fundraising, product development, marketing, sales, strategy, and much more. I believe in straight talk. People call me “the boot” because I don’t sugarcoat the good, bad, and ugly of founding a company. I talk about the hard truths of angel and VC fundraising and strategies for finding success. Launching a new business puts you on a vertical learning curve. Feel the Boot tells you what you need to know to survive the wild ride of taking a startup to a successful exit. Please let me join you on this journey and Feel the Boot for yourself!
If you are looking to bring in investors, then you absolutely want a C-Corp. Otherwise, it is a tax question, and the answer would depend on your specific situation.
I'm starting up a new business how to properly set up my pitchbook what I would need for an MVP and how to get precede funding to produce my MVP. I haven't watched all of the video yet but I will be watching it and I have subscribed just simply because you interact with your followers
The MVP needs to be functional and deliver value to your customers. It might be rough, and could be missing features, but it must be worth buying. I did an episode on pre-MVP fundraising ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-RT95_15YKMw.html
If we are 3 founders and have a vesting schedule from the start with each getting their first part of the shares only after 1 year. Who technically owns the company in the meanwhile? Assuming there are no investors yet. Thanks for the video anyways!
The most common way to handle this is the company has a right to repurchase the unvested shares at some very low price. You all have and vote your shares, but might lose them if you leave.
What an inventive idea! I'm starting a startup and I'm loving all your content and sharing it with my co-founder. Thank you so much for taking the time to help people like me with our vertical learning curve.
Your return calculation at around minute 07:30 is flawed. The annual rate of return for the example you describe is 8.78%, i.e 500,000 USD * 1.0878^10 = 1,160,006.84. This is more in line with results of the YC study you have shown earlier.
I have no doubt that my quick elimination strategy causes me to miss many great opportunities. However, I can't look closely at every company. In my experience, the vast majority of appealing investments (in the US) are Delaware C Corps. Most of the other criteria are also somewhat arbitrary. I need some way of quickly focusing on just the most likely startups for detailed consideration. The point of this video is to help startups avoid getting filtered out for reasons unrelated to their underlying quality.
I think it’s worth noting that most businesses in existence do not make sense to venture fund. That doesn’t conflict with the message here. It’s simply a separate argument. Many modern founders are inclined to think about their potential business models in terms of venture funding, and that bias can lead to worse individual results.
Absolutely!!! I talk about that in many of my episodes. Most startups aren't venture-fundable, and even if they are, they might be better off pursuing other options like bootstrapping, debt, grants, etc. For example, here's an episode on how VC kills startups: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-BO44Y-q7Seo.html
Where do i verify who is a verified dealer or broker? I have people who are willing to invest but the don't want to lead the round. I need someone to lead the round.
You can see if someone is a broker-dealer at this website: brokercheck.finra.org/ You don't need a broker-dealer to lead the round. The lead can be any significant investor who is willing to do it. Generally they would be taking at least 20% of the round, but sometimes leads will take less. Until you have a lead, capture and track your soft commitments. You can go back to those people once you have the lead in place.
I have £60k to invest into my business relaunch plan. I seek two one third partners to help make a good exit in four years with a minimum of 800% mark up. I can present the details quickly if you can put me in front of other investors. My alternative is the slower route which would be boring and a relative waste of time.
33% of the company for ￡60k suggests a valuation of ￡180k, which is wildly low. It is just about as hard to raise a small amount as a large one. I don't know of any significantly faster paths to funding.
Thank you for this series. I am just at the beginning but this is great. I want to become an angel investor. I have invested in one startup before (really almost with no money) and I really like this. I don't want to do a startup myself as like you said I don't want to put in the hours and the stress that comes with it but I just get excited about new things and ideas as well as act as a mentor/advisor alongside. Can't wait to get more into the angel game over time :)
It's hard to put a number on it. The better question is who would buy it and why? Once you understand the motivations of the buyer, you should have a feel for where you need to be before they are interested. For example, if they want tech or intellectual property, the number of users does not matter much. In general, you don't see many $1m sales other than Acqui-hires.
Omg - i am exactly at stage when we move from MVP to 1.0 and it's hell. Its literally hell. I have even clients paying me - but they just dont see how much mess i fight everyday. i am really think to rise moey just becouse of it!
Some people think that a positive attitude will assure their success. I learned a long time ago that the key to success is to think and think and try to find problems in the game plan, and then try to solve these problems ahead of time. Always look out for Murphy's Law. SphereMotor
Thank you for dealing with your imposter syndrome in order to help me dealing with mine. As obvious as it is, it’s necessary to listen to the obvious over and over again. 😉
When I see videos like this one, I'm mildly disgusted. This is not advice! I'd put it on the sheer arrogance shelf. Having talked to a number of investors, I can tell the difference. Only a fraction of all pitches will get invested in - we know, and there's no initial threshold that spares investors from the less investable proposals, so they get a lot of these. But whining around about the burden of reviewing other people's work - well, that's your job description. In the end, angel investors seek to make a profit. Reviewing pitches is not charitable work, and investors are responsible for their own deal flow. If sitting around and waiting for pitches is your model - go with it, but spare us the whining. There are plenty of videos that give very valuable and actionable advice to pitchers, and being a bit clueless is ok. Pitching startup ideas is not what founders usually do - they should be all about building their ideas.
Did you actually watch the video??? I am not complaining about reviewing companies. I am trying to help founders avoid quick elimination as investors make that first pass through the slush pile. Which of these things do you think are NOT issues that get companies quickly rejected by most investors? Are there things here you think founders should not worry about? It seems that you are reacting to the title/thumbnail rather than the content (which is your perogative).
Did you actually watch the video??? I am not complaining about reviewing companies. I am trying to help founders avoid quick elimination as investors make that first pass through the slush pile. Which of these things do you think are NOT issues that get companies quickly rejected by most investors? Are there things here you think founders should not worry about? It seems that you are reacting to the title/thumbnail rather than the content (which is your perogative).
@@FeeltheBoot Unfortunately, I even re-watched a part to be sure. With minor exceptions, like the C-Corp part, you are not giving actionable advice. A founder trying to land "some" startup thing might be flexible in all directions and produce alternative pitches in rapid succession. A genuine founder will be locked into one idea at a time, which might be more or less investable. Those pitches might A) be not fixable, B) be not your investment category, C) require pivoting to be investable, D) require re-dressing, or E) be straightforward investable. There is no constructive advice you can give to A) and B). C) and D) have nothing to learn from your video except your attitude. There is way better content out there that is genuinely helpful, and some of the topics you've touched like valuation, are to such a degree subjective (and vaguely presented) that either you see the potential and sit down together to fix it - we're talking about angel investment here, or you send those candidates to the next investor. Investors themselves are responsible for efficiently managing their funnel, and if you're feeling overloaded with A) and B) - that's your problem, fellow investors might show some compassion. On the risk/profitability side - above some reasonable threshold, your risk appetite reflects your existing portfolio. Either it's so good that you don't need to go subpar or it's rather not and you must play it a bit safer. This video is mostly about you and your funnel - little to nothing to learn for founders.
The market trend can turn around very quickly. In fact, the indexes often switch from a bear market to a bull market when the news is at its worst and the mood of investors is at its lowest point. I read an article of people that grossed profits up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?
Investors should be cautious about their exposure and be wary of new buys, especially during inflation. Such high yields in this recession is only possible under the supervision of a professional or trusted advisor.
True, initially I wasn't quite impressed with my gains, opposed to my previous performances, I was doing so badly, figured I needed to diversify into better assets, I touched base with a portfolio-advisor and that same year, I pulled a net gain of 550k...that's like 7times more than I average on my own.
“Angela Lynn Shilling’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
This is an awesome video. Thanks for making. I am curious... What happens to the remaining 4m shares of the 10m created and how does it get used up since new classes of shares are created for investors?
I invested in [then] Vidangel during its debacle with Disney. I have also invested in several crowdfunding campaigns: His Only Son, Live Not by Lies and David. I would like to "cash out" my investment in "Vidangel Init" at this time. Does anyone know how to do this? How do I know whether I actually have "stock" at this point? I know from the Angel Investors site that I have "1333 units."
In general, you can't cash out until you exit. In some cases, successful but still private companies may let you sell some shares on the secondary market. If the company's records show that you own stock, then you do.
For public companies, some preferred stock can’t vote. Preferred shares issued to angel and VC investors almost always have voting rights, often even enhanced voting rights as compared to common stock.
Pitching a guy today that I want to join the team. What do you think about a variation like: “We’re building a better version of (insert archaic product)”?
That can work as long as it is obvious why the existing archaic solution is a major problem, and you can quickly follow up with why you are far better from a benefit to the customer perspective.
About 1 in 20 startups with high growth potential and large market opportunities hit that benchmark. That is how the VC model works. Because of the high failure rate of startups, if the winners don't deliver those kinds of returns, then the investors are losing money over all (and thus would leave their money in the public markets). It's not reasonable to ask investors to be charities.
Ya 50x is completely insane even angels are only hoping for a 20x at best. A lot of investors set you up to fail so they can seize the company after you poured your time and blood into building it. Watch out for predators like this.
@@Rays_Bad_Decisions what can I say, the potential for 50X is what I hear from many other investors. I don't understand your point about seizing the company. Unless you have agreed to extremely hostile terms, the shareholders are not in control in the early rounds, and probably no single shareholder has a majority later. I have a whole episode on investment terms you should look out for ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-LCCXSS2ubn8.html
@@FeeltheBoot they use performance and growth quotas it's a common tactic. They put in insane best case scenario numbers based off overvaluation and growth of numbers like 50x. After a couple years you've built the company don't make the numbers, they absorb the company. Some financers work together like this to consolidate whole industries and markets. You see it in everything from tech to finance to cannabis
@@Rays_Bad_Decisions I don't see those kinds of terms in any deals I or people I know have been involved with. If someone asks for that, run away. I have taken investments in my startup and made over 30 angel investments. None of those transactions had anything like you described. Those are incredibly predatory terms, and investors like that need to be called out in public. What you describe sounds more like certain kinds of private equity transactions, which usually involve acquiring a majority stake in an operating business. That is a completely different kind of thing and outside the realm of topics I cover on my channel.
Hi Lance, thanks for making this video. My two person company is building a costly prototype and has no revenue (because we're still designing the product). I was struggling with how to make financial projections with no revenue to base them on, but you've eased some of my concerns. Thanks!
Oh, wow, this video is so incredibly helpful. Thank you very much for the invaluable information. I was feeling a bit lost, and this gave me so much more clarity and confidence moving forward in our project!
What if the investors were partners that also did their share of the work? That way you wouldn't need to pay corporate tax, you could keep more of the net profits.
Most startups don't pay any corporate tax because they don't make any profit. All the revenue gets plowed back into the company. The investors are paid at exit, at which point they are usually only paying long term capital gains rates. As a founder, that's your big payout as well. Most founders only take enough salary to cover their needs.
@@FeeltheBootI really never thought about an exit. You are right. If the Delaware C-Corp makes $20,000,000 in profit and it goes public, the stock value could easily go to a billion. Although taking the appropriate salary and paying a giant amount of taxes until the exit comes, would be, so very painful. I really do appreciate your reply.
If I was going to make a sales pitch, I would start with how and why the investor has a good chance of becoming very rich by investing. I would also talk about the profit for every unit sold. Then I would talk about the potential for millions of sales. Then I would talk about why the product is so revolutionary and why it is needed. There must be a better way, then paying corporate tax, then paying the investors and then getting taxed again on the money you pay yourself. It comes out to a faction of the net profits. SphereMotor, the future of electricity.
