5:00 AM PDT Sat, Apr 13, 2013 How to Raise Money in 2013
by @Jason Calacanis
Every few years—at least for the past 20 that I’ve been in the technology space—I’ve witnessed a change in how startups go about getting funding from investors.
In the mid ’90s, the best way to build a pitch was to collect a couple of MBAs and build a kick-ass business plan, a slick PowerPoint deck and, of course, a killer business model in Excel. (Back then, people spent more time building their business plans than founders spend on the first versions of companies I see on today’s AngelList!)
Ten years ago, the best practice was finding an emerging market and building the category killer in it. Basically, you paired a large vertical (healthcare, sports, kids, plastics) with a buzzword (blogging, photo sharing, social, e-commerce) and put a “for” between them. For example: “blogging for sports,” “photo sharing for kids,” or “social for healthcare.”
Today? People are obsessed with the “lean startup” genre of businesses that reinvent—basically optimize—traditional activities like hailing a taxi or booking a hotel room.
If you came into a room with a VC 10 years ago and said you were building any of the following businesses, you probably would have been quickly dismissed:
1. Hail a taxi
2. Back up your files
3. A message board for employees
Yet those businesses—Uber, Dropbox and Yammer—are three of the hottest startups. (Full disclosure: I’m an investor in Uber, and while I didn’t invest in Dropbox and Yammer, they did debut at my conference.)
So, how does one get an investment for an idea that seems obvious? Very simple: Understand what angel investors and VCs are looking for and give it to them. Investors have pattern recognition, and they are driven by four Fs: fortune, fame, fear and fun.
;)