Here are the eight things companies need to do in this altered financing environment to survive and raise angel funding:
1) BOOTSTRAP Companies must pinch every dollar, when possible. Get individual contributors to work for free, pay upon performance and do everything you can that does not cost real money. Work from home, barter, use stock, and look for services and/or consulting revenue to help build the product.
2) HAVE A FOCUSED LAUNCH STRATEGY - This means ONLY ONE market niche as the initial target. Startups need to be a small fish in a small pond.
3) BE PREPARED TO DELIVER ANY SIZE PITCH – It amazes me how many companies still can’t state what their company does in a few clear sentences! If you cannot articulate your deal confidently
4) Cash Breakeven in 6-12 months maximum - Today it is required. Tune your plan to get to cash breakeven in 6-12 months on no more than $1 million!
5) A FINANCIAL BUFFER - I recommend a year's worth of personal expenses in the bank.
6) CORPORATE PAPERWORK - You need to get your "corporate" house in order with written agreements on ownership sharing. If these are not clean you can scare off investors who want to take a closer look.
7) NETWORK AND LEARN - Attend many entrepreneurial workshops regularly. This helps you to learn how to run business models in your head better and see how investors react to holes in plans etc.
8) GET A MENTOR - You cannot afford to learn by trial and error here. Typically, you need someone available for at least two to four hours every week to review all major decisions. This will be the best time and money you will ever spend. An hour or two a month will save you tens or even hundreds of thousands of dollars in errors, can generate sales faster, and will get you to critical milestones months earlier.
Doing all these things can increase your chances of building a successful company and getting angel financing from one in a thousand to as high as 50%. There are few guarantees in life, but hang this list on the wall and review it every month and I guarantee you will improve your chances greatly.