Who is TheFunded.com founder “Ted”? Valleywag tried to reveal his secret identity and Inc Magazine also compiled a suspect list consisting of Blogger-founder Evan Williams, Weblogs-founder Jason Calacanis, Gawker Media-founder Nick Denton and Digg-founder Kevin Rose. However, after nine months of anonymity and wild speculations about his identity “Ted” finally revealed himself in a carefully staged outing with Wired Magazine as Adeo Ressi.
Anonymity also plays a key role on The Funded site where startups can anonymously review and rank venture capital firms. The idea of the site was born out of a bad funding situation serial entrepreneur Adeo Ressi experienced. He now aims to bring transparency to the venture capital business with The Funded. The Funded has attracted a high level community of founders to compare notes what it is like to found a company. At the same time it provides a platform to complain about the company overlords.Adeo Ressi comes onstage right after Erick Schonfeld’s intriguing talk about life after death online. Ressi states that he cannot offer the audience immortality but he can provide ways to handle your start-up company.
Now is the time
One of the main things to keep in mind is that there are more vcs working against you than for you. You do have an advantage as everyone is waiting for you to show up at their door with your dream…. if you are the next Facebook or next Google. Despite the current recession we are living in one of the best times in history to start your own company. Costs are generally low as there is hardly any need for phones and most e-mail systems are open-source. Many traditional communication sources are free and there is a new and major labor pool in India eager to work on projects. The current state of the web provides us with great new opportunities, for example in the popularity of widgets.
Have a vision
Ressi states that you need a big vision, the bigger the better. Unfortunately for you sometimes vcs will wait until you are actually big. Think big, become big and be big. There are a lot of markets out there with a great potential for growth. Not only is there room for new approaches, there is also room for with new technology.
Know the rules of the game
In order for you to get fund raising you need to know the rules of the game. By knowing the rules of the game you will be able to change your success rate dramatically. How to play?
- Get to know the motives of the investors you are talking to because they will want to put you in a controlling relationship.
- Lower the risk by getting a good lawyer.
- Remember that vcs talk among themselves. It is a common mistake to talk to twenty or thirty vcs and all provide them with the same story and same information. Not all the vc gossip takes place on TheFunded.com but also behind the vc scenes! Even if the vc likes your company they will use this against because they will tell the other vcs how bad your company is because they don’t want the others to compete for the deal.
- Don’t talk to the associates as they are just juniors. Chances are very low that your idea will reach any one else but the associate.
- Maybe means NO. This means that you should focus on the people who care. Do not be afraid to walk away.
- Do not accept the first term sheet. The goal is to get the second or third term sheet.
- Co-investing is a major no no. Instead, you should ask for two separate offers and you should evaluate the two offers separately. Do not let them syndicate the deal or merge the term sheets.
- Be prepared for a background check. They will call everyone you know, so identify all the people they might talk to in advance. Make sure that your background is solid and does not contain any “maybes” or “buts.” You don’t want your ex-colleague to say “he’s a great guy but.” Clear out your references because conditionals make a bad impression.
The rules of the game are heavily discussed on TheFunded.com, so let’s play!