Top 10 Tech Investors To Follow On Twitter

Who are you following in Twitter? Once you collect you favorite celebrities, pundits and comedians, it might be time to focus on your business. 

There is a lot to learn from Twitter even in 140 characters. 

Here are the top 10 tech investors you should be following on Twitter.

Ashton Kutcher @aplusk

He's not just a TV star and master of the Punk'd prank, he's also a serious tech investor. As an "Angel Investor" Ashton will pick and choose who he wants to sink money into. He currently has over 14 million followers. It might be hard to get his attention in that crowd but you can certainly keep track of what he's up to.

Richard Branson @richardbranson

As founder of Virgin Airlines, Richard has redefined first class air travel. Thanks to his success he is open to new ventures through his Virgin Investments. He is the very definition of  a risk-taking entrepreneur.

Al Gore @algore

Got a new tech idea that is "green?" You might be able to rope in former Vice President Al Gore who has made a second career in promoting eco-friendly industries. His firm is Generation Investment Management and if you have an idea that is zero carbon footprint rated send him a tweet.

Mark Cuban @mcuban

Each week on "Shark Tank", Mark Cuban shows what an angel investor is all about. Folks with business ideas come to him, pitch their ideas and try to convince him to invest in their companies.  There have been many success stories to come out of the "tank" but that's not the only place he looks for possible investments.

Fred Wilson @fredwilson

His company, Union Square Ventures, is described as a "early stage venture capital firm." This means Fred likes to get in on the ground floor. IT is their primary focus and in the pasts 17 years Union Square Ventures has helped over 40 companies get up and running.

Om Malik @om

Om is a general partner at True Ventures, a Silicon Valley-based venture capital firm that has around $600 million in funds to play around with. According to Crunch Base, the firm "..maintains a strong founder community and offers innovative educational opportunities to its portfolio, helping entrepreneurs achieve higher levels of success and impact."

Chris Sacca  @sacca

His company, Lowercase Capital, not only offers funds for start-ups and late-stage companies but they also pride themselves on their advisory role. Chris is not someone who is just going to write a check and walk away.

Kevin Rose @kevinrose

Google isn't just a search engine. They've also got money to invest. Among the type of start-ups that Google Ventures invests in are Internet (obviously), software, hardware, clean-tech, bio-tech and health care. Their goal is to invest at least $100 million a year. Not too shabby.

Evan Williams @ev

The Obvious Corporation that Evan is a part of was founded in 2006. Since then it has dedicated itself in helping companies create new cutting edge technologies "which have the power to affect individuals, organizations and society." Since Obvious was behind the creation of Twitter, it stands to reason you should be following Evan.

Guy Kawasaki @GuyKawasaki

When you consider that Apple was started in a garage, it makes sense for this venture capital firm to be so named. Since setting up shop in 2005, Guy has lead his company through many important vestments covering a wide range of tech start-ups. 

How Venture Capital Funds Work

It used to be a popular misconception that venture capital funds only invested in companies that had traction and have proven products. Obviously, that misconception has changed with the large number of risky investments in startups. With the considerable amount of resources and advice available on how to pitch to VC’s, there still is a lackof understanding on how the industry really works.

Innovation has been the key driver of competitiveness within an industry. However, to bring innovative ideas to life requires more than just talent to succeed. As innovative ideas are considered risky for traditional banks to invest in, many entrepreneurs turn to the venture capitalists to bring their ideas to reality.

Venture capital has become an important source of funds for innovative and risky startups that may have a potential for high returns. A venture capitalist invests in a potential company in the hopes that their investment could give them a higher rate of return for themselves in a shorter amount of time.

Due to the risky nature of the investment, the venture capitalist spreads their risk over multiple prospects. This way, they minimize the risk of losing their money in one company and make it back from the one startup that makes it big.

Some characteristics of a VC firm are:

Investing in risky ventures with potential for high returns: VCs usually invest in unproven and innovative ideas which traditional financial institutions avoid. For that investment, they expect a ROI that is higher than usual. In general, they look for a rate o return that is within the range of 25 to 40 percent.

Hands on experience of an industry: VCs have prior experience and contacts which gives them an expertise in better management of the funds deployed. Not only do venture capitalists provide funding, they also provide a network and expertise that can help their investment grow. They can provide technical, marketing and strategic support.

Raises funds from several sources: There is a misconception that venture capitalists are rich individuals who are partnered together to invest in companies. Many VCs are not necessarily rich and almost always manage the funds on behalf of others. They raise financing from institutions such as other investment funds, pension funds, endowment funds, in addition to other successful individuals.

Diversify their portfolio: As mentioned earlier, VCs reduce their risk by developing a portfolio of companies instead of investing their entire fund into one company.

Short-term exits: As high ROI is important for any VC, they always make an investment with an eye for the short-term future. They determine whether they can see a return from their investment within 3-7 years. Their exits can range from getting bought out by a larger company, or taking the company public or even selling it to a private equity fund. 

Advantages of Venture Capital Investments

As a entrepreneurs, you may want to consider funding that range from few hundred thousand to a few million. Normally, you require this funding to grow your company by hiring more employees or the ability to do research and development. When faced with these situations there are many advantages of using a VC. 

These include:

• Securing a larger amount of money than you could from a commercial lender or government lender, turning your shares into more money in a shorter time frame. VCs normally make a decision in investing much faster than traditional financial institutions.

• They share the financial risk in expanding your small business.

• You can get specific experience from different kinds of VC firms, such as those specializing in early stage (startups) businesses or late stage (fully developed) companies.

Some Cons of Venture Capital Funds

Even though a VC firm can review your business and identify a lot of value in your company, it can be a disadvantage to accept VC funding. Some cons are:

• Losing your majority equity share to investors who are not passionate about your company.

• Possibility of surrendering managerial control to a VC firm

• Risking that a VC firm will take your company to a quick exit before it’s ready. 

• Losing competitive advantage in an industry by sharing privileged information about your business model to others.

Before choosing to work with venture capitalists, ensure that the pros outweigh the cons. The best position for a venture firm to be in is to have a substantial equity stake in a company. A VC earns their fees based on a percentage of the profits they create for their investors.

As the startup business owner you need to be realistic with your available equity stakes in terms of what you're willing to part with and the valuation of your company. It's important to find that balance and understand that first offers should not be generally accepted.  

Lessons Learned From Pitching Venture Capitalists

 

Raising money is as much a part of business as the goal of making money. As the old adage goes, “You’ve got to spend money to make money.” There’s an even older adage which posits, “Never use your own money.” One of the most popular sources of funds – especially for startups - is venture capitalists (VC), those who provide money in exchange for large ownership stakes.
 

Due to their popularity, VCs are extremely busy and hear thousands of pitches in a month. Out of that many, they invest in only in handful, hoping for a very lucrative exit in a short amount of time. To pitch a VC for financing requires the founders of a startup to not only be well versed in their own companies, but also do extremely detailed research on their potential investors. Not doing your research will make the difference in getting funded millions of dollars or being delegated to the black hole of has-beens. The following tips are some valuable lessons to learn about pitching VC’s and getting your startup funded.  

            Do Your Homework

Every venture capitalist you’ll be pitching to has their own distinct personality. You need to get as much background information on that potential investor as possible. Don’t just Google them but ask around – especially other investors. Do they have a short attention span? Would they prefer to see the bottom line numbers first and then the “sizzle?” What other successful businesses have they invested in? Why did they make those investments? In many ways, you’ll be giving the same basic pitch to every venture capitalist but if you can adjust to their investment criterias and individual personalities you’ll be ahead of the game.

Be Smart With Your PowerPoint

One of the most popular (and easy to use) skills for any business owner to have is the use of the PowerPoint presentation. This is not something you should be slapping together the night before the big pitch. Instead, it’s something you should be developing since the inception of your business plan. An effective PowerPoint presentation can’t stand alone. You’ll still need to “narrate” to fill in the gaps from your bullet points but you shouldn’t become top heavy with data. If you can make your point with a strong visual then go for it. Before building your PowerPoint, go online and view other presentations. Take note of what you like and “borrow” the idea.

Have a Thick Skin

Every entrepreneur walks into a VC pitch with dreams of walking back out with a check. That’s not going to happen. What will happen is you’ll be grilled aboutyour business. This is a good thing. The more you can engage that investor the better off you’ll be. Make sure you listen clearly to any question and think through the answer before blurting out something you think they want to hear. You’re not going to get the same reaction twice. Don’t let that throw you. Remain confident in your proposal and if they don’t bite move on to the next investor.

 Pitch the Facts

It’s great that you have conviction about your business idea but you can’t let that passion become pie-in-the-sky thinking. Over-valuing your company is the quickest way to turn off an investor. If you’ve got grand assumptions to make about business projections you better back it up with more than sweeping generalities. Just because the dog food industry is a multi-billion dollar business doesn’t mean your brand of dog food is guaranteed success. Sell your passion but back it up with the facts.

 

Financing Options for Start-ups

One of the biggest challenges for many start-ups is to find money to keep the company running. Break even point has not been reached and with expenses exceeding sales revenue , a CEO will soon need to look for financing options.

Where you get your financing depends on:

• what kind of business you are starting and industry you’re in,

• how much money you need to raise and

• what you will use the money for

Here are some of the financing options:

Family, Friends and Personal Savings

Personal savings are one of the easiest ways to finance your business. This option may be the best option in the earlier stages of the business, especially when you don’t have a product or clients. You don’t have to answer to any outside investor who only cares about how soon they are going to make their money back and not about the company. This may be your only choice if you aren’t able to attract investors. Family or friends can also be an alternative source, however be careful if they invest in your business. Is it worth losing the relationship if your business fails?

Angel Investors (early stage)

Angel Investors are investors who invest only in early stage start-ups and have been known to invest between $15,000 to $500,000 for equity in your business. Angels mostly invest once a business has been proven and has made some revenue. In certain industries, angels invest as a group, especially when they see a great opportunity.

Incubators

Incubators became popular during the dot-com boom, where they provided office space, access to mentors and IT infrastructure in return for a percentage of a business. They have become very popular recently, with an increasing number of incubators popping up around the world. Incubators work very closely with entrepreneurs by mentoring them in every aspect of the business from sales/marketing to operations. This is why many successful start-ups come from incubators. However, the success of an incubator depends on the experience of its board of directors and investors.

Venture Capital

Venture capital has become a popular option for many start-ups, however it is difficult to get financed by VCs . They are very selective in the investments they make, investing in as little as 1 start-up for every 100 proposals they receive. Due to the fast returns expected, VCs look for high growth potential start-ups that can provide them with a quick exit and a return on their investment in a short amount of time. If you feel that your start-up has a lot of potential for a VC, the best way to get in front of a venture capitalist is to network and get introduced by a mutual acquaintance.

Business Loans

Approaching a bank for a business loan is a standard path to fund a start-up. However, with the financial chaos affecting economies, many banks have become extremely risk averse. Although the benefit of getting a loan is that you keep ownership of your business – getting a loan will depend on things such as:

• the type of business that you run,

• the industry you’re in,

• and your credit rating.

However, if your business plan is solid and shows the loan officer how quickly you will produce revenue and break even, you may be able to get financed by a bank. In many cases, businesses use credit lines to manage their cash flow, and business loans to make large purchases such as equipment.

Most businesses will use a mixture of financing instead of depending on just one source. For example, as a start-up you might invest your own money for market research, then pitch investors to invest in the early stage of the company and then obtain a loan from the bank to purchase equipment. Once your company has grown, you may approach venture capitalists to finance your expansion into a larger company.