CEC Startup Meeting

The CEO of the startup I am working with and I recently met with the Chicagoland Entrepreneurial Center (CEC ) to tell them more about our business and the people we have connected with in the community. When we told them we are looking to raise money soon and mentioned the amount we thought we needed in order to last us through another six months, the feedback we received actually encouraged us to think more about a 12 month runway for the amount we were looking to raise. For angel rounds, you typically want to be raising enough funds to last you for the next 9 to 12 months and for your Series A you should be looking at a runway of 15 to 18 months.

We were also told to strongly consider raising convertible debt since the terms can often be very entrepreneur friendly and most of the angel groups in the area are willing to do convertible debt deals. The key to meeting and working with a lot of the angel groups is to find internal ambassadors within the group to champion your deal. Also, it’s important to realize that each angel group is unlikely to do the whole deal themselves and they will often syndicate it with some of the VC firms who also do seed stage investing.

It’s also important to keep in mind that when you decide you want to raise money through angels and VCs, you want to make sure that your deal is not out in the market unfunded for too long (i.e. 3-4 months) because then investors get suspicious or worried about why nobody else was interested in investing or doing the deal.

One of the biggest pieces of advice that we learned from this initial meeting is that as you’re getting ready to reach out to the investor community, start to put together an online depository of all the information that the investors may ask for such as customer testimonials, good articles about your industry or target customers, your financial model, etc. Those of you familiar with investment banking and private equity know that this is very similar to a data room for your startup so that your potential investors can easily and quickly start their due diligence on your company. Getting this online data room organized in advance can really inspire additional confidence in your company.

For the upcoming year, we learned that the CEC has approximately 120 classes that they are planning for the exclusive group of pre-screened startups. We were just added to the mailing list, so we are looking forward to attending a few of the sessions on marketing, pitching, putting together the business plan and financial projections. Another great advantage of the CEC is that they help bring serial entrepreneurs, early stage investors, and C-level executives in as speakers, advisors and mentors to their group of startups, so this should hopefully be another great resource.