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Co-founders Garth Moulton and Chris Halligan have financed OtherScreen in various ways. They put six figures of their own money into the launch. From an entrepreneurship group, they learned about NC IDEA, a local nonprofit that gives grants to high-growth tech startups. Moulton and Halligan landed $45,000, and the rigorous application was a great exercise for getting the company “investment-ready,” Moulton says. “We were also introduced to many people, organizations and companies that have helped us tremendously.”
Now OtherScreen seeks $1 million to $10 million from a venture capital firm or “super angel,” a new breed of angel investors who invest full time and typically in far greater amounts than traditional angel investors.
Moulton and Halligan are serial entrepreneurs who sold prior tech startups to Salesforce.com, which helps businesses manage their client information, for hefty sums. Even with their credentials, financing hasn’t been easy. Moulton’s tips:
- Use all your contacts. “Exhaust every channel: local entrepreneur groups, angel groups, government agencies, chambers of commerce, etc.”
- Know what the group likes to invest in before you ask for money. “Firms are very upfront about what they invest in and don’t really branch out,” he says. “You could bring a bald person into your [pitch] meeting, grow hair on him, and the [venture capitalists] still wouldn’t invest if it’s not in their wheelhouse.”
- Understand what investors look for. They first examine your team, then your market and finally your idea—in that order.
- Know your market and your competition. If you think you have no competition, you’re fooling yourself.
- Ask knowledgeable people to critique your business plan.
- If you are light on experience, get experienced advisers. “People who have been successful are willing to help others get started,” Moulton says.
- Don’t take funding from someone you have serious misgivings about. “It will bite you in the butt.”
- Don’t lie.
- Develop a thick skin and don’t give up. “It’s grueling, so be in it for the long haul.”