Our very own Don Baker is leading a panel discussion on best practices for startups and early-stage companies in raising investment capital.  Most entrepreneurs find capital fundraising to be daunting and a huge strain on the already difficult task of launching a new product or service.  Even when potential funding sources are identified, there can still be painful negotiations concerning valuation, price, and terms.  The whole process, however, can be made streamlined and accelerated by developing and following a capital fundraising plan.  Don has developed a program to help entrepreneurs develop just such a plan.

The panel discussion will take place on February 9, 2010 at 6:00 p.m.  South Oakland County location to be determined.  The cost $20 in advance and free for students registered by January 30th.  After January 30^th, the cost is $30 and $5, respectively.

All participants can get a full copy of Don’s article on the topic — the introduction for which can be found here.

The event contact is Andrea Reese at andrea.reese@yahoo.com and (586) 945-3306.

–Matt

The online magazine Concentrate has a roundup of the major venture capital deals and acquisitions in the Ann Arbor area in 2009.  The article can be found here.

–Matt

Last year, early-stage venture firm Y Combinator “open sourced” the legal documents they provide to their startups to use with investors after Y Combinator’s seed funding.  The documents can be found here.  TechStars followed by releasing the legal documents they use as a starting point for seed-stage financing for their companies.  Those documents can be found here.  In both cases, the goal is to help young startups avoid at least some of the legal costs associated with first-round financing by simplifying, and hopefully standardizing, the negotiating process.

A client now points me to this TechCrunch article on The Funded’s release of its Ideal First Round Term Sheet for venture rounds (available here).  Like Y Combinator and TechStart, the goal is to reduce legal fees (which average $50,000 or more for a venture round) but also to protect founders by providing them with standard, founder-friendly deal terms for venture rounds.

–Matt

At the risk of making us obsolete, this new online service was too cool not to link to.  The Silicon Valley law firm of Wilson Sonsini Goodrich & Rosati recently launched a free Term Sheet Generator for clients and prospective clients.  According to their website, the Generator:

“will generate a venture financing term sheet based on your responses to an online questionnaire. It also has an informational component, with basic tutorials and annotations on financing terms. This term sheet generator is a modified version of a tool that we use internally, which comprises one part of a suite of document automation tools that we use to generate start-up and venture financing-related documents.

Because it has been designed as a generic tool that takes into account a number of options, this version of the term sheet generator is fairly expansive and includes significantly more detail than would likely be found in a customized application.”

For the first-time entrepreneur, the Generator does a decent job of explaining the various terms and options.  Old pros will love the ease with which they can navigate different terms and produce a quick proposal to present to prospective investors.

All kidding aside, the Generator does not replace the need for a lawyer (it was invented by a law firm after all).  First time entrepreneurs may still need some guidance on valuation and customary terms for their fund raising round.  Old pros may still want something a little more custom, or want counsel in the negotiation phase.  In both cases, a lawyer is still needed to draft the final documents.

What the Generator does best, I think, is allow the entrepreneur to get started quickly, to do the initial ground work, before consulting with the lawyer.  For the lawyer, term sheets produced by the Generator are a great starting place, allowing lawyer and client to quickly get past the basics and on to more important aspects of the deal.

–Matt

Jason Mendelson is co-founder and Managing Director of Foundry Group, a Boulder-based venture capital firm that invests in early-stage information technology companies.  He’s also the author of his own blog, Mendelson’s Musings, which is a must read for those interested in all things startup.  A U of M alum, Jason recently returned to Ann Arbor to speak at the Ross School of Business but also to assess for myself Ann Arbor’s entrepreneurship ecosystem.  I was lucky enough to catch his lecture on what makes a good startup community.  If you are interested, I suggest you check out his latest blog post, which includes his positive/hopeful assessment of Ann Arbor’s community as well as a nice rundown of the many resources and groups for entrepreneurs in the Ann Arbor area.

–Matt