Mark MacLeod

Your question has been sent to Mark MacLeod. Ask another

• Hi Mark, do you know of any good templates for start-up budgets? ie. 18 months and 5 yr projections

  • 

    Here is a good one that I have used before http://unstructuredventures.com/

• Mark, how to you put valuation to a company during the seed round, when there is no enough sales data to justify any valuation?

  • 

    The short story is that valuation is determined most often by the investors. The longer answer is that valuation is a function of many variables:

    • opportunity size
    • team
    • track record
    • team
    • vision
    • team
    • momentum
    • demand for your deal (from other investors)

    It’s all about you and your track record and your team. If you have a good story there, valuations will be higher. If you’re a 1st timer, you can still raise, but at lower valuations.

    Seed rounds in my experience are valued in a range from sub $1M to $2M max. Some companies have done $3M, but that is rare outside of the Valley.

    You also need to look at how much you want to raise. Investors usually look to own (collectively) 20 – 30% after a round. So, that can give you a valuation range as well.

• Where can I go to introduce an idea for a cool mobile app and hopefully partner to get it develop?

  • 

    Depends where you are based. There are many good agencies that specialize in mobile app development. Where is your company?

• I'm developing a website and mobile app that connects customers with local businesses. My challenge is that I need merchants to sign up before I can launch. How can I get merchants to sign up as beta testers or early adopters?

  • 

    I suggest you do a beta test in one city or even one part of a city and just go door to door and pitch them. Many others have done this, including our portfolio company Thinknear.

• I am starting a business where the customer is not the the user, i.e. we are giving away free services (a mobile health platform) to a population that actually cannot afford to pay for them, so the financing will come from non-users. How do you recommend balancing the interests of both groups?

  • 

    I would need to know more to offer any valuable answer. There are plenty of free apps out there that are monetized indirectly. i.e. linkedin, facebook, any media property. Can you learn from them?

    I would need to know if you’re monetizing data or leads, etc before offering any useful advice.

• I'm looking for ideas on how to structure an agreement to enable incremental equity acquisition for developers as the company grows. Any good ideas, links, etc are appreciated.

  • 

    Why not just give a decent grant now but have it vest over time? The standard is 4 years. Plenty of time for them to earn that equity. If you give them a smaller one now, they’ll just compare it with other companies who use the method I suggest and then they might leave

• Would you invest in a startup with a solo entrepreneur?

  • 

    I have done it before, so yes. But we have a strong preference in our fund to invest in companies with co-founders. Startups are hard. Best if you have at least one partner.

• Will I ever find Angel Investment in an LLC?

  • 

    No, you need to use a standard Delaware C corp structure

• During the development stage, when there are two cofounders that contribute equally to the project, would you recommend an even 50/50 equity or a equity dilution stake, e.g. 70/30 where the cofounder with the 70% equity is dilutable and the cofounder with the 30% is non-dilutable?

  • 

    I don’t recommend 50/50. Equity should be split based on your relative long term strategic value and commitment to the company. Tough conversation to have, but it makes a big difference. Also, make sure you have vesting. http://www.startupcfo.ca/2009/09/vesting-is-your-friend/

• Hey Mark! Looking for good payment processing (esp for a mobile app) for an online marketplace -- where our customers can pay each other. Our startup would expect to get a % for each such transaction. Any thoughts?

  • 

    Not something I have looked at specifically. Especially customers paying each other. Sorry.