The Tao of Lo Toney: Words of Wisdom for Funding a Tech Startup

Acclaimed Silicon Valley venture capitalist Lo Toney took part in a one-on-one session about how tech startups can secure funding at Black Enterprise’s TechConneXt Tech Summit. The session, moderated by Black Enterprise Associate Tech Editor, Sequoia Blodgett, was a windfall of great advice from Toney for both early and later stage funding. Here are the important takeaways from Toney in what he looks for before giving a funding check to a startup:

– When a company is first getting started that’s a good time to look to an angel or individual investors.

– As a company goes further down the road, it’s a good time to talk to institutional investors (usually venture capitalists).

– Most institutional investors want to see some traction; they want to see you’ve identified your product market fit.

– As an entrepreneur raising money, know the right person to go after [for funding].

– I want to see […] what the problem is that [the entrepreneur] is going to solve.

– I want to understand the company’s solution.

– I want to understand why that solution is better than the other available solutions on the market.

– What makes the entrepreneur’s solution better or different?

– I want to see a “persona”; a description of the person who is going to buy the service (picture of the person, a name, where they live, their occupation, income, if they have kids, how many kids they have, …etc.) I want to see a complete picture so I can understand their customer.

– I want to see how big is the market itself. Is this a big market? Is this a market that even makes sense to raise venture capital?

– I also want to understand revenue models. How is the company going to make money? How much does it cost to acquire customers?

– How much does it cost to be able to produce that item?

– If it’s a consumer company, once they get to me, I want to see millions of users.

– If it’s a marketplace, I want to see they have transactions happening.

– For enterprise services, I want to know, do you actually have customers paying you?

– I like to see if it’s a technical product…at least one of the founders with a technical background

– [A startup] needs a leader who thinks like a product manager.