

Hack: Create a market for your shares (includes quote from Adam of Xobni) - aaroneous
http://www.venturehacks.com/articles/create-a-market

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ivankirigin
At first glance at the title, I thought this was about putting up shares in a
private auction to increase the pool of potential investors.

Then I thought it was about a startup hacking away to make it easy to start a
mutual fund, from a regulatory perspective. I think there is already a YC
startup about something similar, but it would work by the startup being the
fund, with funding for purchases coming from sub-investors / users. The site
would then be a social network around picking the best investors, or becoming
one. The benefit for the pickers is that they could receive commissions, where
the real money is.

Then I read the article. It makes lots of sense. One problem is getting people
to contact, which is one huge benefit of YC. The format described almost
perfectly matches demo-day.

I think it's been mentioned before, but experienced investors together in a
room with an inexperienced entrepreneur could cause collusion among investors,
right? How to avoid that?

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rwebb
that's a good read. he doesn't get into it too much, but the danger in
declaring fund-raising season and going for broke is that if you blow your wad
on the 6 VCs you know in 3 weeks and none of them bite, you just cashed in all
your connections. of course you should continue the dialog with them and ask
what you they would like to see over the next period for them to be
interested...but then you have a wish list from 6 vcs who might not know
what's best for your business.

the ultimate marketing making move i have heard of is this: 1\. give 3 firms
your materials, including the amount of money you want to raise and the
valuation you want to raise it at; 2\. tell each fund that you have given the
same materials to 2 other funds and that you are going to only take on the 2
funds that respond first.

this can work very well. the upside is that you create leverage and massively
cut down on negotiations if it works. downside is that it can blow up in your
face. if your company isn't as great as you think it is, VCs could get pissed
and tell you to screw, putting you back at square 1 with some potentially
burned connections.

