How Tech Startup Funding Works with Josh Melick
Josh Melick has been a successful Silicon Valley founder, CEO, and investor for more than 20 years. His current company offers customer engagement tools to small businesses – from the mom-and-pop shop on Main Street to fast-growing startups. He knows firsthand how a tech startup goes from a brainstorming session to reality. Josh’s insights can help you secure funding for your tech startup or improve how you pitch investors.
Others know him as a serial tech entrepreneur and intrapreneur. Josh is currently co-founder & CEO of Broadly, which builds the tools that help small businesses better communicate with their customers. Its mission is to make it incredibly easy for small businesses and individuals to engage and interact with their audience online and via mobile apps.
Needless to say, Josh knows a thing or two about how technology companies are born.
He’s also held leadership roles with Intuit and AT&T for nearly 20 years. Josh is one of those rare entrepreneurs who has successfully started several ventures, including two successful exits – one of which was acquired by Intuit, where he ran product management. He’s also managed teams at both companies ranging from 150 to more than 1,500 people.
So whether you’re a startup or a corporation trying to make an acquisition, Josh Melick is someone you want on your team. He’s also been kind enough to give away some of his time and expertise as the expert for this month’s interview series.
Q: When you’re a tech startup trying to get funding from venture capital, angel investors, or other sources, how do you convince them to give you money?
Josh: This is an important question and one that not enough entrepreneurs think about. They are often too busy working on their product development and go for the first investor who seems interested in giving them money.
For me, I like to think I’m a relatively conservative and analytical person. So when we get asked that question, it’s rare that we’ll say no (we sometimes do, but generally only if the plan is terrible). We’re typically looking around for our next investment and evaluating other opportunities at the same time. Our criteria have more to do with how we can add more value than whether or not we get a return on our money (which is essential, of course, but secondary).
Q: Do you know of any specific technology or business that has been primarily funded by crowdfunding?
Josh: I’m not aware of any direct equity crowdfunding. I think the closest thing would be Kickstarter or IndieGogo, but both are non-equity.
Q: What happens when a venture capital firm invests in your company? Like what kind of expectations do you have from them and vice versa?
Josh: I’m not sure there is a standard that most VCs follow, but it’s certainly helpful for an entrepreneur to have a good idea of what’s typical.
Many VCs will have some short-term requirements that need to be met before the money is wired, but for the most part, that should happen quickly after everyone has agreed on using the funds. It could range from getting an audit completed or having a board meeting scheduled to other things like hiring key personnel or getting the next round of financing lined up.
Q: Do you think it’s more important for a company to have good technology or business model first?
Josh: If I knew this, I would probably be retired by now! It’s my favorite debate with some of our founders, but there are no right answers. A great strategy can get you through the door, but it’s the execution that gets you paid.