Entrepreneurship Tips — Financing

Here is a graph showing the deals reported to Pitch deck, which could easily be skewed very high by all the smaller deals that go unreported Learn more about our Growth and Scaling (GSP)Certification program for Managers For a free video consultation call on what yourcompany and team need to scale better Click here to get this Financial Package To get entrepreneurship tips, check out Bob's Blog Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO...

Networking is the key strategy. You need to get out there and meet other CEOs, investors and key referral sources at physical events. LinkedIn can be a way to find them, but cold approaches are difficult. I get invitations to invest every week from people I do not know, and I am certain most are not high-quality deals within seconds from their email, deck or type of approach.  Bad English, missing key data, no team background and a hundred other red flags mean an instant rejection. Too many to even send five minutes looking at them when the CEO cannot...

The more money that is poured into a deal, the lower the risk and more market share they are likely to garner. And hot deals where growth and financial projections are getting real can create a feeding frenzy among investors. It is also likely that these larger investment can scare off smaller competitors.  It is often assumed there are a limited number of winners in any given market. Click here to get this Financial Package Furthermore, it could be three or ten, but limited. Therefore, more money means lower risk and higher upside. Sometimes these deal with blow up, proving...

They say venture capitalist would like a 40% IRR which is an approximation of their ROI, but this is all fantasy based on assumptions that drive the financial projections.  Pessimistic projections can be used to negotiate lower pre-money valuation prices.  So the CEO/Founders are selling the potential while the investors are selling the downside risks. Angel investors would like to see good returns like this too, but are unlikely to develop their own models to their own assumptions as the amount of work involve is large, and they have no associates to do that work. Angel syndicates on $1M+ deals...

This is a big question and the deviation is very large depending on many circumstances. However, I will give some baseline information to help you prepare for the negotiation of terms. Your mileage will certainly vary. Angel investors, early on, will not get anything except a promise of equity later via a convertible note or SAFE note. Their ownership stake is too small to have any real control, and the legal structure of a note gives them no real voting authority at annual stockholder meetings. So, control is usually not a big issue unless an investor is large enough to...