Entrepreneurship Tips — Financing

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...

This varies by the amount of money being raised and stage of development of the company. I have posted a due diligence checklist on my blog, you can find for full detail. Any amount over $1M will likely require substantial look into all company officers, financial statements, customer records in addition to review of the company’s business plan and product(s). Expect serious investors to ask about everything you can imagine. And the more open you are, the better. Although VC will likely refuse to sign NDAs as many of these would place too many constraints on them over time, this...

Well, this is art more than science, so you will need an expert in raising capital to review the materials you have prepared and tell you your materials are of sufficient quality.  These materials should include the following, even at the seed stage, even though the bar for quality and completeness will not be as high: Pitch deck Business plan with market research, competitive intelligence and the business model you have designed to be unique in the marketplace Team resumes in detail with every job (no holes) Financial projections Product offering and any sales and marketing results that can drive...

Typically, you need a 20 to 40-page plan that discussed each of the five key areas of the business, which are marketing, sales, product development, finance and operations (delivery).  You will need this read by an objective and experienced expert for feedback. It is highly likely that you are both too close and not experienced enough (as an investor) to know how good the quality of this plan can be ranked. 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 See links to other blog...