Raising Seed Capital & Finding Investors for your Business Patrick Lockton is a lawyer for digital nomads and entrepreneurs whose Matrix Law Group practices what they call Law 2.0—a flexible, on-demand, virtual legal practice—an alternative to big law firms that’s rooted in notions of mobility , technology and efficiency. One of the questions clients have for him most frequently is ‘How do I raise seed capital if I don’t know any investors?’ I know there are several of you who will one day seek funding for your big business venture, so I thought it would be of great value to get some of his expert knowledge about the early-stage and legal aspects of forming a business here (hopefully with more to come soon). Long gone are the days of pitching investors with hot new ideas and having money thrown at you. Luckily, there are still options for funding, but finding and securing the cash will take time, research, good negotiating skills, and, above all, a strong commitment to your new business. Even a very well run startup involves risk. Angel List or
Online Broker, Investment Ideas, Online Stock Trading | Motif Investing Peter Thiel: Best Predictor of Startup Success Is Low CEO Pay In a long-ranging discussion today at TechCrunch50, investor Peter Thiel (PayPal, Facebook, Slide) gave his thoughts on what is the best predictor of startup success. At the Founder’s Fund, one of the most important factors he likes to look at before deciding to invest in a startup is how much the CEO is paying himself. (This is also a factor that one of his investments, YouNoodle, looks at to value private startups). The lower the CEO salary, the more likely it is to succeed.The CEO’s salary sets a cap for everyone else. Person Peter Thiel Right click for SmartMenu shortcuts In Startupland, everybody should be working towards the same goal: that big juicy exit.
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How Equity Dilution Works - Stock Dilution in Startups - Understanding Dilution - Raising Money - Entrepreneurial Tips – Resources for Entrepreneurs - Gaebler Ventures - Chicago, Illinois Equity dilution is the curse of the startup executive. If you don't understand how equity dilution works, you can find yourself working very hard…for very little. If you are a senior executive at a startup company and you don't understand how stock dilution works, you may be on the path to a painful lesson. (article continues below) Don't learn about equity dilution the hard way. Understand stock dilution before you sign your employment agreement and you'll be happy you did. Let's say, for example, that you signed up to be COO of a startup company and the CEO founder offered you 5% of the company. But he assures you that he's had conversations with venture capitalists and there's a sense that if things go right, the company might one day sell for $100 million. Hmmm, you think. 5% -- not bad. Your math failed to take into account stock dilution. Let's go back to our example and see how stock dilution works in action. You take the job and get 5% of the company. Not much. How many shares?
Important Questions Startup Co-Founders Should Ask Each Other Great points, very important to discuss in the early days. Some more things to think about ... (a) Pre-money, before you get VC investment, you may be buying stuff for new company. Is this money considered to be an investment in the company (what accountants call paid-in capital) or will you claim it on an expense report and be reimbursed from the proceeds of your first round of financing? (b) What fraction of the company's ownership will you set aside for employee stock options? (c) Will you have the same terms of employment as your future employees? (d) When you work before having any investor money or revenue, you'll be working for cheap or for free. (e) What non-disclosure or non-compete agreements does each partner have with former employers or any other company? (f) What is your attitude towards wealth? Dharmesh:this is a pretty good list. Dharmesh, Absolutely! A good rule of thumb might be, "Never say, 'We'll deal with that when it comes up.' Wow, this is very thorough. Hi Dharmesh,
Introduction to Transaction Analysis: The Basic Accounting Equation, Assets, Liabilities, Owners Equity Accounting is built upon the fundamental accounting equation: Assets = Liabilities + Owner’s Equity This equation must remain in balance and for that reason our modern accounting system is called a dual-entry system. This means that every transaction that is recorded in accounting records must have at least two entries; if it only has one entry the equation would necessarily be unbalanced. The equation’s three parts are explained as follows: Assets = what the business has or owns (equipment, supplies, cash, accounts receivable)Liabilities = what the business owes outsiders (bank loan, accounts payable)Owner’s Equity = what the owner owns (investment and business profit) The Accounting Equation From the equation we can see that what the business owns (assets) equals what it owes both creditors (liabilities) and the owners (equity). The accounting equation can be expressed in 3 ways: Assets = Liabilities + Owners’ Equity Liabilities = Assets – Owners’ Equity Owners’ Equity = Assets – Liabilities
How it Works How does it work? private-equity-investment.co.uk is a platform which entrepreneurs search for risk capital, credit, private equity, loans or even partners etc. To help investors choose their ideal investment opportunity entrepreneurs are able to give a full range of details to their proposals. On the other hand, investors, financiers or business angels are able to enter their investment preferences within their profile and their email notifications are filtered by these factors. private-equity-investment.co.uk is not involved in the choice process so the two sides are able to find their ideal partners. When one or more investors, financiers, or business angels indicates interest in this application, the entrepreneur is emailed, a brief message. Have you still questions?
Seeking Angel Investment: Why do I need an exit strategy? As a rule of thumb, the value of the company is the investment amount divided by the proportion of the shares being offered. For example if you want to offer one third of the shares in the company for 100k investment, you need to show why your company is worth 300k. This is not always easy, especially if you are pre-start with no track record. It is a subject that baffles Angels too and is the subject of many of our Angel training courses. Of course your financial projections won't be "right" (they will either be too high or low) and in the end it really comes down to how much you need for your expansion, what share you can bear to part with and whether than makes for a valuation and potential exit that is attractive to an Angel. If you have a profitable, high growth idea with a clear brand, a real product or business process, a trademark or patent, a team with a track record of success, and the infrastructure to go live, your value will be much higher than without these things.
13 Crowdfunding Websites to Fund Your Business Who needs banks? Crowdfunding websites can help you find a community of small investors to fund your business, without the risks of traditional financing. Here is a list of crowdfunding sites. Some sites focus on funding creative projects, others sites focus on meeting specific needs in the marketplace or community. So don’t let access to capital hold you back — let the crowd fund you. 13 Crowdfunding Websites 33needs. 33needs enables everyone to invest, make a social impact, and earn financial rewards. How did Mark Zuckerberg retain 26% of equity after so many rounds of financing