The question on Quora was “What do investors ‘get’ that other people don’t?” I answered that question from the point of view of angel investors, specifically … not just investors. 1. Some of the healthiest businesses are not good investments Many people think that a good business makes a good investment. The truth is not […]
Investors
5 Steps to Due Diligence on Your Potential Investors
Even though the color of their money is always green, all startup investors are not the same. Struggling entrepreneurs are often so happy to get a funding offer that they neglect the recommended reverse due diligence on the investors. Taking on equity investors to fund your company is much like getting married—it is a long-term […]
3 Key Components of Successfully Raising Funding
Not all companies should raise (or need) venture capital to succeed. As scholar and former VC Dileep Rao points out, “The reality is that most ventures do not qualify for venture capital and never will.” However, a highly scalable business shouldn’t necessarily avoid seeking capital. In fact, many successful companies have grown to fruition because of it. Ultimately, your company’s […]
4 Ways of Successfully Scaling Your Global Startup
There are over 214 global startups that claim to have attained the coveted “unicorn” status—meaning they’ve reached a billion-dollar valuation. Becoming a unicorn may not be the end goal of all entrepreneurs, as some may have a moon-shot in mind and some may be in the game merely to solve a problem. Regardless, having the […]
How Do You Pay an Early Stage Board?
Give one percent equity to each outside board member vesting over four years of service. Many early stage CEOs and board members have asked for some guidance regarding pay and time commitments for board members. Here is my best advice, based upon many boards and many years. Pay early stage board members of companies that […]
Avoid Competitor Bashing in Your Pitch to Investors
Don’t bash the competition. Every investor knows how vulnerable a new startup is to competitors, so investors always ask about your sustainable competitive advantage in the marketplace. How an entrepreneur answers this question speaks volumes about their knowledge of business realities, customers, confidence, and their ability to handle investor funding. There is no perfect answer to the […]
Take Only “Smart Money” Investments
This statement could be considered controversial. We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations. Now we explore the other side of that coin. Professional investors usually bring “smart money” to the table, defined as money that comes along with good advice and great […]
3 Strategies for Bootstrapping from the Beginning
While choosing to forego outside investment can leave your business more susceptible to the ups and downs of the market, it can also be exhilarating to be in complete control of your professional destiny. Your ascent into the upper ranks of your industry may be slower than if you were bolstered by outside funds, but […]
Several More Real Costs of Taking Outsider Investments
Let’s talk about the reality of taking money from professional investors. It is not the first time we’ve covered this general subject nor the last. But this time, we concentrate upon governance changes. Once a company founder has tapped the funds available from his or her resources and from friends and family, if the company […]
Top 10 Pitch Fails
I was asked recently for a list of things that annoy me in angel investment pitches from startups. I’ve done this before, so there will be some duplication here. But here is my top 10 pitch fails list. Profits. Talk of profits, overestimated profits, the failure to understand that investors make money on growth, not […]
