STOP TAKING ADVICE …FROM IDIOTS !!!
So you wish to raise capital. Venture firms know how to value revenue companies and concept is proved companies. Early development round – seed round – first and second round- is not an ideal venture private equity or hedge fund funding match. Return to these sources with proof of concept and income modeling completed.
When you set up your structure, you have to imagine your exit and what you will sell or IPO your firm for in a future time frame. When you KNOW that NUMBER as your goal, and it is realistic, experts in early found valuation ideally investment bankers or investment banking law firms. Taking the low cheap road here can cost you millions and tens of millions later. Often control real control of your company later. Stop taking advice from self proclaimed experts who have no clue how to value your venture in your silo in todays capital markets. Really drill down on their expertise in your silo category. Take input from multiple experts while you shop. Give the least away to raise the most.
Give the least away to raise the most. Go with that one out of five expert advice. Disregard the rest.
Over 45 years of watching entrepreneurs it is my opinion more ventures fail because of horrific STRUCTURES designed by incompetent self proclaimed experts, and business owners give WAY TOO MUCH stock away for WAY TOO FEW DOLLARS and shoot themselves in the feet.
To raise money for any first round do this:
- Figure your salary and all office and staffing cost as if your fully operational and larger – for two years of time.
- Include everything. The cost of everything. Google FREE BUSINESS PLAN PROJECTIONS. Put in your own math for fed ex – health care – car costs – insurance – copy machines – etc and etc and etc. For two years.
- Plus product development cost – packaging – on line marketing – branding – advertising and PR for two years.
- Plus a cash reserve after two years. Highest possible budget cost for all of it.
- Then model your offering to sell 20% of your firm to secure that RAMP UP CAPITAL to go all the way.
Raise the budget the business will require not the number you think you can limp along with. Raise enough and the % of everyone winning is higher. Raise insufficient capital and the % everyone will lose their money is highest.
STRUCTURE is the master skill set when raising capital – seek out your experts in this critical area and take longer and work longer on it. The difference of an investment banking law firm’s expertise and a solo law firm practitioner is significant. Know the difference. Its your future.
Shop. In this area get five proposals on structure and fee’s. Then and only then decide.
Ask mentors to propose their best structure to raise your entire budget for two year ramp up resourcing.
Read the CROWD FUNDING articles on this site to learn HOW to DO Crowd Funding – we’ll show you – watch for them they are coming.
Never let money sources structure your offering structure your investment banking. Why? They are weighted to protect their money against your value. Mentors will protect your value against the money protecting your future wealth as ownership is wealth – and your control of your venture over multiple funding rounds. Chose mentors who protect you in any market space.
CEO SPACE is a short cut in cost and in time to get this critical step done. Inside our outside CEO SPACE chose wisely and be super careful in this one area.
Berny Dohrmann – Helping you into effortless abundance
— August 16, 2016