One question everyone asks is what investors look for when deciding whether or not to fund a startup. Having a high-caliber team with a good track record and a clear value proposition are givens. But the bottom line is that it comes down to the numbers. VCs are looking to make investments that pay off big.
No one likes to talk about it, but the odds of an individual startup making it are pretty daunting. If you want to shift those odds in your favor, one of the most important things to do is to understand where the potential traps are.
Valuation is one of those ubiquitous words: at least when it comes to discussions around startups — and, of course, stock market multiples. But it can be confusing because there is not just one type.
First things first. Why raise funds? This seems like an obvious question but you need to be clear why you’re looking to raise in order to come up with an effective game plan and determine your best funding option.
The startup ecosystem is not just made up of entrepreneurs and investors; it also includes lawyers, bankers, HR and payroll providers as well as financial services providers. These service providers do more than provide a service; they are partners and important players within your startup ecosystem, providing guidance, connections, and support.
In the best case, getting funded can take months, and in the worst, you might end your quest without a single signed term sheet. Oh, and have I mentioned that it’s a full-time job? Physical endurance is one thing, but how do you prepare yourself for the mental and emotional toll?
I get questions from startup founders about executive summaries all the time. They range from “what should I include?” to “how long should it be?” to “where can I get help writing one?” Those can be found on a previous post. But I do want to highlight 5 things that are guaranteed to make you stand out — and not in a good way.
So your company’s in its very early stages. We’re talking a skeleton crew of staff, minimal sales, and even less cash. While your focus is understandably on immediate survival and how you can hit your first big hurdles, what else should you be thinking of, especially where your finances are concerned?
You need a strategic financial partner who is in close contact, asking questions and ensuring that they understand your business intimately.
How will you know when to revise your business plan? The short answer is that plans are living documents and should be constantly evolving. That being said, there are certain times when major, rather than incremental change, is called for. How do you distinguish between the two? Below are unmistakable signs, or forks in the road, that should prompt you to substantially rethink your plan.
