Structure deals correctly. Getting the money in the bank is a big step, but doing it the right way matters even more. This book provides easy to follow guidance for choosing and documenting the best funding structures for both your startup and your funding partners. As an added bonus, a promissory loan example is provided, with blow by blow details of each clause.
Hone your Friends and Family pitch.Additional sections provide concise information to help you prepare a compelling funding pitch, as well as explaining how to document your estimations of the market and financial feasibility of your early-stage startup.
Founder’s Pocket Guide: Friends and Family Fundingguides founders through topics such as:
• Structuring a simple startup loan with friends and family lenders.
• Using convertible debt to entice friends and family to invest in your startup.
• Learning the most important considerations for issuing stock to friends or family members.
• Understanding the legal limits of raising startup capital from friends and family.
• Keeping early funding rounds clean for later stage investors such as angels and VCs.
• Using profit sharing to rewarding friends and family investors for backing your startup.
The bad news is that no-one can 'give you' either emotional or spiritual intelligence. But the good news is that - because those intelligences are already lying dormant deep within you - you can learn how to harness these powers for yourself. Effectively you'll become your own guru - and once you've discovered how to tap into your hidden resources, you'll find yourself rapidly shortening the learning curve to both happiness and profits!
Written in an engaging style by former journalist Olivia Stefanino, Be Your Own Guru is intriguing, inspiring and above all, accessible.
Personal anecdotes and real-life case studies will be incorporated into an overall 'program' which will enable readers to be their own guru in less than two months!
This Element is an excerpt from The Truth About Starting a Business (9780137144501), by Bruce R. Barringer. Available in print and digital formats.
Minimizing the cost of launching your business--and then finding the money you do need.
Most prospective business owners worry about whether they’ll be able to raise sufficient funds to start a business. It’s a legitimate concern. But the same business might cost one person $10,000 to start and another person $25,000. The amount needed depends on how a person thinks about money, and how frugal and resourceful that person is. Skimpy finances can be a blessing, not a curse....
· The Startup Valuation Explorer
· Expanded coverage of Valuation Methods
· Responding to investor questions about your valuation
· Understanding option pool impact on your valuation
For many early-stage entrepreneurs assigning a pre-money valuation to your startup is one of the more daunting tasks encountered during the fundraising quest. This guide provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by-step examples for several valuation methods.
This Founder’s Pocket Guide helps startup founders learn:
• What a startup valuation is and when you need to start worrying about it.
• Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.
• How investors view the valuation task, and what their expectations are for early-stage companies.
• How the valuation fits with your target raise amount and resulting founder equity ownership.
• How to do the simple math for calculating valuation percentages.
• How to estimate your company valuation using several accepted methods.• What accounting valuation methods are and why they are not well suited for early-stage startups.
This guide provides a framework and process to help startup founders answer this common question.
Equity ownership affects the culture and sense of wellbeing of a startup. Founders typically sacrifice a great deal of other life opportunities to work on a startup effort. In exchange for that sacrifice, a founder wants to feel the ownership equation with any co-founders is fair.
In detail, this Founder’s Pocket Guide walks entrepreneurs though the following elements:
• Take The Founder Test to make sure everybody deserves founder status
• Review the case for splitting your founder equity into equal parts
• Use the Equity Split Scorecard as a fair method to allocate more equity to highly skilled cofounders
• Solve common equity problems using founder vesting structures
• Answer common equity split questions like IP and founder-investors
Note that this guide does not go into how to use equity to attract employees or using equity to pay service providers, advisors, development companies, or other contractors. This guide focuses solely on the best practices of deciding the equity ownership split between the founders of a startup venture.
There are two ways to make money in startups: create something valuable—or invest in the people that are creating valuable things.
Over the past twenty-five years, Jason Calacanis has made a fortune investing in creators, spotting and helping build and fund a number of successful technology startups—investments that have earned him tens of millions of dollars. Now, in this enlightening guide that is sure to become the bible for twenty-first century investors, Calacanis takes potential angels step-by-step through his proven method of creating massive wealth: startups.
As Calacanis makes clear, you can get rich—even if you came from humble beginnings (his dad was a bartender, his mom a nurse), didn’t go to the right schools, and weren’t a top student. The trick is learning how angel investors think. Calacanis takes you inside the minds of these successful moneymen, helping you understand how they prioritize and make the decisions that have resulted in phenomenal profits. He guides you step by step through the process, revealing how leading investors evaluate new ventures, calculating the risks and rewards, and explains how the best startups leverage relationships with angel investors for the best results.
Whether you’re an aspiring investor or a budding entrepreneur, Angel will inspire and educate you on all the ins of outs. Buckle up for a wild ride into the world of angel investing!
Expanding on these key skills every startup founder should know, this Founder’s Pocket Guide helps you learn how to:
• Build your basic cap table step by step, including founder’s shares, option pools, angel investor rounds, and VC rounds.
• Decipher cap table specific lingo, such as fully-diluted shares outstanding, preferred shares vs. common shares, Series A, Series B, and so on.
• Establish a stock option pool in your cap table and understand the option pool effect on founder dilution.
• Understand the simple math behind cap table formulas and calculations, including calculating fully diluted shares outstanding, investor equity ownership percentages, and share price.