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What do you give up when you take outside investors?

Berkonomics

Setting your expectations Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first. The newest investor has the power.

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Need money? Read this!

Berkonomics

Friends, family and fools: [Email readers, continue here…] This term, although pejorative, describes the typical mix of early investors in a small, young growing business. Professional angels: This is the arena where I work and play. Do not expect grand valuations of your enterprise from these professional angels.

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Have you heard the rule of the thirds?

Berkonomics

We should think of the creation and growth of a high valued company as the sum of three parts, with three distinct classes of participants helping to make real value out of a raw start-up. It is normal for the first round of organized angels to expect to purchase between twenty and thirty-five percent of the company with their investment.

Startup 240
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Angels and VCs: Don’t be greedy even if you can.

Berkonomics

Especially when outside investors, venture capitalists or angels have put in substantial money, and the sales price is not enough to give them a reasonable return for the time and money invested, these investors can be – in a word – greedy. Further, preferred stock holders can be recipient of accrued dividends in a sale or liquidation.

Angel 120
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Are you thinking of the end game when managing your business?

Berkonomics

Most businesses fall into the class of those that can be sold someday to a willing buyer. Accepting venture or angel money is to create a contract between the investors and the entrepreneur that the business will someday be sold or even go public to create an exit for the investors.

Class 226
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Think ahead when raising your early investments

Berkonomics

Some businesses just can’t fit within the angel capital or friends and family model for raising funds. Email readers, continue here…] Second, it is important in the first investment round to face the issues that may be required later by subsequent, more sophisticated, investors such as VC’s. What VC’s can and cannot do.

Invest 120
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What do you give up when taking outside investors?

Berkonomics

Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first. From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering.