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Question: I’ve read a few articles and blog posts over the past couple of days regarding Senator Dodd’s financial reform bill, and some of them suggest that it’s going to be more difficult for startups to raise money if the bill is signed into law. Why is that? I thought the bill was supposed to address the problems on Wall Street that led to our financial crisis.
The founder of a software development business had already agreed to be acquired by one company and was ready to sign the documents. Then another company came calling with a better offer. Loyal employees and a working partnership with the buyer turned out to be the crucial assets constituting the value of the business. The author concludes that you need to shop around and negotiate to find out what your company is really worth.
This exceptional article offers insightful explanation and key details of how angel investors determine valuations, why entrepreneurs and investors often have different perspectives for angel returns, and what steps angels and entrepreneurs can take to quickly find common ground on this critical topic.
Investing in seed and startup companies is extremely risky: Angel investors typically realize about 85 percent of their total portfolio returns from 15 percent of their portfolio companies. Consequently, angels look only for companies that can grow rapidly. Entrepreneurs who pursue less aggressive growth are unlikely to attract angel investors.
Valuation may be done for a wide range of reasons and is not an exact science, whatever method you use. To understand how a company's fair market value is reached, start here.
Whatever formula you use to calculate the market value of a business--assets, performance or other multiples--a good starting point may be all it provides. Here's why--along with the other factors that count.
The legal documents included in a Private Placement Memorandum give potential investors necessary information about your company, the terms of the securities being offered and the risks of buying and holding them. Here's how to put it together.
Issuing shares privately is a viable way for small and growing businesses to raise capital, exempt from many registration and reporting requirements. Here are the rules you need to know.
Venture capital firms consider key variables in your business plan before committing capital to the project. Prepare your management team to answer the questions discussed here. This article also explains the securities and documents that result from venture capital negotiations.
There is no doubt that it is a nearly impossible time for entrepreneurs to raise venture capital. Only the best of the best new companies are attracting such funding, according to the author. Entrepreneurs need to prepare themselves when approaching venture capitalists. Increasingly, several must have factors have become an essential part of the necessary preparation.
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