It was recently reported that the co-Founder of WeWork Adam Neumann took over $700 million off the table from investors long before the company had gone public.
How do these Founders go about getting cash out of their startups long before the startups ever cash out themselves?
Investors will often dangle the option of providing some Founder liquidity only when the deal they are trying to get into feels incredibly competitive.
This happens only rarely, and only amongst investors who are open to providing some Founder liquidity (some are very against it!).
Generally speaking, it only helps the investor by allowing them to get into the deal but provides very little upside to the company a...
When it comes to financing a startup, government grants for small businesses aren’t the first thing most founders look toward. And they shouldn’t be. While it’s great to get “free money” if you can, federal grants are only available for specific fields and specific uses — and they’re not easy to get.
However, if your startup does qualify for a government grant for small business, then they’re potentially a great source of funding that you don’t have to pay back.
But unlike other industries, startups have another source of funding that we don’t have to pay back, at least immediately: Venture Capital.
Venture capital is also hard to acquire and certainly comes with stipulations — including giving up equity in your startup — but it’s usually ...
Continuing in Phase Three of a four-part Funding Series:
Phase One - Structuring a Fundraise
Phase Two - Investor Selection
Phase Three - The Pitch
Part 1 - Anatomy of a Pitch
Part 2 - Market Size
Part 3 - Revenue Model
Part 4 - Operating Model
Part 5 - Customer Definition
Part 6 - Customer Acquisition (←YOU ARE HERE 😀)
Part 7 - Funding
Part 8 - Key Pitch Assets
Part 9 - Traction
Phase Four - Investor Outreach
Let’s dive in!
Our Customer Acquisition Slide in our pitch deck details our acquisition strategy for new customers. For many startups, defining a marketing growth strategy will be inherently linked to our customer acquisition cost for new customers and the key metrics in how we convert them.
Angel investors are wealthy individuals who invest in startups, usually at the early stages. Sometimes angel investors pool their money with other angel investors, forming an investor pool.
The typical angel investor is someone whose net worth is likely in excess of $1 million or who earns over $200,000 per year. Incidentally, those look a lot like the credentials of an accredited investor.
Realize, though, that the angel investor is playing with their own money — not invested capital — so even though they may be a high net worth individual, they are still looking at money coming out of their personal bank account.
When you’re talking about federal angel investment tax credits,...
Are you in the startup or growth and establishment phase of your business? Odds are you’re already thinking about the importance of location.
Where you’re located might not be a huge concern when you’re the sole member of your “team”. However, once you grow the business past a critical point, you’ll need to attract additional talent and investment.
The temptation to set up shop in an inexpensive city is entirely understandable. On the face of it, it seems the most cost-effective option. After all, startup hubs such as New York, San Francisco, London, and Singapore regularly rank in the top 10 most expensive cities in the world, both for cost of living and cost of doing business. So why not go somewhere cheaper? Or even further afield: to a ...
Crowdfunding has become an increasingly popular way for individuals and businesses alike to raise much-needed capital. The relatively low cost of entry and accessibility of popular crowdfunding platforms have fueled this revolution in funding.
But while it might look easy — and seem like a no-brainer — to launch a crowdfunding campaign, there are strong pros and cons to consider.
Founders considering launching a crowdfunding campaign might wonder:
To answer those questions (and a few more that people might not have even thought of), we reached out to our network of crowdfunding experts.
Our list includes founders of crowdfunding platforms, serial...
Despite how obsessed the startup world is with company culture, there’s no singular definition we can all turn to. But there are really two parts to it: Philosophical and practical.
On a philosophical level, company culture is the intangible atmosphere of your company. Some people call it the “personality” or the “glue that holds everyone together” or even the “soul.” It’s as much a feeling — of belonging, of shared purpose, even of similar ways of dress — as it is an aspiration for the entire company to contribute to.
“The truth is that culture – on its own – is not the thing that will bring you success in whatever way you may define it for yourself and your team,” Adii Pienaar, founder of Conversio, says. “Buildin...
Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors.
This approach taps into the collective efforts of a large pool of individuals — primarily online via social media and crowdfunding platforms — and leverages their networks for greater reach and exposure.
Sounds great, right?
But because this method is relatively new, many people don’t understand exactly how crowdfunding works.
Simply stated, crowdfunding works by presenting your idea to people inside and outside of your network and allowing them to contribute toward your fundraising goals online.
The crowd is essentially your personal network, potential customers, and — in the case ...
In a world of billion dollar exits and absurd funding rounds, startup Founders have lost sight of what financial success really is.
Don’t get me wrong… Having billions of dollars is amazing. But, you know what else is cool? Making a million flipping dollars. Especially when you don’t have a million flipping dollars!
Let’s take the time to recalibrate how we think about startup success — and more specifically — Founder success. When we get to the point where we can only think of “success” as some astronomical, arbitrary outcome, we’re headed down a very dangerous path that affects our startup, our finances and — if we’re being honest — our health.
No, a million dollar business isn’t very big. ...
What if I told you that selling a company for $40 million could net you more money than if you sold it for $200 million?
On its face, it sounds ludicrous, I know! But what's missing in that formula isn't the exit price, but how much of that exit we get to put in our pocket as we raise more rounds of capital.
More importantly, our opportunities to sell for $40m are dramatically more abundant than selling for $200m (or more!). That means every time we raise capital, while it sounds like we're improving our chances of an outcome, we're also reducing our options to find an exit at all.
CapShare released a study of 5,000 startup cap tables to determine how much equity Founders have at each stage of a funding round. ...