cloud network hunting on June 8 ,
let entrepreneurs looking for investors is tempting at an early stage of a thing, especially in today’s market. Although there is little income, but due to the risk investment companies and other investors’ money, like Snapchat and Pinterest company has grew up in a few short years for billions of dollars worth of big companies.
but to give up equity into investors can produce any risk for the development of the company? Entrepreneurs how to decide when to introduce capital, introducing how much capital?
in Accelerators, the challenges and strategies of blog about entrepreneurship, experienced entrepreneurs and investors in the blog to share their advice on when financing. Here are edited interview excerpt:
financing? Please first modest
I hope entrepreneurs to abandon the mindset of arrogance, instead with a modest attitude. Completely don’t need to raise more than its value, also is very dangerous to do so. If you have excessive financing, the company can’t handle, then your fate will be very miserably, this usually leads to chief executive was fired, this is all the entrepreneurs have to avoid mistakes.
entrepreneurs need to know that there is no free lunch, especially in silicon valley. Investors tend to use their capital in exchange for shares of the company, because they bet on the future of the company, so they will hope that entrepreneurs can create value every day. The more money they have expectations, the greater the this also means that entrepreneurs have to return for more profit, far higher than the money.
to raise the appropriate capital is key. Obviously, you don’t want to fall in bankruptcy, was forced to sell the company or exposed themselves who are more likely to be using the shortcomings of others. But also can’t financing too much, because you are confused about what to do. For example, when you don’t have a product, waste a lot of money on the luxurious facilities or hire a large number of sales personnel. Or haven’t product design recruited a team of engineers.
— Maynard Webb (hunting cloud network note: Webb investment network, the founder of the Everwise co-founder, Los Gatos, California)
you really need the money?
well, today’s full of venture capital, capital market seems to be every day “unicorn” under the rainbow. You can see all kinds of stories in the news, the young success entrepreneur financing for millions of dollars. But money doesn’t grow on trees wait for you to pick, it requires you to pay a lot of sweat and tears, often pay and do not necessarily get such financing opportunities. When you choose the venture capital, you are kicked out at any time in their own hands to create the company’s risk. Once you introduce investors, your company is no longer belongs to you completely. If you can accept the result, then you go and financing. But you remember, institutional investors to invest in the company, this person is not you.
in addition, ask yourself, is it really need the money. Capital is a big commitment, you need to think about how big is your market, what you need to give up in order to become the industry leader. Sometimes, bring more is the problem of financing, rather than the solution. For example, if you only $1 million a year of profits from the market, that you don’t want to raise $10 million. You might have not been able to gain profits, in order to avoid such situations, you need to clearly understand their financing is what to do, and ensure the goals to achieve.
– Richie Hecker (New York), chief executive of Traction + Scale
unless to profit, otherwise please patience
now market created a startup’s first priority is to ensure that the financing environment, it also led to a number of entrepreneurs can’t wait to financing, although they have only a concept, although just a good leadership team. But when you first time, you don’t know what the future will be like. If a start-up company at this stage it has deep pockets, the founder of it will be a waste of money, in the form of a stupid like grabbed a throw spaghetti against the wall to see luck, rather than a careful planning to ensure sustainable growth. So, if you can profit to financing, but the best.
let’s assume a scenario where you went to visit one investor, told him about an idea only, and requires its investment of $250000. What do you think will happen next? If you’re lucky, you won’t be laughed at. If he decided to accept your request, he will give you the company set a very low valuations, and requires a large amount of equity returns. After all, you just an idea, provided good ideas are everywhere.
but imagine, when your ideas mature, profitable to find investors, what would a scenario. All you have to do is no longer just a prototype, you even have their own market and consumers. In order to profit, you set the balance of cost and income of financial policy. And these are what every investor want to invest in reason.
after the profit seeking financing may sound silly, but it is often the opposite. You can not only with a higher valuations for financing, you will also need to abandon only very little control to return for money
– Sujan Patel (hunting cloud network note: When I Work marketing manager, from Minneapolis)
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