Even when your startup is a one-man show and lots of fun, a “business” needs some discipline and controls to keep it from being defined as a hobby by investors, and assure some financial return. Like it or not, you are now entering the dreaded realm of specifying and documenting “formal business processes.” The right
Category Archives: Invested Interests
Sure! There are quite a few senior executives of large companies who are angel investors. Unless there are specific competitive or ethical issues with a particular investment, there is nothing different from their employer’s viewpoint about investing in a private company rather than a public one.
It’s your startup, so you can give early partners any title you want, but be aware of potential investor and peer implications. VCs and Angel investors like to see a startup that is running lean and mean, with no more than three or four of the conventional C-level or VP titles. More executives, or other more
What are the most effective ways for an entrepreneur to argue that a convertible note should be uncapped?
For a sophisticated investor, there are none, because an uncapped note just doesn’t make sense (see my answer to “If a startup’s valuation is $x, how much larger should its cap on a convertible note be?”)
There is no standard thing called an “Investors Contract”, and it sounds as though you are trying to re-invent the wheel here. It also sounds as though you are doing all of this yourself, instead of using an experienced lawyer…which is a very, very bad idea.
A while back I talked about how and where to find a co-founder in “For a Startup, Two Heads are Always Better Than One”. The feedback was good, but some readers asked me to be a bit more specific on attributes that might indicate an
Most people think that the Peter Principle (employee rises to his level of incompetence) only applies to large organizations. Let me assure you that it is also alive and well within startups. I see startup founders and managers who are stalled transplants from large organizations, as well as highly-capable technologists trying to start and run a business
The challenge you face is that there are other amazing ideas out there. Actually, there are many, many, brilliant, wonderful, amazing ideas out there. So faced with all these amazing ideas, investors invariably choose the ones that have been reduced to practice, developed traction of some kind and proved that they are amazing businesses, not just ideas.
First things first – your startup needs a name! This may seem a silly and frivolous task, but it may be the most important decision you make. The name of your business has a tremendous impact on how customers and investors view you, and in today’s small world, it’s a world-wide decision.
Please don’t send me any
When should a convertible note be treated as a replacement for an equity round, and take on characteristics of an equity financing?
It doesn’t work that way. A convertible note and an equity round are two different things, done for different reasons. In most cases, the former is a quick way to get some money in the door in anticipation of the latter.