Archive for the 'FrankDemmler' Category

Attracting private investors

In this post we will continue the discussion about private investors.  Last post’s primary takeaway was that there are significant differences among private investors and it is incumbent upon the first-time entrepreneur to understand that, first, and then use it to his advantage to conduct a successful fund raising effort on reasonable terms.
This time I […]

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Attracting Private Investors

Much of the investment discussion has been focused on institutional investors and their attitudes toward investment in entrepreneurial concerns.  On the one hand, this provides some context for you as to how the “professionals” address such investments.
But on the other, the vast majority of companies are funded by private investors.  In a “normal” year, venture […]

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What’s so preferable about preferred stock?

Once upon a time an aspiring small businessperson needed some money to start his business. Through a circuitous route he found himself in front of the owner of some capital.
After explaining his plight, the small businessperson asked the capitalist for a loan. The capitalist replied, “While I find your concept intriguing, there is […]

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An Exchange of Values

Previously we took a look at the term sheet and its role in the deal making process.  This week we’re going to take a look at how the two parties in a deal view the transaction and one another.  While I might have been accused of taking poetic license in the past, I plead guilty […]

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The Term Sheet

In past posts we’ve looked at why investor’s want to say, “No,” to your business plan; how they will approach the valuation of your business, if you avoid that, “No;” that deals are negotiated with percents, but they’re structured with shares; and that the arithmetic used to quantify a deal can be tricky.
With that as […]

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What is your company worth?

The response to this question is: Who’s asking?  Why?
If you’re talking to a bank and looking for a loan, your company is worth its book value with some adjustments.  If you’re trying to impress your neighbors, it’s whatever you want it to be.  The truth is that closely held private companies don’t have a specific […]

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The Arithmetic of Deals (Part I)

Let’s start with a few basics about how corporations work from a structure perspective, and the mechanics of investments. [Note: the same concepts apply to LLCs, but the vocabulary is different.]
When you form your company, you will issue the initial shares of stock to the founding team. For the sake of simplicity, let’s say […]

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Why investors don’t want to invest in your deal!

After 20 years of working with early stage businesses, from both the company and investor sides, it never ceases to amaze me how many myths and misperceptions exist about raising capital among first-time entrepreneurs.
One of the most common mistakes is the entrepreneur’s belief that raising money for a venture is a linear process with defined […]

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