One of the 1st questions is how much do you need for how many shares?
Valuation is often air, its build around the future success of the company, so a lot of emotion comes into place as well. Following that most companies don’t actually know how much they need, but they think they do. They don’t take into account set backs, hardly are able to calculate the life time value of a customer and what about the acquisition costs…..completely unknown.
On top of that, they always come up with an office, admin, salary costs, but never with a scale up scenario or 18 months finance instead of 12 months. How about asking very little for very little and be bootstrapped or the other way around ask double the amount so you have a much longer time to reach your target.
Best way to describe was an early stage tech who just needed 50K to get kick-started. not bad, good concept….just enough to get the product life. Replying and than what?….silence we will need cash to market it, ok ask for 250K and calculate what that extra 200K does for your company and how many clients will use it.
Other way around is getting this great plan and than hear we need 500K for a TV campaign….and than what? than we are as big as Google. Really having a focused positioning and goal with your company is critical. People forget that Google struggled immensely in the beginning with huge shortage of money, as most successful start ups.
One of the key rules of Fundraising is to attract smart money, money that will carry you to a higher level. Do your homework, ask more and answer better why you need it and make it accountable.
Fuel Ventures http://www.fuel.ventures put’s it as follows: Bringing together great entrepreneurs into an environment of innovation, collaboration and support in RocketSpace in the heart of London. We provide a unique combination of mentorship, experience and access to investment required to drive a business and ideas to success. Investing in the next wave of potential 100x return globally scaleable companies
They take care of investors money and of companies and I personally believe this is the future of innovation!