Crowdfunding and the Benefits of Standardized Documents
Traditionally, running an investment round has meant a lot of work with the legal documents. Getting the Term Sheet and Shareholders’ Agreement into such a document that all parties agree on, can mean a lot of work and legal costs. Quite often it’s also the investors who bring the initial document on the table (as often the entrepreneurs don’t have those in the first place).
But what is the definition of a standardized document?
For me it is a document that is acceptable for all parties (investors and entrepreneurs alike) as such, without any tough negotiation concerning the key issues. The parties could just select between some key options (like in this Term Sheet Generator) and fill-in the blanks, such as the company name, valuation and the amount of funding.
With the “old way”, agreeing on the Term Sheet and the creating the actual financing documents requires a lot… Continue reading
What About the Exit?
So you got your friends, family and even some angels believing in you to invest in your startup. But what if it takes a bit longer than anticipated to make it a success? Wouldn’t it be nice to have a mechanism for the early-stage private investors to make a partial exit?
Many people believe that having a possibility to exit a private investment withing 3 years would greatly accelerate the willingness to invest. The effect would probably be much greater than any of those planned tax breaks. Tax breaks are useful, after all, only after making an exit.
Why should you, as an entrepreneur, worry about the exit strategy of your private investors?
Aren’t there already enough challenges of your own?
There are quite a few things that make this important aspect to think about.
Well, at least to think about whether it concerns you or not.
According to the… Continue reading
Looking for an Angel Investor in Europe?
Looking for an Angel Investor in Europe?
Take a look of the following statistics by the OECD (Organisation for Economic Co-Operation and Development) .
The graph shows number of angels groups in each country.
In Europe you’ll have the best chances of finding an angel investor in the following countries:
- France (66 angel investor groups)
- Germany (38 angel investor groups)
- Spain (37 angel investor groups))
- Sweden (22 angel investor groups)
- United Kingdom (18 angel investor groups)
- Italy (11 angel investor groups)
- Portugal (10 angel investor groups)
- Netherlands (9 angel investor groups)
- Switzerland (8 angel investor groups)
- Norway (7 angel investor groups)
Finland, Greece and Slovenia have only one angel investor group.
Demystifying (Vendor) Due Diligence
If you’re a company preparing for a financing round in the near future, you should already know what is a Due Diligence (commonly known also as DD). If not, read on. If you do know what Due Diligence is, you might be interested how to do is cost-efficiently.
Wikipedia defines Due Diligence as follows:
Due Diligence is a term used for a number of concepts involving either the performance of an investigation of a business or person prior to signing of a contract, or the performance of an act with a certain standard of care.
Nowadays there are many kinds of Due Diligences, for example Legal, Financial, Technical, Commercial and Environmental. The scope of the Due Diligence will depend on the size and scale of the transaction and the surrounding risks.
We will focus here on investment-round related Legal Due Diligence, and more specifically on Vendor Due Diligence which is… Continue reading
Silicon Valley Early-Stage VC & Angel Investor Event
Today I had an opportunity to participate a pitching event arranged by FundingPost.com, in Palo Alto, California. The event consisted of group of entrepreneurs pitching for the audience and then the panel of Venture Capitalists giving comments on the state of the industry and the presentations as well.
It was stated that Friends&Family investment rounds can typically be up to half a million dollars (unless you have really rich friends and family) and VC investments typically start at 2 million. So there is a great gap in between, and that has increased the deal flow for angel investors. At the same time “time to liquidity” ie. time from investment to exit has doubled. Today, investors may have to be prepared to stick with the company even more than 10 years.
As always, some companies are more “hot” than others. That influences the interest to invest. In the best position is… Continue reading
