Start Up Capital Basics

Make Sure You Are Dealing With A Legit Venture Capitalist And Have A Lawyer In Place

Learn How To Pick Your Battles

Make Sure The Term Sheet Is In Order

Learn How To Use The Government's Information Reserve

Why It Is Important To Put Together Venture Capital Correctly

 

 

Start Up Capital Basics

 

There is a need to find out how to get startup capital for your internet business – to have a great start for better internet business chances.

  

1. Personal savings. Always plan your business well before you start it up. Along the way as you plan or even just after you decided to start a business, save your money. Saving money not only aids in supporting your business, it can also help you to control financial usage and cut costs for budgets.

 

2. Seek help from your family and friends. This is a more common way of getting finance for startup capital. If 

you do not intend to make a business plan, borrowing money from your family and friends can work well. However, make it professional; return the money as soon as you gain profits from your business with extra interest.

 

3. Get advice from experienced entrepreneurs. Find out from them how to get startup capital or funding, while getting more information on how to start up your business. They are there to guide you. Some may even support you all the way – they help you in establishing connections.

 

 

Make Sure You Are Dealing With A Legit Venture Capitalist And Have A Lawyer In Place

 

To save costs, some entrepreneurs would prefer to fund their business with the wrong investors, or use the wrong lawyer’s to manage their businesses. In the long run, this is not beneficial at all for your business. It not only represents poor management of your business, it may also bring loss to your business. You should avoid making these two major legal mistakes.

 

Dealing With A Non-Legit Venture Capitalist

 

Dealing with a non-legit venture capitalist or selling your business to the wrong investors affects your business’ securities and growth. Not all venture capitalists can afford losing their investment efforts on you. Not all of them truly understand the consequences of investing in you if your business fails.

 

In addition, inexperienced venture capitalists will file a legal suit or sue you if they are not happy with you. No matter whether the complaints are relevant or not, giving up valuable resources, time and energy to deal with lawsuits and investigations will definitely cause harm to your business, plus tarnish your reputation.

Have A Lawyer In Place

 

It is simple. If you do not have a lawyer in place, how are you clear about legal limitations or boundaries for your business, especially when you want to start an internet business?

 

Some entrepreneurs think that they have enough legal information; they may miss out on many details that are hidden. Overlooking the details may create a huge problem for their businesses.

 

Do get a lawyer, not any lawyer, but a good lawyer who has experience in dealing with business investments, investors like venture capitalists or angel investors. There is no time to waste on new lawyers without any experience dealing with it.

 

 

Learn How To Pick Your Battles

 

Investors, usually either venture capitalists or angel investors, prepare a term sheet for further negotiation on partnerships with the entrepreneurs.

 

Generally, term sheets are unbinding documents- terms and conditions can still be negotiable. Therefore, to get the most suitable investors for your business company, one must know how to pick your battles.

 

1. Valuation. Valuation refers to the values of a business company agreed to by the entrepreneur and the investors. There are mainly two types: pre-money valuation and post-money valuation. These valuations refer to how much your business worth before or after financing.

 

2. The type of security. This refers to liquidation preference, a term used in venture capital agreements that specify which investors get paid first, and how much they get paid. This is to secure investors financially, where some entrepreneurs may gain success but investors get away with less money.

 

3. The option pool. It refers to the shares of stock reserved for partners of the business. Generally, partners or employees who are involved with the business earlier will gain a better percentage of the option pool. The option pool can be a way to attract potential partners or employees.

 

4. Board composition. Usually, there will be one or two places in the board of directors for investors. A good management of the board of directors or committees will ensure all shareholders get their benefits. The selection for the board must come with a shareholder agreement, of which investors must include this in the negotiations before they provide funds.

 

And much more...

 

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