Is venture capital right for me?
Venture capital (VC) is a form of financing that is tailored specifically for high-growth startups. VC firms will invest money in a startup in exchange for an equity stake in the company. However, they are not like traditional investors. Here’s why. Is a Venture Capital Right for My Startup? VCs take a large amount of…
What is the difference between a “Friends and Family”, Pre – Seed, Seed and Series A round of funding?
Funding is essential for most startups to grow. As founders are raising capital, one question that comes up repeatedly is: What should I call this round of funding? There is no one answer to this question. The label on the funding round depends on various factors such as the stage of the product, the amount…
What are the different types of startup investors?
Startup investors come in various forms, including venture capitalists who usually invest large sums of money and angel investors who invest smaller amounts of money for a smaller stake in the company. Friends and family may also provide funding through small checks for a small stake in the company. Crowdfunding platforms allow startups to raise…
What do I tell my friends and family interested in investing in my startup?
It’s flattering and exciting to hear a friend or family member wants to invest in your startup. It signals that they see the potential of the idea and believe that you can execute on the vision. However, it’s important to proceed with caution. Advantages of Friends and Family Investing in Your Startup When starting a…
Can our startup raise money from people who are not accredited investors?
When founders are raising money to get their startup off the ground, the Securities and Exchange Commission (SEC) is not typically on their mind. But this agency has a profound impact on who startups can receive investments from. If you sell shares of stock in a company, you either need to register the offering with…
What Is a down round in startup funding?
A down round is a round of financing in which the company is valued lower than the previous round. Ideally, a startup will increase its valuation at every financing round. For example, normally a company might be valued at $50 million for its Series A, then $150 million for its Series B. If a company…
What Is the deal With equity crowdfunding?
One of the most common fundraising questions for startups is whether crowdfunding is an option. As is often the case with legal questions, it depends. What Is Equity Crowdfunding? Equity crowdfunding is a method of raising capital for your company by soliciting small, individual investments from a “crowd” of people though a Securities and Exchange…
What is due diligence and how do I prepare my startup for it?
What is due diligence and how do I prepare my startup for it? Due diligence is a crucial step for any startup seeking funding. It’s a deep dive into the company’s financial and legal history to assess risks and opportunities. For startups, due diligence is especially important because they often lack a track record of…
What Is a convertible note and how does it work?
What Is a Convertible Note? A convertible note, also called convertible debt, is a loan (debt) from an investor which, under certain circumstances, may be converted into stock in the company (equity). Convertible notes are a popular instrument for several reasons. Advantages Well-established.Convertible notes have been widely used for the last decade. Therefore, they are…
What is a SAFE?
A Simple Agreement for Future Equity (SAFE) is a contractual convertible financing agreement between a startup and its investors (SAFE Investor) in which the investment converts to equity when the startup raises a future round of funding. The SAFE sets out the terms and conditions regarding when and how the capital would convert into equity….
