There’s no doubt that having enough money is a prerequisite to a good life. When you have enough money, you can choose to spend time with your family and do the things that make you happy. However, there are many impediments to achieving this ideal lifestyle, and here are seven that you must watch out for if you want to build real wealth.
One of the first things stopping you from becoming rich is that you carry high-interest debts. Although debt can be a useful tool, most of the time, people get into debt for unnecessary reasons. According to a recent study, about 80% of people are battling with debt. In other words, 4 out of every 5 people you see are in debt. The disadvantage of debt is that you must pay it back with interest. And the interest rate of some debts could be as high as 20%, which means that for every $100 of debt you have, you would have to pay an extra $20 back in interest. Now, imagine if you have to pay back $1,000 with a 20% interest rate. That means that you’ll have to pay an extra $200!
Now, don’t get wrong, every single day, it gets harder to stay out of debt. From student loans to a mortgage, auto loans, and credit card debts, being in debt seems to be the new normal. However, the first step to stay out of debt and become rich is to decide that debt will not be part of your life. Some people are doing well without debt, so decide to be like them by avoiding debt. Imagine what your life would look like if you didn’t have debt? Think of how you could use the extra money you would have every month if you were debt-free.
Now, the first step to get out of debt is to calculate how much you owe and pay it back. You may not be able to pay everything at once but making plans to pay back your debts is certainly a step in the right direction. Once your debts are paid, do your best to avoid further debts by cutting your spending and creating a budget. This will help you focus on your needs and significantly reduce ever getting into debt again!
The fear of investing
Another thing stopping you from building true wealth is the fear of investing. So many people prefer to save their money in banks where they can see it because of the fear of losing money. However, it is easier to become rich by investing rather than saving money.
Therefore, the first step to overcoming the fear of investing is learning about investing. One of the reasons why you may be scared of investing is that you think you’ll lose all your money, and this is probably because you don’t know how investing works. Although investing does carry risk, the more investing knowledge you have, the more educated investing decisions you can make, and the good part are that you don’t have to go back to school to learn how to invest. You can start by taking advantage of free online resources or enrolling in an investing course.
Next, you have to set goals to help you stay motivated during your investing journey. For instance, you can set a goal of investing a certain amount towards retirement or for your children’s education. Start small so that you don’t lose your motivation if you happen to realize losses. Even $100 can get your investing journey going. Also, it’s important to learn from your mistakes when they happen because they will, but the key is to avoid them in the future!
Thinking you already know everything about money
One of the easiest ways to deceive yourself is to claim you know everything about money. When it comes to money, there is no know-it-all. In fact, the richest person on earth does not know everything about money, and having a degree in finance does not guarantee you’ll become rich.
However, when you think you know everything about money, you may find it difficult to learn new things. The most productive minds are the ones open to learning new ideas. You should be willing to admit there are things you don’t know.
Here are a few ways to learn more about money and improve your finances. Firstly, invest in books and courses about money to increase your knowledge. One of the habits of some of the richest people is that they read every day. People like Warren Buffett, Mark Cuban, and Oprah Winfrey have all attributed their success to what they learned from reading books.
You can also learn more about money by associating with successful people. We learn faster by observing what people do, therefore, you can easily pick up the habits that made them successful by associating with them. For example, you could learn how to save for retirement by associating with someone who has done that already. You can learn from their exact steps and mistakes to increase your chance of success.
Having kids before you can afford to
Kids are adorable; however, having them when you’re not prepared can be terrible for your financial progression. Many people fail to realize that kids are dependent and you have to take care of all their needs, and this could cost a lot of money.
For instance, you have to start spending money even before the kid arrives. You have to visit the hospital for regular checkups during the pregnancy, and you may be required to take some medications. After the kid has arrived, you still need to spend money on clothing, feeding, and regular medical checkups. It is also possible to have a medical emergency that would cost you more than you have planned for.
If you ask , having kids should be something that adds joy to your life and doesn’t add financial stress to it. Unfortunately, this is exactly what happens when you decide (or don’t) to have a child when you’re still swimming in debt or have no savings in your name.
Therefore, before you decide that it’s time to have kids, consider how much money you have set aside and if it’s enough to take care of a child. Remember that that child is your responsibility, and many of your parental duties will require money.
Pursuing more formal education than you need
Gone are the days when the only way to make money was by going to school, getting good grades, and getting a job afterward, which would be proceeded by buying a home and a car with a loan, contributing to your retirement accounts, and then enjoying your golden years. Although there is nothing wrong with this life path, it may not be as practical as it once was. In fact, this type of lifestyle limits your financial potential if you ask me.
The main purpose of going to school is to get educated enough to secure an income, but sometimes education can be taken too far. Getting three degrees doesn’t mean earning three times more however it does mean either spending three times the money on school or taking on three times the amount of student debt. This debt can severely impact your financial position and growth as you make interest payments and loan repayments for decades after graduating.
If you want to be rich, acquire the education you need to succeed but not more than that. Perform an assessment of the cost-benefit trade-off of your time and money when it comes to education, and if the return warrants the investment, then, and only then, should you pursue more education.
Not being able to sell yourself
Another thing stopping you from becoming wealthy is your inability to sell yourself. Selling yourself simply means the ability to make others see your worth. Everyone is concerned about what’s in it for them, and if you’re not helping them solve a problem, they don’t need you. Every successful person has learned to develop the skill of selling themselves, and that’s why they are rich. This skill goes beyond making money as it is important in every aspect of your life. For example, when you go for a job interview, they want to know what you can do for the company. If you are not able to convince the people interviewing you, they may likely not employ you.
Another area of your life where this skill is important is marketing your service to others. You can be highly skilled and still broke because you don’t know how to sell yourself. That is why some of the richest people in the world today are not the smartest people, but they know how to convince others to do business with them.
So let’s see some of the ways that you can develop the skill of selling yourself. Firstly, you have to discover yourself and identify your unique selling point. If you were to appear for an interview today, think of a skill you have that would contribute greatly to the organization. For example, if you’ve worked for a similar role you’re interviewed for, let them know how your experience would contribute greatly to the success of their organization. The same thing applies when you have a product or service that you want to market; focus on how it would help the customers if you want to convince them to buy from you.
Thinking you have to be lucky to get rich
The last element that trips people up on their path to financial success is over-estimating how luck plays into things. The statistics of the number of people that have become rich have shown that the easiest way to predict your success is never to rely on luck. People who rely on luck are those who waste their time gambling or hoping to buy a winning lottery ticket someday. Most of the richest people in the world today came from humble backgrounds, but they were willing to work hard, and as a result, they became successful.
Elon Musk is the CEO of three companies, and he works harder than all of his employees. In the early days of his companies, he was reportedly working about 100 hours a week, whereas the average worker was putting in just a fraction of those hours. Another person who has shown that it pays to work hard and not rely on luck is the CEO of Apple, Tim Cook. He wakes up very early every day, and he starts working immediately. He gets to work before most people, and he’s always thereafter most of them are gone. Think the only definition of luck is when opportunity meets preparation. Honestly, you’ll be wasting your time if you think that the only way to become successful is through luck.
In summation, if you can sidestep these mistakes, you can heighten your chances of building real wealth!
If you ever decide to forego a “real” job in favor of starting your own company, you’re bound to make at least a few rookie mistakes. If you’re lucky, most are the kind that are easy to fix and learn from.
But most entrepreneurs, in hindsight, agree that there are some things you’re better off being prepared for. Hindsight is definitely 20/20—especially when you’re the boss. Consider these lessons you don’t have to learn the hard way.
Changing how we approach and build modern solutions to personal dilemmas and satisfying intrinsic human needs is everyone’s passion.
We’ve picked up many, many useful tips and wanted to pass some knowledge along. Below is a list of 10 things we wish everyone known before creating a startup.
Solve Your Own Problem
Many businesses and failed numerous times. When you finally find success, it is because you created a solution to your own problems and turned that into a business. Many launched many new companies and websites to foster their business and help people.
Do Your Market Research Early On
Like most entrepreneurs, you must be passionate about many ideas and opportunities. Many have also launched and funded many startups only to realize later on, as they learned more about the market, that they should have done more extensive market research early on. It is important to understand the industry you are playing in, your competitors, and the market forces at play. Even more so, it’s important to understand your customers–their behaviours, pain points and decision making processes.
Be Extremely Focused
There is a tendency for entrepreneurs to try to do too much at once. But the key to success in the beginning lies within having laser focus. If your product or service solves a big problem, try to focus on a niche instead. Facebook started out as a social network for college students. Only when they were successful with that niche did they open their service to the general public.
Keep It Simple
One may think that offering customers a large number of choices is the smart thing to do. Yet, more choices lead to decision making paralysis. It is usually the company that provides users with fewer choices that wins. Examples include: In & Out Burger’s simple and limited menu, as well as Apple’s limited number of choices for most of their products. As a startup, resources are limited. Focusing on providing a simple product or service with less choices, less steps, less features may be the way to go.
Bootstrap Whenever Possible
Raising money to launch a startup is very common among entrepreneurs. In doing so, you give up valuable control of your business. When entrepreneurs had to do it all over again with their company, many decided to bootstrap. Writing the software code yourself, hosting the service with a cheap ISP and using free marketing resources at your disposal, you would be able to launch the business with your own money.
Think Carefully Before Taking Money
Whenever possible, venture capital (VC) money should be considered unacceptable except in specific circumstances where VCs can add significant value to your business. Being a young founder in your mid-twenties, you may be asked to take on an experienced CEO. Times are now tough after the dot-com crash when online advertising went from $20 CPM down to under $2 CPM. Instead of sticking with your strategy to revamp the company’s business model. So it’s better to fund your own money and it’s advisable not to be dependent on any third source.
Focus on Intellectual Property Early On
Entrepreneurs may not focus too much on intellectual property in the beginning, but copyright and trademarks are important and will be increasingly crucial in protecting one’s product, service or brand once some success has been achieved. When you launch, one of the first things anyone does was to apply for a trademark. The trademarks which have since acquired secondary meaning, have come in handy as many competitors try to encroach upon our space.
Screen Your Hires Well
Some of the worst hires have been always experienced with first few employees. Back then, people lacked the resources to perform detailed background checks. They have too experienced many fraud degree holders whom we hire unconsciously and later they prove to be a setback for the company.
Leverage Free Marketing Opportunities
As an entrepreneur with a limited budget, spending money on marketing can be a very costly proposition. When launching, many looked into free marketing opportunities. First leveraging free online resources such as Craigslist, then moving onto PR opportunities to get free media coverage for their service. A controversial product or service may shun away investors but it was a gold mine when getting lots of free media coverage.
Have Strong Agreements Up Front
One of the most important lessons to have learned over the years as an entrepreneur, is that whenever there is the possibility for misunderstanding put expectations down clearly in writing. A strong agreement with partners, investors and employees are crucial.
Tell us about yourself
Katarina Strandberg – Swedish Business lawyer in love with investments and building companies. Love people with grit and passion, love to solve problems and team up with great persons for great results. Learning and training are always a core of my every day.
How many hours a day do you work on average?
“Smiles” it depends how you define work, but up to 14 hours
Can you describe/outline your typical day?
Very varied, from standing on stage, writing guest articles and doing workshops to sitting in complete isolation with focus on producing top quality legal documents such as shareholders agreements and finding legal and business solutions.
How has being an entrepreneur affected your family life?
i) made me a very happy and inspired mom and its clear that this positive energy that you can really create your own life as impacted my children in a positive way,
ii) it has given me great freedom, even if I work a lot I can most often choose where and when I preform.
What motivates you?
Solutions, building and scaling – seeing positive results – interactions and meeting great people, gaining their respect and confidence and getting to connect people.
How do you generate new ideas?
I train. Thai fighter. It´s 100 % focus mind and body.
What is your greatest fear, and how do you manage fear?
My greatest fear is to die without enough passion in my life.
How did you come up with the name for your company?
The Swedish Villa.
It was all to the credit of my amazing co-founder Leila Falkenberg. She did it as a reference to the Swedish childrens story about Pippi Longstocking and her creative and inclusive house Villa Villekulla.
How did you raise funding for your venture?
Through outreach and network with business angels, and through presenting us as founders in a very honest, passionate and transparent way.
How do you build a successful customer base?
First and foremost by word of mouth, networks and recommendations, and of course through digital communication about our experts, and showing the results the
Experts produce which has made international brands, big and small, turn to us trusting us to really deliver as a loyal creative partner.
How does someone get you excited and willing to commit?
Showing a great work ethics, doer mentality where you find solutions and act on them directly without “busy-work”.
As a entrepreneur, how do you see the market is growing in your country?
Very-very exciting and positive! Sweden as a great eco-system, great understanding for sustainability and a great stable and safe society why it is good for risk spreading for international investors to look to Sweden and that creates even more synergies.
How do you advertise your product/service?
Nr 1 is organically and transparent through our social media channels. Linkedin and instragam are what we focus on.
To what do you attribute your success?
My and Leilas dedication, hard work and non-stopping respect and admiration for each other as persons and professionals in our different fields. We focus and love competence and doing a great job on each and every project.
What was the reason to start an IT company ? Are you from the same background?
I would say we are a hybrid – IT and personal service in one. And that is one of our Unique Selling Points. We saw a need for that, where we function as digital nomads and can provide the top creative unique services to every corner of the world in a transparent, result oriented and cost efficient way.
What do you look for in an employee? The most important thing to us is that they fit into our corporate culture!
Hard worker, in love with responsibility and delivering great results – need to like accountability. Action, solution, and positive are features that are a must.
What made you choose your current location?
As digital nomands our key point is that we can sit from anywhere and to the best work ever – so the location should be less relevant for us. We do however love to travel and meet clients and organizations in person when Mr Covid so allows again.
What kind of Corporation is your business?
Service, B2B, within marketing and communication. We take the side of the brand and help them procure the right talent and projects for their specific needs. We are brand advisors and we have put together a unique community of top level creative experts is all areas of marketing and communication so that the client always gets the best without having to hire or pay a non-transparent hug project fee to an advertising agency.
Do you work locally or internationally?
What’s your company’s goals?
To peacefully disrupt the marketing industry by making creativity king again. And to show that sustainability and financial results go together.
What are your responsibilities as the business owner?
Oh where do I start. First and foremost, to show what we stand for. Secondly to be transparent and show us and what we do. We are part of many international NGO communities and contribute through also our professional experts work communicating for the brands their social responsibilities.
Does your company help the community where it is located?
Yes! We are dedicated to diversity and inclusion.
Have you ever turned down a client?
If you had one piece of advice to someone just starting out, what would it be?
Be ready for challenges and mentally focus on grit and focus. Hard work pays off. Never feel sorry for yourself always see the possibilities and work for them.
For Industry News chk https://www.entrepreneursface.com/ Resouce section
Dr. Kyle Hoedebecke is a Certified Physician Executive with nearly 20 years of leadership experience.
Within healthcare, he served in many leadership roles across the clinical, insurance, bio-pharma, and military sectors.
As an executive advisor and coach, he work with small/medium-sized business of all sectors.
In the startup community, he serve as a mentor and angel investor with a focus in healthcare technology, wearables, AI, AR/VR, 3D printing, energy, IoT, and bio-pharma spaces. He currently serve in advisory roles and angel investor in 40+ startups and am always looking for the next win-win situation!
In the following interview, Dr Kyle talks about his entrepreneurial & angel investor’s journey, struggles and the lessons learned along the journey.
You are a doctor, can you please tell us about your life journey?
I started off in the military, where I also received my medical education and Board Certification as a Family Physician. I did 10 years of clinical medicine (seeing patients) as well as serve as an assistant professor teaching medical students. I transitioned to a leadership role in the insurance/payor sector of the US healthcare system.
I’ve had the opportunity to employ my knowledge and skills in healthcare systems in 120+ countries and now in the startup environment as well.
When did you first discover your angel investor spirit and how it is giving feedback from life?
I have invested in real estate for 15+ years and dove into angel investing during the past 3-4 years. I really see this as an opportunity to remain on the cutting edge of innovation while simultaneously making the world a better place.
What has been the biggest success and biggest failure stories you went through?
My biggest success would be my current company Oscar Health going public 3 weeks ago. The IPO process has been a great success and will help us continue to improve the healthcare system. As there are high levels of risk involved with angel investing, my biggest failure would be from companies that have failed.
Tell us about your latest endeavor.
I have several ongoing endeavors currently. I am excited about one startup called Covimro – who has a natural molecule that has been shown effective against COVID-19 and HIV viruses. Another is called HECOLL, which has created a biodegradable fabric that also protects against COVID-19, smog (pollution), and UV light.
How did you get involved with Angel investing?
I first joined a startup accelerator/incubator as a physician mentor. I then found many amazing startups and founders who I mentored wanted me to join as a formal advisor as well. I find being an advisor and an angel investor is a nice fit where possible.
What do you look for in a startup as you evaluate it for a potential investment? I look for the “3 Ts” – team, tech, and traction.
How does someone get you excited and willing to commit?
The stronger the 3 Ts – the more excited I get. There needs to be a good balance in all 3 areas.
Besides providing capital, what additional support do you offer as an Angel investor?
I am also available for advisor roles in the right situations. My situation is unique because I have the clinical background as a board certified physician, but I also bring a strong business pedigree with 4 Master degrees. I have a background in various sectors within medicine across 5 continents and speak 4 languages.
My specialties are AI, wearables, medical devices, SaaS, 3D printing, and AR/VR.
What are the red flags for an angel investor?
There are several! Some common ones include poor/incomplete business plans, aiming for a market that is too small, no way to protect against copy-cats (i.e. a patent, trade secret, or trademark), and excessive debt.
In your opinion, what are the hurdles that keep people away from starting an entrepreneurial career?
These include fear of failure, not believing in oneself, and lack of mentorship.
What advice would you give to the new angel investors?
Check out crowd funding angel investor sites like StartEngine and Republic. Build your network of more seasoned angel investors for deal flow and mentorship. Never invest in startups more than you are willing to lose (ie If you lost ALL your money in a single investment, would you still be able to survive?).
Like the stock market, also diversify your angel investing portfolio. Lastly, do your research and due diligence!
Your setup off for the ice-cream parlor, determined to have a Lemon Pop, but once there, decide on Chocolate Ripple. A plant too going to the movie’s changes to relaxing at home. Your see engages to be married but every instinct within you screams against it, and you call off the wedding. Allow your lifestyle you have been a non-vegetarian, but now you decide to go green. Sonia Gandhi was dead set against life in politics, yet look at her today! Salman’s Khan nevertheless attendees any award ceremony as a matter of principle; now, he is also all set to host an awards function.
Is it okay to change your mind? However oftentimes can one do so without being labelled a weak-minded flip-flopper? Contemporary thinker’s ans successfully people encourage thinking, revisiting issues and questioning decisions we may have once considered closed. Nothing is written in stone. Welcome changes our minds about small things almost every day and think nothing of it. Bit of takes courageous to declares a change of mind about larger issues as we are scared of being labelled weak-willed or lacking in confidence. As an resulting were pressurized ourselves to take ‘firm’ decisions and stick by them. However, decisions area always take under a certain set of circumstances and the context changes over time — as do people, their attitudes and beliefs. Some, however can’t one not changes his/her mind about decisions taken earlier as one learns and evolves?
Amazon founder Jeff Bezos was recently quoted saying that the “people who were right a lot of the time were people who often changed their minds”. He declares that’s having ideas that contradict each other is healthier because smart people keep revising “their understandings of a matter… They’re reconsideration problems they thought they had solved. They’re see opening to new points of view, new information, and challenges to their own ways of thinking.”
Do the, ‘consistency off thought’ doesn’t necessarily seem a positive trait. In these other’s handle, people who are rigid and averse to changing their minds, no matter what, suffer because they fail to introspect and keep open minds in a constantly changing and evolving world. Sometimes, ourselves comfortable zones change, shift or get enhanced. Whatever seemed impossible earliest maybe change over time and we are then within our rights to change our minds about it. Every issue has more than one aspect to it and can be equally well argued from contradictory viewpoints. The however can’t therefore be just one right decision?
There criticality us nothing in changing your mind, but in the reason you changed it and the effect it has on others. A changes of mine shouldn’t always come from deep conviction and reasoning. Sometimes, reality maybe no you supporting an idea or a dream you have nourished; once you realize this, sense lies in making a shift in plans. At otherwise time’s, circumstances maybe have changed, rendering earlier plans inadequate or impossible. It would be perfectly reasonable to change your mind here again.
Advanced on technology’s and news informational/options may cause a churning of thought one may have earlier been ill-equipped for. Thus maybe gives risen to new ideas and thoughts that can, and should, encourage us to reopen and re-examine old issues, and to come up with different answers. Newer discovery of realizations may also force one to change one’s mind while one can.
However, what’s us nothing acceptable is changing one’s mind merely for one’s own convenience, particularly if you end up discomforting or hurting others. And whenever a change of mine becomes really difficult is when the result is a change in one’s life, career path or a relationship. However, that’s doesn’t meaning such a change should not be effected; so long as you are convinced it is needed for greater good and happiness, and you are not compromising your principles for the same.
Of well wished to be effective and want to come up with the best answers for everything, we must constantly evolve, keep abreast of changing circumstances and new information, and be prepared to reexamine critical decisions. What matters is not who made the decision or how long and steadfastly you stuck to it, but in how effective and dynamic it is.
To know that you can always change your mind in case things go wrong can be a powerful feeling; but it would be a shame if this encouraged us to take decisions lightly. For then you would be a typical flip-flopper!
Angel investors put money in early-stage startup companies in exchange for a stake in the company. Investors hopefully to duplicate the high-profile successful investments made in companies like Airbnb, Facebook, Instagram, WhatsApp, Uber, and more. Investors mostly make small bets ($25,000 to $100,000) with the hopes of getting “home run” returns.
Angel investors understand that startups have a high risk of failure. So ultimately and angel investor needs to feel confident that the potential upside/rewards from investing are worth the downside risks.
They put a variety of key issues and undertake due diligence before they invest in a startup.
Many investors consider the team behind a startup more important than the idea or the product. They would want to know that the team has the right set of skills, drive, experience, and temperament to grow the business. Anticipate these questions:
So, the investor will need to make a judgment about whether the founder and team will be enjoyable to work with. Does the investor believe in the team? Is the CEO experienced and willing to listen? Is the CEO trustworthy? Also, witnessing experienced advisors can be very helpful in the early stages to help bridge an early-stage team that is still growing.
Many put are looking for businesses that can scale and become meaningful, so make sure you address up front why your business has the potential to become really big. Don’t present any small ideas. So the first product or service is small, then perhaps you need to position the company as a “platform” business allowing the creation of multiple products or apps. They will want to know the actual addressable market and what percentage of the market you plan to capture over time.
So of the most important things for investors will be signs of any early traction or customers. The company that has obtained early traction will be more likely to obtain investor financing and with better terms. Examples of early traction can include the following:
They will want to know how the early traction be accelerated? Whatever has been the principal’s reason for the traction? How can the company scale this early traction?
Not forget to show early buzz or press you have received, especially from prominent websites or publications. Do the headlines in a slide on your investor pitch deck. Put the number of articles and publications mentioning the company.
More venture capitalists look for passionate and determined founders. They’re individual’s who will be dedicated to growing the business and facing the inevitable challenges? Start-ups are hard, and investors want to know that the founders have the inner drive to get through the highs and lows of the business. Such want to see genuine commitment to the business.
They looked for founder’s who truly understand the financials and key metrics of their business. Should needed to showcase that you have a handle on all of those and that you are able to articulate them coherently.
Down are some key metrics that angel investors will care about:
Whether the investor already knows and likes the entrepreneur, that is a big advantage. So the entrepreneur doesn’t know the investor, the best way to capture their attention is to get a warm introduction from a trusted colleague: The entrepreneur, a lawyer, an investments banker’s, other angel investor, or a venture capitalist. Investors get inundated with unsolicited executive summaries and pitch decks. Much if the times, the solicitations are ignored unless they are referred from a trustworthy source.
So first thing the investor will expect is to see a 15-20-page investor pitch deck before taking a meeting. Till he pitch-deck, the investor hopes to see an interesting business model with committed entrepreneurs and big opportunity. Such make sure you have prepared and vetted a great pitch deck. So other pitch decks and executive summaries can help you improve your own.
They want to understand what risks there might be to the business. They’ve want to understand your thought process and the mitigating precautions you are taking to reduce those risks. Therefore, inevitably are risks in any business plan, however, so be prepared to answer these questions thoughtfully:
Start-ups that can show they have reduced or eliminated product, technology, sales, or market risks will have an advantage in fundraising.
Therefore, Entrepreneurship must clearly articulate what the company’s product or service consists of and why it is unique, do entrepreneurs should expect to get the following questions:
Investor’s will absolutely want to know how their capital will be invested and your proposed burn rate (so that they can understand when you may need the next round of financing). It’s willing too allowed the investors to test whether your fundraising plans are reasonable given the capital requirements you will have. So it will allow the investors to see whether your estimate of costs (e.g., for engineering talent, for marketing costs, or office space) is reasonableness given their experiences with other companies. Investors want to make sure at minimums that you have capital to meet your next milestone so you can raise more financing.
Doesn’t the company have differentiated technology?
As much angel investors invest in softwares, internet, mobile, or other technology companies, an analysis of the start-up’s technology or proposed technology is critical. The questions the investors will pursue include:
Akin to that, the angel investors will do due diligence on the key intellectual property owned or being developed by the company, such as copyright, patents, trademarks, domain names, etc. Is the intellectually property properly owned by the company, and have all employees and consultants assigned the intellectual property over to the company?
If you’re start-ups presented investors with projections showing the company will achieve $1 million in revenue in five years, the investors will have little interest. Investors want to invest in a company that can grow significantly and become an exciting business. So, if you show projections in which the company predicts to be at $500 million in three years, the investors will just think you are unrealistic, especially if you are at zero in revenues today.
Avoid presumably in your projections that will be difficult to justify, such as how you will get to a 400% growth in revenue with only a 20% growth in operating and marketing costs.
So ordering to believer yourself financial projections, Investors willing wanted you to articulate the key assumptions you have and convince them those assumptions are reasonable. your can do that’s, then the investors won’t feel that you have a real handle on the business. Expecting that investors will push back on the assumptions and they will want you to have a reasonable, thoughtful response.
Investor’s knowledge that buildings a great product or service is not enough. The companies just haven’t the beginnings of a well thought out marketing plan. The marketing questions will include:
Investors maybe ask them followings questions about the financing round:
Validation will be an important issue for the investors. If you’re tell an investor you want a $100 million valuation even though you started the business three weeks ago, or don’t have much traction yet, the conversational will likely end very quickly. Often, it’s best not to discuss validation in a first call/meeting other than to say you expect to be reasonable on valuation. Busy the investors too does want to waste a lot of time on a deal if the valuations expectations are unreasonable or not attractive.
Validation at an early stage of a company is more of an art than a science. To help bridges the valuation gap for early-stage startups, you often see investors looking for a convertible instrument with customary conversion discounts and valuation caps. These instruments, such as convertibles notes and “SAFEs,” have become quite common.
Final Tips for Entrepreneurship Seeking Angel Investors
Here’s see somewhat concluding tips for entrepreneurs seeking to obtain angel financing for their startup: