Loading...
Answers
MenuI am not sure how much money should we raise. The founders have boot strapped the company. They can go on without salary for one more year.
Answers
I built and sold an enterprise company to IBM. While the fundraising climate was very different then, here are the things you should look out for:
As a general rule, if you're going to raise money, then you want to raise enough money that you can get the company to the next stage at which you'll be able to raise another round. Were I in your position, I would raise enough that I could confidently establish our LTV, churn, CAC. Once your LTV is at least 3x your CAC, you've built a business that many investors would readily fund.
A few tips:
1) You will _always_ need more money than you estimate. It is better to raise 30-50% more than your initial calculations of what you "need" - if you raise more than you need, you took a bit more dilution than necessary. If you raise less, the company will likely fail.
2) The CEO will likely be the best salesperson at this stage and for a time to come. Don't hire more than 2 additional salespeople until you are certain you have a scalable, repeatable playbook.
3) If you haven't read the sales learning curve - it's a quick intro to scaling a sales org. Running sales is very different than running eng. Very. https://hbr.org/2006/07/the-sales-learning-curve
Happy to share more about my experience if you'd like to do a call. Good luck!
Charge-up your sales efforts. If you're bootstrapping, why stop now?
Get out excel and build out a robust model ...the answer is in the numbers.
Related Questions
-
What is the best way to write a cover letter to an early-stage startup?
Better than a cover letter is to actually proactively DO something to help them. It'll show them not only that you've researched them, but you're passionate about the startup and worth bringing on. A man got a job at Square early on for just making them a marketing video on his own (back before they had one). Since you're a web designer, design a stellar 1-pager that's targeting their message to a particular niche. Something they could use on social media or something. If they're like most startups, they're not interested in reading cover letters. They're interested in passionate individuals who can add value to the organization.AS
-
Business partner I want to bring on will invest more money than me, but will be less involved in operations, how do I split the company?
Cash money should be treated separately than sweat equity. There are practical reasons for this namely that sweat equity should always be granted in conjunction with a vesting agreement (standard in tech is 4 year but in other sectors, 3 is often the standard) but that cash money should not be subjected to vesting. Typically, if you're at the idea stage, the valuation of the actual cash going in (again for software) is anywhere between $300,000 and $1m (pre-money). If you're operating in any other type of industry, valuations would be much lower at the earliest stage. The best way to calculate sweat equity (in my experience) is to use this calculator as a guide: http://foundrs.com/. If you message me privately (via Clarity) with some more info on what the business is, I can tell you whether I would be helpful to you in a call.TW
-
I'm having problems with ideation for a startup, I'm a web developer, what needs of yours aren't being met? Or how can I find a big problem to solve?
It's really ill-advised to solicit your vision from anyone. In my 20 years of building, investing and supporting tech companies, I don't know of a single success story that has it's origins in someone with your approach. Running a tech startup is incredibly hard. It demands sacrifices few are truly able to make and come with it tremendous risks that most people are unwilling to take. It sounds to me as if you want the startup life because you have an impression of what it's about but haven't yet experienced it first-hand. I'd encourage you to first join an early-stage startup. Developers are incredibly in-demand. Find an entrepreneur who has some experience, funding and a compelling vision that you believe in and get to know what the journey is really like.TW
-
What happens to a convertible note if the company fails?
Convertible notes are by no means "earned." They are often easier to raise for early-stage companies who don't want to or can't raise an equity round. Equity rounds almost always require a simultaneous close of either the whole round or a defined "first close" representing a significant share of the raised amount. Where there are many participants in the round comprised mostly of small seed funds and/or angel investors, shepherding everyone to a closing date can be very difficult. If a company raises money on a note and the company fails, the investors are creditors, getting money back prior to any shareholder and any creditor that doesn't have security or statutory preference. In almost every case, convertible note holders in these situations would be lucky to get pennies back on the dollar. It would be highly unusual of / unheard of for a convertible note to come with personal guarantees. Happy to talk to you about the particulars of your situation and explain more to you based on what you're wanting to know.TW
-
Among platforms for startup funding, AngelList is the 800 pound gorilla. Does it make sense to use simultaneously other platforms like Gust, etc?
Short answer: Of course! Many angel groups require you to submit through Gust because it offers a consistency and makes reviewing applications easier. But not all use Gust same as not all use AngelList... I haven't met an angel who frowns upon using multiple platforms. I would encourage you to leverage your twitter and Facebook or Instagram to meet angels and get in their radar (don't hassle or stalk) just try to get exposed a bit to them by being part of the same meetup group, follow the same blog, membership... Subscribe to their own blog.. And when you submit funding request considerations do please send a follow up email or a call or basket of fruits if you have contact them before.HV
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.