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MenuWhat a startup needs to know about investment from beginning to acquisition?
How a founder should think of his future startup in terms of investment or raising capital, from the time it starts until the time it will be acquired by another company.
(including finding a co-founder and key employees and offer them shares or options in the company. Also, taking into consideration seed investment, and any kind of investment or raising money by investors...).
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I strongly disagree with the first answer - of course you are building to sell! They key is how fast and what is the multiplication factor for investors...
But back to the question itself, I think the most important thing to remember about investors and fundraising is that you are not just getting money - you are selling your company piece by piece. So at each round you need to be sure that what you get is worth what you give away. Simple math might show that at the end it will not worth much for the founders.
The rest are details of strategy and specific business and need to be discussed directly. Happy to talk.
First, I caution you that building to sell is a huge turn-off to many investors. Not only is it a bad signal, but it's also a bad strategy. There are so many uncontrollable variables that dictate the likelihood of that specific outcome and the terms attached, that it's a really bad reason to start a company.
If you want to sell a Company in an acqui-hire type scenario, I would suggest you don't raise any seed money and that you expect to raise entirely from friends & family or at best, some angel money. But I'm telling you right now that there is exceptionally high chance that you would fail to achieve your goal.
No serious or respectable seed investor wants to invest in an entrepreneur with a "quick flip" mentality. No matter how much you try to hide that motivation, it will come through and you'll get pass, after pass.
Also, I would argue that the kind of technical and design talent that wants to join as a co-founder or early employee has almost zero motivation to end-up at a large company, so defining this as your "True North' is unlikely to recruit anyone of great talent. The quality of your talent can be a significant difference in the valuation of the acqui-hire.
Based on what I know of you (which is very little), my sincere hope is that you don't start a Company as your next step in your path forward. It's incredibly difficult to make a startup successful and given your obvious inexperience, I'd suggest you join an existing one that you believe in and earn your first experience that way. You have far better odds of making money (clearly a strong motivator for you) and you'll be in a much better position to evaluate whether you have what it takes to become your own founder.
A great resource for finding startups that you can join is AngelList. There is a lot of transparency (e.g. how much they've previously raised, who their investors are etc) that will allow you to make an informed decision.
Thank you Tom!
I'm not following this strategy at all. My question is to know how each step works for self education only. Just curiosity to learn.
It's better to talk over the phone.
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