Money comes from many sources, VC (venture capital) and PE (private equity) are just a few of them.
When you start or run a business, you have your own money. If you are short of money at the beginning or in the process of running a business, and you have the support of family and friends, you must think they are angels. With angels, it’s easier for you to open your mouth without signing a formal contract.
Because it is good to discuss, it is easier to leave future problems. If you borrow from more than one person, future relationships can be complicated. For example, when you have no shares at the beginning, it is difficult to determine the number of shares when you want to take them, which is not easy to predict and sometimes hurts face. So with relatives and friends to borrow money, there are advantages and disadvantages, according to their own situation and relationship to consider clearly.
I think the bank loan within three years is very good, although there is interest, but how to calculate compared with other costs are the lowest. First, the interest is fixed. Second, it’s a business relationship, not a debt. So I suggest considering a bank loan first. If that doesn’t work, borrow money from friends and relatives in the short term.
Asking for money has a cost
If you need a lot of money, have a long-term commitment to the organization, have confidence in your business and are willing to go the extra mile in terms of your technology, product or ability, consider investors.
What VCS and PE’s want is simple — equity. For successful businesses, financing is expensive. Plus, there’s the cost of investors following you for years until you sell or go public. VCS are there to make money, and the sooner the better, your goals are actually the same.
In addition to VC and PE, can also ask for money from strategic investors. You want more and more resources, maybe even to the stage of acquisition and merger. The biggest benefit of a strategic investor is resources. It has a twofold purpose, one is to make money, and the other is to hope that you can feed the parent company’s main business.
VCS care about making money, strategic investors care more about how to integrate with their main business. They don’t interfere with you in the same way. If you are strong, you can pick investors, investors chase you; If you’re weak, be relatively honest.
It’s expensive to do an IPO, and it’s expensive to do it after you go public.
Trying to impress investors
You have to be able
VC is very picky, the threshold is very high, not what project should look for VC investment. VC people’s ambition is very big, want to find a big market, the ultimate goal is to hope to cast a few big, had better be able to cast a Tencent, a Baidu.
Whether it’s a startup or a growing business, investors are sure to ask your former colleagues and bosses what they think of you. The investors put the character first, then the team, team regularity is very important.
In fact, investment is to invest in an industry in the top two or three, if you are not the top three, find VC and PE financing is very difficult. The next best thing is to look for strategic investors, whose goal is not necessarily top three, but to supplement their product chain and industrial chain.
Investors’ expectations vary slightly at different stages of a business. When chuangxin Works invests in seed or angel rounds, entrepreneurs have no users or products. The first thing we want to see is the team, to see the team’s experience, ability, speed, execution and past products. Early VCS, in particular, care a lot about the industry chain. Even if you don’t make money, be clear about how you plan to make it.
Materials must be available
Whether it is round A or ROUND B, you should first check your team, direction and products, write project introductions and find different investors.
Want to contact investors, your relatives, friends, classmates is the most reliable introduction. When you introduce them, ask them how you met, what they like, and what kind of projects they’ve seen. Unless there are special circumstances, VC rarely invest in two competing enterprises. After a few rounds, he’ll basically give you a term sheet.
The best plan is a POWERPOINT presentation that Outlines what you want to do and how it will be marketed. Financing plan and financial plan must also have, how much is the cost, how much money is ready to finance. Investors will rarely give you more than two years.
Make changes after you raise money
If you get the money, you call a board meeting. Investors generally don’t demand too much power on the board; it must be the founding team.
You own the company, you have the signing rights, but the amount is set. In particular, if a company wants to acquire, merge, be merged, be acquired, such things cannot be decided by the board of directors, need to be decided by the shareholders. Taking other people’s money does not mean that you can do what you want. In the early stage, your autonomy is still very large, and in the later stage, it gets smaller and smaller.
A fund at least in charge of 20 or 30 projects, a VC at the same time in charge of two to three funds, 50 or 60 projects is normal. For investors, entrepreneurs are a fraction of him, he will not bet on you a person. He can help by all means, but you can’t count on him.
The financial investor will try to clear out angel investors, whether in Series A or Series B, because he wants to simplify the company’s equity structure and business registration.