Beyond the three Fs – family, friends and founders – owners of young, small businesses may seek capital from from external sources such as angel investors, incubators, accelerators, and venture capital funds to help establish and grow their business.
Today I attended a local event about capital options for startups and here are some takeaways:
- Investors look for the three Rs:
- revenue – indicates customers
- repeat customer – indicates happy customer
- referral – indicates very happy customer
- Investors may have ‘FOMO’ – fear of missing out. So they may never say an outright ‘no’. Instead, they might mean ‘no at this time’, or ‘come back when you’ve done A B C’
- ‘Taking investment means committing to a certain amount of growth and ambition’.
- A venture capitalist said ‘we expect 90% of the funds from us to be used for salaries’
- ‘Salaries are for the entrepreneur’s ‘piece of mind” so that they can continue working on their startup. But it shouldn’t be a $300,000 salary!!
- The environment for early stage financing right now is fairly ‘frothy’.
Although my primary intention in attending was to learn about finance issue, I also was inspired (momentarily) to pursue some of my own entrepreneurial pursuits.
Food: strawberries, kiwi fruit, ethiopian curry, burrito, congee, shallot pancake