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5 Ways A Business Plan is a Promise, not a Product

One of the questions I hear most frequently is how to find consultants to help with developing a business plan for investors. Often it seems as if people are thinking that the right prose and formatting could make the difference between investor interest or lack of it. Too bad. A lot of time, money, and stress gets wasted […]
Tim Berry
Tim Berry , Founder , Palo Alto Software
11 Jan 2012

A Bubble for Seed Stage Valuation

When entrepreneurs raise equity capital for startup companies, the investors’ percentage of ownership is determined by the negotiated valuation for the company at the time of investment.  For example, if the negotiated pre-money valuation is $1.5 million and the investors provide $500,000 in equity investment, the investors are purchasing 25% of the company [$0.5 million […]
Bill Payne
Bill Payne , Angel Investor , Frontier Angel Fund
10 Jan 2012

The Startup Clock Starts When You Incorporate

The official start date for your startup is the date you incorporate the business. This is obviously important for tax purposes, but may also dramatically influence how potential investors, customers, and competitors look at you. My rule of thumb expectation is that it should take two months to set up the legal entity, six months […]
Martin Zwilling
Martin Zwilling , Founder and CEO , Startup Professionals
9 Jan 2012

Cohort Analysis

Don’t mean to disappoint you, but this idea isn’t nearly as devious or dark as the name implies.  It’s just a straightforward, really smart, thing to do. The term derives from sociology: groups of people who share certain characteristics are “cohorts”.   Instead of focusing on average behaviors of a large population, cohort analysis looks to […]
Bob Rice
Bob Rice , MANAGING PARTNER , Tangent Capital
9 Jan 2012

Limiting the Number of Shareholders in Private Companies

The US Securities Exchange Act of 1934, section 12(g), generally limits a privately held company to fewer than 500 shareholders. The assumption has been that companies with 500 investors are quasi-public anyway, and for disclosure and other reasons should be forced to go public when the shareholder number approaches this limit. Since the IPO market […]
Bill Payne
Bill Payne , Angel Investor , Frontier Angel Fund
5 Jan 2012
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