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Survive the Term Sheet Negotiation and Investor Due Diligence Part 1

The principal roles of the lead investor was to negotiate the terms of an investment with the founder of the startup. In theory, the terms could be “here’s a million dollars to use; if the company becomes a big success, please give it back to us.” Unfortunately, that’s not the way it works. When a corporation is established, its ownership is divided into pieces called shares of common stock. That’s what you as a founder will have, which is why it’s also known as founders’ stock. There is a different kind of stock that investors can choose to purchase, called preferred stock. While the name makes it seem preferable to common stock, preferred is not inherently better, it’s just different. Here’s why.
David S. Rose
28 Nov 2023

7 Tips On Written Communications To Startup Investors

Even in this age of videos and text messages, the quickest way to kill your startup dream with investors, business partners, or even customers, is embarrassingly poor writing. Being very visible in the startup community, I still get an amazing number of badly written emails, rambling executive summaries, and business plans with one paragraph per chapter. In the competitive realm of business, you only get one chance to make a great first impression. You have to be able to communicate effectively in all the common forms, including business writing, as well as talking, presenting, and producing videos. Lack of the requisite skills or discipline will get you branded as a poor business risk before the message is even considered.
Martin Zwilling
Martin Zwilling , Founder and CEO , Startup Professionals
8 Nov 2023

How a Great Brand Story Can Help You Nail Your Pitch Deck

Pitch decks for demo day. Goes without saying that raising capital is a critical moment for any startup. It’s your first impression that can essentially make or break (figuratively) the opportunity at hand. Branding is what sets one business apart from another. It's what makes Apple a luxury tech brand and Nike a reputable sports brand. Understanding how to create an effective branding strategy can help your startup stand out on your big day.
Logan Burchett
1 Nov 2023

Market Research in Tech: Avoiding Investment Blunders

Know your market and competition, or don’t spend a dime on anything else. I love absolutes – statements with no wiggle room for gray-area responses. Well, here is one of those, and it deals with market research first and foremost. Let me tell you a short story at my own expense...
Dave Berkus
Dave Berkus , President , Berkus Tech Ventures
23 Oct 2023

What does a “discount” mean in a convertible note?

A note is a loan. That is, a lender gives a company $100, and the company writes a note to the lender stating "we will pay you back $100 one year from today, along with 10% [or some other number] per year interest". The convertible part means that in addition to the straight repayment mentioned above, the lender and the company agree that instead of the company paying back the loan in cash, if the company raises money by selling stock to another investor before the loan is due, then the original lender (the "noteholder") can use the amount of the loan (plus the interest) to purchase stock on exactly the same terms as the new investor. Depending on how the note is written and the amount and valuation of the equity (ie, stock) sale, the conversion may be either optional on the lender's part, or mandatory. A discount on the conversion means...
David Rose
13 Oct 2023
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