If you have ever seen the movie Wall Street you probably remember the character Gordon Gecko who said “greed for the lack of better word is good” but is it though? Well we all know where greed landed Mr. gecko.
When it comes to raising money from investors we must ask ourselves what our company is really worth. Now of course, every entrepreneur thinks his company is worth more than what the professional investor believes what it is worth. And of course if you ever watch the TV show Shark Tank you know exactly what I’m talking about, and by the way if you don’t watch this show start today!!! It will be a great education for the young entrepreneur who has never pitched a real check writer.
First you must understand the term called “pre-money valuation”. This is the valuation that we would put on your company, as an investor prior to investing i.e. the word pre. Now also keep in mind when investing in an early stage, high risk opportunity, we need significant upside potential to risk 100% of our investment capital. So when you take that into consideration it helps you understand why investors always want to value your company lower than what you want value your company at.
The best advice we can give you, is to really do your homework and really understand valuation and how to come up with a reasonable fair valuation they can be justified even Mr. Wonderful on Shark Tank. Now that you have a better idea from the investors point of view let’s talk about your greed.
The one thing that can save you from this greedy entrepreneurs syndrome again is knowledge. When you understand how to structure deals in the inside and of corporate finance if you have a really good plan with a really good management team with a lot of upside you can always structure a deal that would make the investor happy at a good valuation as well as protect you and not giving up the farm and getting too much your company away.
You first got to ask yourself what’s the cost of not getting funded so I have the capital to implement my plan? All too often entrepreneurs hold their idea, their invention, so close to the vest and having an unrealistic valuation that they never get funded. Now this happens this causes a couple of problems. First you never get your product or service to the marketplace therefore not being able to help mankind in second you never have the opportunity to see if that vision that God gave you can set you up to take care of you and your family and your children for generations to come. Don’t let that be you!
I have often found that entrepreneurs always have more than one idea and I am continually coaching them to get the funding, get to market, make it successful and go do it again. I’m telling you that you’ll be happier, you will be more fulfilled and life will be more satisfying if you can get an investor to back you, you get to market and have a winner.
That’s why we recommend, when raising money for investors, get help from professionals so they can help you structure a deal, help you with your valuation, help you with your language and help you get to where you want to go faster and a much more efficient manner.
Donald Trump has fired himself from the crowdfunding business.
Last year a new crowdfunding platform launched called FundAnything, which was most notable for its affiliation with the one and only Donald Trump. In addition to being an investor in the site, Trump had committed to contributing to new FundAnything campaigns and then promote those selections via his popular Twitter account.
But a few months later we noted that Trump didn’t seem to be keeping up his end of the bargain, having made far fewer donations and tweets than what was expected.
Now it appears that Trump is out of the crowdfunding business all together. The section of FundAnything’s site that once was called “Donald’s Picks,” has now been renamed “staff picks.” And Trump hasn’t made any mention of the site via Twitter since this past March.
FundAnything, which is led by Learning Annex founder Bill Zanker, did not respond to a request for comment. Trump, however, did provide Fortune with the following statement:
So here is a perfect example of how things can change, and if you let it, put your life upside down as a entrepreneur. One must try and prepare mentally for these challenges.
Imagine if you were the entrepreneur who started a company and closed a deal with Donald Trump. You would be flying higher than a kite!!
Then you start raising money from investors because of Donald’s name, pretty easy to get investors right! BAM then Donald’s out, doesn’t live up to his end of the deal. Life as an entrepreneur is not perfect and there will always we road blocks, be prepared to take on every challenge in your entrepreneur journey.
No, this isn’t some ancient secret society thing; just seven things that will give you the competitive advantage in order to raise the capital that you want and need. But let me first start with a little history and some statistics on angel-type investors and raising capital.
In 2007, there was 26 billion dollars invested by some 258,200 different angel-type investors into about 57,000 different companies. These created a lot of jobs and business. Now is the most difficult time to raise capital that I personally have ever seen; possibly even in the entire history of capitalism itself. In the year 2011, $8.9 billion was invested by angel investors – less than a third of the 2007 numbers. Furthermore, the number of angel investors had dropped to 124,900 with only about 26,300 deals. It has become harder to raise capital than ever before with more competition for the same investment dollars. If you want to stand out in such a competitive marketplace to raise that money, if you want to differentiate yourself from the guy standing next to you, then you need an edge, you need to know the ins and outs of what investors are looking for and how to find them.
We must first start with the fundamental question: What is it that investors want to see? The simple answer is that investors want to see a return on their investment. Nearly all entrepreneurs forget that not only do these investors want to see a return “on” their capital, but that it is equally important that they can get a return “of” their capital. When investing in a venture where they are literally risking 100% of their investment, they must see the potential to make at least ten times return on that investment, and this is assuming an equity investment. Your job is to be prepared and convince investors, beyond any reasonable doubt, that this is not only probable but likely.
These 7 secrets are the musts that will help you accomplish this!
Why is America great? Two reasons: the Entrepreneur and Innovation.
The Declaration of Independence granted American citizens the “unalienable rights” of life, liberty, and the pursuit of happiness. For many Americans, that liberty means the ability to work for ourselves and build our own businesses, achieve financial independence and create wealth. We all have the unalienable right to a good life, to the sort of life that we want to live, and the best way to achieve this is through the entrepreneur and the small business.
Capitalism & Entrepreneurship
In my humble opinion capitalism is the only economic system that can save America! Why do I say that? Because capitalism is the economic system
that created America and made it the greatest country in the history of the world. And, it’s the only system that can deliver on the promise of economic prosperity for everyone.
Why does America need saving?? Well, in my eyes America is losing its free enterprise, capitalistic, positive outlook due to the lack of knowledge and ignorance of many Americans who don’t understand the vital importance of our capitalistic system of enterprise to the long term survival of our country.
I believe that capitalism is the best economic system on planet Earth and needs to be embraced again! Capitalism and free enterprise—the price system in conjunction with the profit system where we exchange goods and services for currency—force entrepreneurs to constantly seek better, more efficient means to “serve” the needs of the “market.” At the end of the day, mankind benefits.
That why I say we must do everything we can to support the entrepreneur. If you are reading this I guess I should say THANK YOU for supporting our efforts to support the entrepreneurs that make the world a better place.
Here’s what’s really cool about this system. Entrepreneurs are totally subject to the sovereignty of the buying public. In addition, capitalism is based upon property rights, which are key to our society, and all Americans cherish those rights. But think about it for a minute. When an entrepreneur is subject to the buying public, what happens? Well, entrepreneurs earn income by “pleasing and serving” others. This motivates clever entrepreneurs to innovate and create new products and services that better meet customers’ needs.
We must believe in this system. We also must understand that we battle over individual liberty, limited government, and market-driven capitalism because these are the conditions necessary for creating a free and prosperous society.
As a quick side note:
redistribution is simply a legal way to steal from one person to benefit another. For the most part, in a free society people who are wealthy created their wealth by serving others and should not be demonized in any way because of their success. Propaganda and ignorance might have one believe that the increase of capitalism only benefits the rich. But the facts prove otherwise. Think about the ultra-wealthy who created the railroads across our country and the benefits that mode of transportation created over the decades; think about when only the rich could afford automobiles, or cell phones. I think my first cell phone was $2,200 and it didn’t even fit in my pocket! With entrepreneurs, innovation, and the wealthy serving the market, prices for innovative products come down quickly and society benefits.
Consider another huge factor that is completely ignored. The benefit capitalism has generated through previous decades has contributed to a more civilized society and more civilized relationships. Since the dawn of man’s existence, he has had to spend most of his time barely eking out a living. Now, with all the technological advancements created by capitalism and the increase in our never-ending economic progress, every man has more time to potentially grow, read, learn, and become an expert in some trade.
Okay, now let’s address “innovation.” When I think of innovation a million things come to mind, but one everyone is aware of is Apple. I remember I used to own a Sony Walkman when Sony dominated the portable music device market and served it successfully for many years. Then Apple introduced the iPod, and took the market by storm, completely destroying the Walkman market.
Keep in mind Apple didn’t just create this by accident. To the contrary, Apple was intensely focused on the market, excellence, and of course the customers’ needs. This is just one of thousands of examples, and the point is let’s not take this system of capitalism for granted; it’s what motivates innovation.
Innovation adds value to the end-consumer by providing a real benefit we are willing to pay for. Can you even imagine where we would be without the entrepreneurs who have created all the products and technology just in the last ten years? The times we live in are really mind-boggling, Think of the things that are being innovated to do what? Serve us! How cool is that!
What Entrepreneurs Mean For America
In terms of helping our country and keeping our economy healthy, entrepreneurs have quite a lot of influence, but how exactly does this occur? How can one small business have any effect much beyond its own home street or neighborhood market?
Let’s take a simple example. A man wants to start up a small-town grocery store. He obtains funding, be it from personal savings, family investment or bank loans, and opens up that country grocery store, but it doesn’t end there. He needs to hire a couple of employees to help him run it. Then he needs produce shipped in from the local farmers, which in turn provides those agricultural entrepreneurs some much-needed income. Of course the guys trucking in the product appreciate the extra delivery money, as does the accountant the new storeowner will have to hire around tax time. Now if there happens to be a local rancher looking for an extra outlet for his meat products, then that new store will definitely help him out. In essence, this small country store has created a spider web of local profit with the potential to keep expanding the network. The small business can certainly get around.
This chain of events is referred to as “trickle-down economics”, but I could make an argument that for some companies it is “torrential downpour economics”! Apple iPhone is a perfect example to examine. We all have seen the thousands of products that have been created around the iPhone: covers, lenses, cases, earbuds, apps, etc, etc. Each product has created jobs for thousands of people. Think about a product from manufacturing to the end consumer and how many people are employed because of one successful product, such as the little red wagon every child wants to own. Even though Apple is a big company, the same goes for a small business that creates a successful product or service that supports or serves the iPhone.
So please support me in supporting entrepreneurs buy investing in their companies, buying their products and sharing their innovation online and together we can make a major impact to society! Check out my new book, Saving America One Crowd @ A Time @ www.SavingAmericaONeCrowdAtAtime.com