When entrepreneurs pitch us we hear about how much they are raising, how long they think it is going to last them, and what they are going to spend it on. As an entrepreneur, you need to think strategically about how to spend your money. Some investments may pay back and produce value immediately while some take a while longer, thus leaving you with a shorter runway. It’s all in the numbers!
If you have watched the other MATH 101 videos, it is pretty clear that Troy is an advocate for using equity for most “real” rounds of funding. BUT, that doesn’t mean that convertible debt doesn’t have its place. In today’s video, see how to best use convertible debt to your advantage…
When deciding how to price a product, many entrepreneurs have flawed assumptions. I hear them assume that a discounted price on their product or service will bring them more customers, when in fact it can be just the opposite. Watch the video to hear Troy’s experience with this exact scenario at SurePayroll.
While some entrepreneurs like uncapped notes, most investors hate them. But agreeing to a valuation cap can send a signal that may hurt you in your next round - it could be too high, scaring off potential investors or too low, hurting your negotiating power. Here is a way to raise this bridge with a price the investors will like without signaling any price at all!
In last week’s episode, we discussed the pros and cons of SAFE/Convertible Debt vs. Equity. This week we take a deeper dive into some unexpected problems you can run into when deciding to raise with SAFE/Convertible Debt. Make sure you are always putting yourself in the best position for your next raise, always be optimizing for the future!!
When you are raising your first round of capital you basically have two options, SAFE/Convertible Debt or Equity. One option may seem to offer more flexibility and lower cost, but the other will be much more beneficial in the long run. Show your investors you know what you are doing and do the hard work up front and you will benefit in the long run!
We’ve talked about how to construct a great deck, but how do you get in front of investors and make your meeting count? In episode six of MATH 101, Troy dives deeper into the fundraising process talking about how to identify key investors, getting the meeting, how to pitch, and the follow up. Remember, it’s not about you, it’s about the investor.
You asked, Troy answered! When you are starting to think about how much money you should raise, you probably start to develop a range in your head. In episode five of MATH 101, Troy digs into the strategy behind which side of that range you should push for to create momentum and excitement around your company. Additionally, he offers advice on how to best communicate to funds on how you will use their capital.