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Print outs - 2. Entrepreneurs users of PE1.pdf
Print_outs_-_2._Entrepreneurs___users_of_PE1.pdf
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Print_outs_-_2._Entrepreneurs___users_of_PE1.pdf-Summary: Entrepreneurs / Users of Private
Print outs - 2. Entrepreneurs use...
Print_outs_-_2._Entrepreneurs___users_of_PE1.pdf-Summary: Entrepreneurs / Users of Private
Page 13
Financing
Do's
-
2
r
Develop
detailed
/ coherent
strategy
to
raise money
from
outside
investors.
-
Attract and
leverage
investors
with
industry experience
/
credibility
,
lf
possible, get
this
investor early.
,
Provides credibility.
o
Can
help
with
introductions.
-
"Ask
for
money,
get
advice;
but ask
for
r
Rely heavily
on
references
when
looking
for
partners
/
investors.
r
lf
buying
an existing
business:
*
Get seller financrng.
>
Seller
has
stake
in
your
success.
Enæprcneuriâl
Fimrce
ùd
Privâte Equity
25
Stoven
N
Kaplsn
Securing
resources:
Getting
customers.
r
Learn
how
to
sell:
-
Provide
quick
payoffs.
-
Create emotional
appeal:
"Underdog."
*
Cast
a
wide
net.
Enrreprereurial
FiMEeild
PñvateEquity
2A
slewn
N
Kaplân
Page 14
Growing
and
sustaining
an enterprise:
¡
Set
priorities
/
strategies.
...
What
business do
you
want
to
be in?
-
What
is
achievable?
:
Build
capabilities.
Go after /
create team
with
skills
you
need
-
Be systematic
/
strategic.
.
Use opportunity
as
selling
tool.
-
Use
equity
if
you
have
to.
:
Do
due
diligence
before
committing
:
Communicate
clearly.
Put it
in
writing.
*
Formally organize
sooner
rather
than
later.
-
Founder
Stock
Purchase
Agreement.
E
Shareholders Agreement.
Growing and
sustaining
-
2:
:
Do not let
problems
build.
Act
quickly.
*
"lf you
see a snake, kill
it.
Don't appoint
a
committee
on snakes."
Ross Perot.
-
"You
cannot fire
a
CEO too
soon."
Kathryn
Gould
-
"A's
hire
A's,
B's
hire C's."
-
Hard, but
very
important.
Entrepæneuiål
FiMrce
and
P¡ivâle Equity
Stewn
N. Kaplan
Page 15
r
Types
of angel
financings:
*
Convertible
Preferred
Stock
(at
Fixed
Price).
>
Fixed
price
/
valuation
set.
*
Convertible
Notes
>
Converts
into
convertible
preferred
at
next
financing
(Series
A).
>
Price
set
in
future,
usually
at discount
for
the
seed
investors
(who
took
more
risk).
>
Usually
a
valuation
caP.
Enhprenetrrial
FiMrce
mdPrivåte
quiry
29
Steren
N. KaPIan
¡
Pros
and
cons
of
the
two
financings
for
Entrepreneur
r
Pro
CN
-
CNs
do
not
require anyone
to come
up
with
a
valuation
now
-
CNs
allow
entrepreneur
to
get
higher
valuation
later.
-
CNs
do
not
give
up
control.
r
Pro
CP
-
By
pricing
round,
entrepreneurs
and
investors
are
aligned.
>
Both
want
higher
valuation
next
round.
)
With
CN,
investors
may
want a
lower
valuation
in next
round
in
order
to
increase
the
number
of
shares
they
get.
*
Some
investors
will
not
participate
in CNs.
md
Private Eoùitv
30
Ste@n
N
Ksolån
Entrcprercuíål
FiMrce
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