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Raising Money From Informal Investors. Whoever leads the deal dictates the terms

The devil’s in the details when taking money from–and structuring a deal with–friends, family and angel investors.

No matter who you’re raising capital from and no matter whether you’re raising money in the form of debt or equity funding, you’ll be faced with the prospect of financing agreements that are written to favor the investor over the entrepreneur. Over the years, the agreements used by more informal investors have come to mirror the investor-friendly agreements used by venture capital firms. So it’s critical, especially during the startup stage when your negotiating leverage with investors is often weak, to know the difference between what is tolerable and what is intolerable when it comes to structuring a financing deal.

By Asheesh Advani

Full Story: http://www.entrepreneur.com/money/financing/startupfinancingcolumnistasheeshadvani/article168860.html

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Inside Entrepreneurship: Whoever leads the deal dictates the terms

By SUSAN SCHRETER
SPECIAL TO THE P-I

Q: What should I know about term sheets? I’ve got some patentable concepts for cell phone and PDA user interfaces. I expect to raise angel money first and then some venture fund money. It seems the investors always dictate investment terms, so why are people telling me I need to hire a lawyer to develop a term sheet before approaching investors? Isn’t this the investor’s job? I’m getting conflicting information!

Full Story: http://seattlepi.nwsource.com/business/288538_schreter13.html

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