The Secrets of Wall St. Course – Why Entrepreneurs Fail

In the beginning stages of your Company’s existence, you are working from a “relative position of strength” when approaching strangers for investment capital.

$500,000 to $1,000,000 is normally an appropriate amount for seed capital followed by a $5,000,000 to $10,000,000 round of development capital for most operating companies.

Entrepreneurs spend considerable time building their company or developing their project—i.e., intellectual property—with little or no capital.

Skin in the game means what?

A detailed Estimated Use of Proceeds and Sources and Uses statements when conducting a securities offering is mandatory for securities compliance.

Providing investors with a first or forward lien on assets is not important in the start-up or early stages of a company because those assets aren’t worth much.

Hybrid securities, such as; convertible notes, convertible bonds, and or convertible preferred equity can easily provide a first or forward lien on assets.

Using a business plan to attract individual investor capital rarely works and if done incorrectly, it can be very dangerous, as it may be in violation of US securities laws.

An IPO or an outright sale of a start-up or early stage company (or its assets) is an excellent exit strategy.

If the arrangement of your management team is contingent upon financing, it is wise to ensure it with signed contingent-commitments letters from each potential management team member before you include their backgrounds, biographies, and responsibility statements in a securities offering document.

It may be better to have 100 investors in your deal with a $5,000 investment per investor (totaling a $500,000 equity raise) than it is to have 5 investors in at $100,000 each.