Differences Between Angel Investors and Venture Capitalists Viewed: 4219 Times

Differences Demographics

Angel Investors

Venture Capitalists

Experience

Money source

Typically male with an average age of 49 years and has a graduate degree Have been investing five years or more, have entrepreneurial experience, and will provide handson guidance to early-stage companies. Private investor- uses their own personal money to fund their investments $50,000 to $500,000

Typically male with an average age of 42 years Have a decade or more experience and will provide their own associate staffing to ensure their investment.

Investment amount System for analyzing and managing investments

Professional money managertheypool capital from other sources, such as pension funds and university endowments $500,000 to $5+ million

Strategy for reasonable return

Act solely as individual investors, Have a formalized approach to many have professional investment investing where they employ a team experience, and will bring of human capital to maximize profit considerable industry knowledge to and growth potential, i.e. an entrepreneur and management consultants/ associates who are team. specifically involved in due Have a practical, hands-on diligence on potential deals, have a approach to building a company and network of investment bankers and are willing to work within the others in different capital markets to structure that the founders have put provide additional sources of together. financing for their portfolio companies, and have access to highrank legal counsel to help them structure investments. This structured method allows VCs to have more financial, due diligence, and valuation skills when compared to angels. Have hands-off experience. Risky approach to investing Conservative approach to believes in early-stage investment investing- even though VCs invest (seed and start-up stages) strategy in in all stages of a company; they which they can receive more slower believe in the home run theory of and modest returns over their entire investing, in which later-stage portfolio. companies (mature, high market Angels may get involved with a capital companies) will minimize company in its earliest stages their risk of loss. because more equity is available at

a lower price and there is an opportunity to shape the strategy and development of the business. Rigid Structuring the Flexible deal/financial decisions More likely to play an advisory role More likely to require one or more Amount of for company founder and board positions to gain control of control management team corporate decisions Requirements Provide the initial funding of small Provide millions of dollars per amounts (from tens of thousands to investment; however, VCs are for investing hundreds of thousands of dollars) more likely to invest in companies for a company, even before the with a proven track-record of company has demonstrated any kind business success. The company of success; however, the company must gain $25 million in gross must show considerable potential revenue potential from their unique for growth. product or service before the investment and need to make a 50% profit margin. An angel funds companies for Are obligated to maximize investor Reasons for motives beyond financial return, returns and to outperform other investing social responsibility, and venture funds community involvement 5-7 years Investment time 3-7 years Risky- believes in early-stage Conservative- even though VCs Investment investment (seed and start-up invest in all stages of a company, approach for stages) strategy in which they can they believe in the home run reasonable receive more slow and modest theory of investing, in which laterreturn returns over their entire portfolio. stage companies (mature, high market capital companies) will minimize their risk of loss No. There is no national directory Yes, VCs advertise their location. National for active angel investors; therefore, There are many extensive recognition the entrepreneur must actively directories listing active venture network their influences to find the capitalists. right one. Rarely- angels tend to avoid follow- Yes- they will re-invest/put in Follow-on on investing because of the risk of additional amounts of capital at investment losing more money if a company is later stages to assist with growth not successful as predicted. Found in all industries, including Involved in limited industries Industry and technology, pharmaceutical, (mostly technology), and have portfolio publishing, insurance, finance, etc., limited portfolios and have diversified portfolios Should tell the investor how much Elevator pitch Tells the investor how much the

time (the term angel investor can make, the exit used to describe a strategy, and business issues. sales pitch in the time it takes to ride an elevator) Angel investors believe in Investment theentrepreneur and invest in them Consequence as a person.

the venture capitalist can make and how quickly s/he can get out of their business deal. VCs are less emotional and are more process involved; they mainly evaluate deals and make offers.

Venture Capital Angel Investor

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Looking for a venture capital firm? An angel investor?

Most startup businesses begin the funding process by counting on the so-called three Fs: family, friends, and fools. This is done simply by talking to each of them that may want to invest and giving them a first opportunity. Banks and government funding in the form of grants or loans can be the next option for many business owners. However, obtaining government funding is a long and arduous process. In addition, many entrepreneurs need more money than banks or traditional financing institutions are willing to provide given the risk. Thus most small business must turn to other sources for additional funds. The process of getting the next round of funding is usually composed of many similar initial discussions promoting the idea of your company. A great entrepreneur considers every conversation, however unrelated to the business, a chance to further his success. This is because from experience he knows that many times unexpected people are able to help in some manner. That said, there are significant differences between an angel investor and a venture capitalist. You will probably not meet great success without tailoring your presentation to your preferred investment type.

Venture capitalist vs. angel investor

One of the most important differences between an angel investor and a venture capitalist is the funding they intend to use. An angel investor uses his own private money. On the other hand, a venture capital firm raises money from wealthy individuals. This difference profoundly affects the motivations and actions of each type of investor. Helpful Hint A venture capital firm seeks first to obtain a good return to their investors. Because they not using their own money, they tend to be more risk averse and conservative in their process of funding startups. It is their job to get good returns, and they must rely on their experience to choose which companies have the best chance for a high

return. Competition for their limited funding is keen; many firms will fund less than five companies for every thousand business plans they consider each year.

What motivates someone to be an angel investor?

Since an angel investor is providing funding with his own money, the typical angel is a wealthy private citizen with prior success in business. Many times the angel has experience building a company. Some of these angels invest in new startups for the thrill of entrepreneurship. Others want to help a fellow budding entrepreneur meet success. Still others want to stay current on the latest developments in a particular field. Or perhaps they are infatuated with a particular idea.

How does this affect the actions of the angel investor?

Because of the diverse reasons for investment, angels have differing expectations for the return on their money. They recognize startup companies are high risk, and will want to justify the risk with commensurate returns. It is not uncommon for angels to require a 25% return each year. Others may want ten times their investment in a specified time period. However, because many invest for reasons not purely financial, they are usually willing to be more flexible on the structure, terms, and length of a deal. Many angels do not expect a return on their investment for five to seven years, though this can vary. In presenting a business to obtain funding from an angel investor, you should be sure to discover their motivation for investing. Some of them will want to be in an advisory or coaching role, while others may want to be similar in function to a partner. The least sophisticated investors, though, may be hard to reach after a funding deal is complete. A solid management team with a proven track record, a prototype, and well thought out financials can significantly improve your chances of capturing both their attention and money.

How does this affect the actions of a venture capitalist?

Since they are required to report to their investors and typically have a lot of experience with startups, venture capitalists are not as lenient as angel investors in structuring a deal or in the terms. Many entrepreneurs are taken aback by their directness and inflexibility, but you should keep in mind that their objective is to fund the company with potential for the returns they are seeking. The amount of funding and the industries preferred vary by firm. Most will have clear preferences, and you should not approach them if you do not have a business in that area. In addition, most venture capital firms will invest no less than several million dollars in a single deal. If you are looking for less money, angel investor would be better suited to your needs. Summary If your business already has some traction and you need funding to generate many more millions in revenue, a venture capitalist will probably be your best bet. If you need money to get your business off the ground, an angel investor is your ticket. In either

case, be sure to get an investor that fits you and your company well.

ngel Investors vs. Venture Capitalists

Angel Investors vs. Venture Capitalists

Is there a real difference? Angel investors vs. Venture Capitalists are similar in that they both invest money in new and established companies at any stage prior to IPO (initial public offerings.) The similarities end there, as you will soon see with Angel Investors vs. Venture Capitalists . As a rule, angels and VCs can be distinguished from one another by their behavior in four main areas: 1) level of professionalism; 2) whether the money spent is the investors own money or someone elses; 3) whether the investor expects a seat on the companys Board of Directors; and 4) size and growth stage of investment.

1. Angel Investors vs. Venture CapitalistsProfessionalism

Angel investors do not make a full-time job of investing money in companies. They are wealthy by means other than investing, and have other commitments. Rarely do angel investors work through a venture capital firm. Instead, they work directly with the entrepreneur. Angels are not always in the equity capital game for profit; some angels invest simply because they like the entrepreneur or believe in the cause. This is one difference between Angel Investors vs. Venture Capitalists. Venture capitalists, on the other hand, are full-time investors. They regularly commit funds to growing companies and manage a portfolio of company investments. Their primary skill is risk management that is, they invest in a range of companies and work to profit handsomely from the overall spread. The chief concern of a VC is return on investment (ROI). Here is another difference between Angel Investors vs. Venture Capitalists. 2. Personal vs. Institutional Money With Angel Investors vs. Venture Capitalists

Angel investors are known to invest their own money rather than that of an institution. They are typically independently wealthy and are not under any outside pressure to invest wisely. If an angel loses money on an investment, he suffers alone. Venture capitalists are under pressure to invest wisely, because they spend other peoples money. Venture capital firms manage a fund or pool of money gathered from outside sources such as pension funds, corporations, wealthy individuals, and others. A venture capital firms prime directive is to make money, grow the fund, and share the wealth among the investors. 3. Control Over the Company

With Angel Investors vs. Venture Capitalists, Angel investors generally do not request a seat on the Board of Directors of any company they invest in. They might serve on a Board of Advisers, but Advisers do not have corporate voting rights. Therefore, while angel investors do play a role in the growth and success of companies they invest in, they do not have as much control as a venture capitalist has. Venture capitalists almost always require voting rights and a Board seat. This way, VCs retain some control over that in which they have risked their money. As mentioned above, VCs are in the business of profit, not idealism. Now are you starting to see the difference between Angel Investors vs. Venture Capitalists? 4. Size and Stage of Investments Angel investors generally invest no less than $5,000 and no more than $500,000 in a company. They invest early usually at the pre-seed ($5-100K) and seed ($100-500K) stages. At the preseed and seed stages, most companies are still in the research and development or early revenues phase of their business plan. Venture capitalists invest far more equity capital. Minimum investments are typically $2 million, sometimes as high as $20 million and sometimes more. VCs invest at the Early, Later, and Mezzanine stages. That is, they buy equity in companies that are demonstrating the ability to grow. These are important facts when looking at Angel Investors vs. Venture Capitalists. In some cases with Angel Investors vs. Venture Capitalists an angel investor can also play the role of a venture capitalist (as a fund participant) and vice-versa (outside the VC firm in which she works), but as you can see, the two terms are distinct. Go Out There And Get Funded! Look at Angel Investors vs. Venture Capitalists, now that weve explained the differences between angel funding and venture capital, the ball is in your court. You should decide which one to pursue, make a game plan, and take action. Now that you know the difference with Angel Investors vs. Venture Capitalists

Ans 2

Critical Factors for Obtaining Venture Funding

By Garage Technology Ventures
Download PDF version Sometimes there is nothing more powerful than the passion and vision of an entrepreneur. But sometimes passion and vision are just not enough. It helps to understand the criteria that venture capital firms use to decide which companies to fund. Some venture capital firms and corporate investors have very narrow criteriaspecific technologies at specific stages in specific regions of the country. Others have broader criteria and invest across many technology sectors and geographic locations. But all investors look for certain critical components in an early-stage company. Below is a brief summary of these critical criteria. If you meet these criteria, you may be able to continue to the next step in the venture financing process. If you dont, you are likely to receive a polite note passing on your opportunity.

1. Compelling Idea
Every entrepreneur believes his or her idea is compelling. The reality is that very few business plans present ideas that are unique. It is very common for investors to see multiple versions of the same idea over the course of a few months, and then again after a few years. What makes an idea compelling to an investor is something that reflects a deep understanding of a big problem or opportunity, and offers an elegant solution. This is the starting point for getting venture investors interested, but it is not sufficient. The idea alone does not make you fundable. You have to possess the rest of the ingredients below.

2. Team
You may have a great idea, but if you dont have a strong core team, investors arent going to be willing to bet on your company. This doesnt mean you need to have a complete, world-class, all-gaps-filled team. But the founders have to have the credibility to launch the company and attract the world-class talent that is needed to fill the gaps. The lone entrepreneur, even with all the passion in the world, is never enough. If you havent been able to convince at least one other person to believe in the business as fervently as you, investors certainly wont. Winning over investors (and customers and co-workers) depends on your people skills, not just your technical prowess.

3. Market Opportunity
If you are focused on a product/market opportunity that is not technology-based, you probably should not be pursuing venture capitalthere are different private equity sources for non-technology businesses. Venture capital is focused on businesses that gain a competitive edge and generate rapid growth through technological and other advantages. If you are focused on technology, you should be targeting a sector that is not already crowded, where there is a significant problem that needs to be solved, or an opportunity that has not been exploited, and where your solution

will create substantial value. Contrary to popular belief, its not about how big the market is; its about how much value you can create. Brilliant new companies create big markets, not the other way around.

4. Technology
What makes your technology so great? The correct answer is, there are plenty of customers with plenty of money that desperately need it or want it. Not, there are some geeks with no money who think its cool. Assuming you have a technology advantage right now, how are you going to sustain that advantage over the next several years? Patents alone wont do it. You better have the talent or the partners to assure investors that you are going to stay ahead of the curve.

5. Competitive Advantage
Every interesting business has real competition. Competition is not just about direct competitors. It includes alternatives, good enough solutions, and the status quo. You need to convince investors that you have advantages that address all these forms of competition, and that you can sustain these advantages over several years. A few years ago entrepreneurs could get away with saying that competition validates my solution, but today thats not good enough. Moreover, you have to show that you have a good way to reach your target customers and beat out your competitors. As a friend of mine has said, its not good enough to build a better mousetrap; you have to really want to kill mice.

6. Financial Projections
If the idea of developing credible financial projections makes you wince or wail, or if you think its a meaningless exercise, you are not an entrepreneur and you shouldnt ask investors for money. Your projections demonstrate that you understand the economics of your business. They should tell your story in numberswhat drives your growth, what drives your profit, and how your company will evolve over the next several years.

7. Validation
Probably the most important factor influencing investors is validation. Is there good evidence that your solution will be purchased by your target customers? Do you have an advisory board of credible industry experts? Do you have a codevelopment partner within the industry? Do you have beta customers to whom investors can speak? Do you already have paying customers? What other brand name validators can you offer? The more credibility and customer traction you have, the more likely investors are going to be interested.

To secure venture funding today, you need an excellent grade in all seven areas, and an A+ in at least a couple. Its a tough environment out there, so dont waste your time with a story that is not compelling and credible. At Garage, we would love to help and support all visionary, passionate entrepreneurs. Of course, we cant work with everyone. But if you have the elements for success above, we would like to get to know you better. If you have any questions about this article, or about Garage, you can contact Bill Reichert, Managing Director of Garage Technology Ventures (email:reichert@garage.com).

How to Target and Land Financing for Your Start-Up The Decathlon Metaphor
1995 TEN article by George C. Levy, Ph.D., 313-930-6964, Infomatrix Inc., a hi-tech consulting firm in Ann Arbor, MI, and Thomas S. Vaughn, J.D., 313-568-6800, Dykema Gossett PLLC, a business and securities law firm in Detroit, MI.

The process of obtaining money to fund a new idea or start-up company, can be frustrating and sometimes fatal for the new enterprise. Often the entrepreneur chases prospective financing that is not appropriate for his or her business opportunity. While this can succeed occasionally, the effort can sidetrack corporate management just when they are most needed to prove the business concept, complete R&D, prepare for initial sales, etc. In this article, we will discuss some of the factors that can help you to succeed in fundraising while continuing to develop your business concept. Financing your start-up can be likened to competing in a decathlon: there are many events, and you need to excel in several -- but to successfully compete, it is important that you do a credible job in all of the components of the competition. Many of the points raised here require a realistic assessment of your ideas and the competitive situation you are likely to face in several years when your product is out there in the marketplace. Unfortunately, most entrepreneurs are not able to stand back and evaluate their plans with a realistic view of market factors and potential threats to their plan, both through technology development (yours and theirs) and other unknowns. One way to proceed is to view the process of financing your Company as sequential, although in fact it is often necessary to overlap the stages. Recognize that the overlapping of normally sequential events adds risk to the process, and it becomes important for the entrepreneur to adroitly re-order their efforts in response to changing conditions. This is a very useful ability in all aspects of corporate development. The stages of the fundraising process can vary; in this article a ten-step model will be presented - the Decathlon model.

Step 1. Evaluate your business concept and organization as an opportunity: its strengths and limits will help define your potential capital sources.
Banks and other lenders evaluate the safety of their money, focusing on the factors that ensure that they will get their money back when it is due.

On the other hand, venture capitalists and other early professional investors are willing to risk their entire investment -- but only when a realistic possibility exists that their investment will be multiplied many times. Thus businesses that can initiate or dominate markets that can grow only to $5 or $10 million are not of interest to venture or seed funds, in most cases. Market opportunities of $100 Million or more excite investors -- provided they believe that you have the ability to exploit the market opportunity, and that your business can protect itself from the future competition that will certainly develop once you have defined that opportunity. The possibilities for funding can also be defined by the quality of the management team. A nonideal market opportunity can be made attractive when the effort is led by management that has succeeded before. With an inexperienced management team, it can be advantageous to add one or more seasoned members. For most start-ups there is insufficient cash to compensate seasoned managers, making use of equity compensation common. It is also common to initially build an experienced management team with part-time staff.

Step 2. Determine how much money you will need soon (and later)?
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The glib answer is, "(much) more than you think". Even without significant equipment or related capital needs, it is surprising how much cash is needed to fuel a start-up beyond the initial stage, when the whole enterprise is existing on sweat equity and chewing gum. Many entrepreneurs think that when they begin to sell product, the cash crunch will be over. When the product is shipped and if sales are great, this actually generates more cash needs -- not less. Growth of 50%-200% per year, common for high-tech start-ups, typically requires cash to support growing receivables, selling and product support costs, and a myriad of other functions. Sometimes it is possible to get customers to fund the company's growth, but this is not usually true.

Step 3. Realize the likely type(s) and level of financing your start-up will attract.
Most start-ups are initially funded by the entrepreneur and his family or founding team. But it is rare that the level of available funding from these sources is sufficient. Bank financing is not usually available to start-ups unless fully collateralized by deposits from the entrepreneur or a sponsor. Even then, the bank will be reticent unless it has confidence in one or more of the principals. It is helpful to have a founding team which includes high liquid-net-worth individuals. If your start-up is capable of creating and defending one or more large market segments (see Step 1), then major venture capitalists should be targets for your financing. In a rare case, the

entrepreneur can choose from many offers of seemingly unlimited funds. Usually, funding of only $50-100k is offered at the seed stage, and $250-750k in the first full investment round. If your concept does not address the largest opportunity, then regional SBIC or seed funds may still consider funding you. Individual investors, including professional "angels" and "rich uncles", can be the source of initial funds beyond those provided directly by the founding team. But these funds are generally inadequate and it is necessary to develop professional financing relationships as early as possible. When your start-up has been through due diligence and received an investment from a respected seed or venture capital group, then additional investments are facilitated. In some cases (based largely on the type of technology and potential products to be developed), federal, state, or commercial R&D funding is an important source of early-stage financing. In Michigan, the non-profit organization, MERRA, provides valuable assistance to start-up businesses thinking about these sources of funding. MERRA's services for start-up companies are largely funded by an economic development grant from the state of Michigan; its phone number is 734-930-0033.

Step 4. Complete the management team.

At a minimum, the entrepreneur must be able to name a management team with financial, marketing, and (if appropriate) technical leadership. Identifying talented operations/manufacturing and sales management may also be important. Clearly, this team may not as yet all be on-board, but you should have letters and accompanying vitae indicating that they will join the start-up, and on what basis and conditions. When you complete the initial Business Plan (see Step 5), the timetable and financing model for the management team should be complete. If you cannot identify an individual for one or more of the critical management roles, describe how the Company will effectively operate until such members are found and recruited. Remember, it is acceptable in all but the largest start-ups to rely on part-time staff and consultants to fill several management functions. But the Business Plan needs to include supporting documentation regarding these people and indications of commitment of sufficient effort over the necessary time period. Although it may seem premature to include a long-term management plan in a Business Plan, it is important to wrestle with a few issues right at the start. One issue important to investors is the succession plan for CEO. Obviously, investors must have a great deal of confidence in the entrepreneur serving as CEO at the time of the investment even while recognizing that the entrepreneur may not be an appropriate CEO at a future stage of the

Company's development. Investors appreciate founders who recognize this fact and can define continuing personal roles that will enhance the Company's future prospects.

Step 5. Prepare for fundraising: refine the business idea; write the Business Plan and Executive Summary.
You may have already written your initial business plan, but most likely no formal plan is yet on paper. It is critical that you do this now; your (future) management team and other advisors can assist you in completing and refining the Plan, and in developing realistic and complete financial projections and assumptions (this is particularly difficult for inexperienced entrepreneurs). It is important that you and your advisors validate as many of your assumptions as is possible. This is particularly true for the Market Analysis and Competition sections. Most entrepreneurs fail to recognize that new competitors will arise even if there are none at this time. It is critical to recognize competition from alternative approaches, as well as possible direct competitors. It is also crucial to realize that some big companies can effectively take over your market in a very short time. After you have completed the Business Plan and it has been critiqued by your advisors, refine the Executive Summary. This 1 to 4 page document is all that will be read by most of the potential investors you will contact. Keep it as short as possible, but fill it with enticing information about you and your business opportunity.
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Step 6. Evaluate & confirm the legal issues.

Before actually completing the Business Plan and seeking financing, review all of the legal aspects of your business. This is one area where the help of outside experts is critical because you need to anticipate the due diligence (see Step 8) concerns your investors will raise, so that you have time to adequately resolve them -- preferably before they are even raised. One key area of concern will be your legal rights to the intellectual property underlying your business concepts. If patent and trademark searches have not yet been conducted to be sure that your intellectual property does not infringe the rights of others, now is the time to do so. Similarly, now is the time to put in place strong agreements with employees and consultants protecting the confidentiality of your proprietary information, as well as confirming your rights to intellectual property they may have assisted to develop. When due diligence questions about the validity of your intellectual property are raised, you want quick, clean and clear responses. Patent and trademark applications should be filed at this time -- before proprietary ideas are exposed to numerous investors who you don't know and can't control. You will also need to develop a good confidentiality agreement for potential investors to sign and will need to decide just how much proprietary information you will give to investors and at what stage of your negotiations.

Other legal areas you need to be concerned about include:

Developing a clear written record of all of your equity owners and persons having legal rights to purchase your equity. Putting in place written agreements describing employment terms for management and key consultants. Understanding the limitations that the securities laws place on how you raise capital so that you don't find yourself in the position where you have to turn away a ready, willing and able investor because of a technical violation of applicable rules.

Step 7. Make contacts; find lead investor(s).

Networking -- the key word for the 90's and beyond. Recognize that most professional investors do not select their investments from business plans mailed to them. Personal recommendations from sophisticated members of the entrepreneurial or investment community count a great deal in getting the attention of big money. In Michigan, regular participation at regional Entrepreneurial meetings sponsored by the Michigan Technology Council, Ann Arbor's New Enterprise Forum, the Southeastern Michigan Venture Group, etc., can be invaluable for identification of Angels, Bankers friendly to small business, venture capitalists, and others. In addition, being familiar to these communities will benefit management recruiting and satisfying other needs. Once you have one or more initial outside investors, they will act as advocates for your business; their standing in the investment community will affect your future financing, as will known, strong members of the management team.

Step 8. Begin due diligence.

The process of due diligence begins when a potential investor or acquirer asks questions about your current status and business concepts. Due Diligence practices vary significantly, but almost always contain financial and legal reviews, independent marketing and technical analysis (the latter when appropriate), personal and/or client reference checking, and much more. The process can distract company management, stalling or reversing company development. However, due diligence also produces information that is highly useful to management and is difficult to otherwise obtain. Entrepreneurs rarely take the time to develop this information in the absence of the due diligence process. Start-up companies may need assistance in successfully meeting due diligence requirements. This is particularly true in typical cases where the entrepreneur has not kept a complete paper trail on past events.

Step 9. Close financing -- in stages if needed.

Completing new investments can be quite rapid for financing from relatives or Angels, but most venture funding requires 3 to 6 months or more from first contact to closing. The speed of closing investments can be inversely related to the need for the money, and the old axiom about seeking financing when you don't need the money is valuable advice. In reality, start-ups always need money, but your financing plan should recognize that, at certain times, your business will be more attractive to others. Success in funding can depend on your skill and luck in timing, as much as on other factors. It can be helpful to Close initial funding with one or more investors while due diligence proceeds with others, although it is important to not make commitments that are contingent on other possible investments. You should also reward and protect your first investors for their prescience.

Step 10. Follow the Business Plan, as it continually changes.

Your investors will expect you to live up to your Business Plan. The term sheet of most venture capital investments punishes the founders with dilution if the Company does not achieve goals given in the Business Plan (usually measured by financial performance). Nevertheless, the Plan should be continually adapted to changing circumstances, so that you and your investors have realistic expectations of the future. An informed, but albeit disappointed, investor is much easier to deal with than a surprised investor. As a result, major changes in the Business Plan should be considered by the Board of Directors, usually with input from large investors. In addition, this is typically the best time to approach investors for revisions in financial performance criteria. Once you have actually missed the standard, investors have little incentive to make such revisions.

Finish.
When you have successfully raised your first round of external financing, you will feel like you have just completed a decathlon (or the one-event marathon). But you will also be exhilarated and on your way. The next challenge will be to spend those funds wisely in the development of your business.