Tag venture capital

Capital for your startup typically comes from one of three places: self-funding, debt financing, or equity financing. If you’ve chosen to raise capital through equity financing that means you are most likely relying on investors. Money is never free; even Uncle Sam gets his share if you win the lottery. Investors expect a certain amount of return and/or equity in your company when they invest. Yet, you still need to protect your interests and not give away the farm. Protecting your stake in your startup requires clear and formal documentation to solidify any agreement you make with investors.

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As the owner of a startup, you have a laundry list of things you’re concerned about and raising capital is likely near the top of that list. You need capital to scale and grow your business, but you don’t want to give away too much ownership. With an understanding of the differences between pre-money and post-money valuations, their importance, and how the amount of capital you raise can impact your ownership, you will have a better idea of how much capital you want to raise for your business.

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Many entrepreneurs and startup founders have great ideas; however, first-time founders often lack knowledge about finances, investment, and lack a strong network. Ambitious founders who want to succeed with their new startup, sometimes feel overwhelmed when confronted with new and unfamiliar vocabulary such as “incubators and accelerators.”

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One of the questions entrepreneurs and startup founders ask us the most is, “Why do so many startups incorporate in Delaware?” As co-founders or business partner(s) sit around a table and discuss the best ways to bring their startup to life, one of the topics that usually pops up (or should pop up) is entity formation. The typical entity of choice is a Delaware C-corp.

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For startups, raising money at the seed stage can be difficult, but this is probably when your business needs money the most. If your startup finds a venture capitalist (“VC”) or angel investor (“Angel”) willing to invest in your startup at the seed-stage, you should avoid these four common seed-stage pitfalls that can derail the deal. The Brown & Blaier, PC can ensure that you remain in compliance with state, federal laws while you seek funding for your startup at the seed stage and beyond.

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