Rules for a startup during the boom investment

In connection with another dotcom boom in the US some owners of startups think only about how to raise more money. It's easy, when investors lined up, and budding startups at seed level receive seven million dollars. Startups 42Floors co-founder Jason Friedman (Jason Freedman) says, how are presentations of start-UPS: everyone is given two and a half minutes for a presentation, then a short session of questions and answers, any business plans. The audience of five hundred "angels" eager to invest in someone. A couple of days it is easily possible to close the investment round with a seven-digit amount and the investors will negotiate, offering two to three times more than the declared volume of financing. One of these was sent to Jason, four e-mails, three SMS, then called and sent a message on LinkedIn — if only to fit in to the closing round.

Startup 42Floors founded in November 2011, it provides online service to find office space. Investments by March 2012 amounted to $400K.

Jason Friedman has formulated several rules that you need to follow a startup in a hot market.

Respect. Even in the worst of past times, says Friedman, when he at times received up to 30 failures in a row, no one showed him disrespect. Many of the failed investors are trying to do something to help. Now the situation turned in the opposite direction, and now it's our turn to show respect to investors, when you have many of them to refuse. The world of start-UPS close, and we have to work together for a long time. Our manners will not be forgotten, good or bad.

Optimize for people, not money. Proposed investments of the imagination: ten million, twelve, fifteen?! It's just crazy. The job of the entrepreneur is to attract investment for business, and often this means to evaluate the business as much as possible. But if you want to build a big company, then for the next four-five rounds of funding, and eight years development it's more important to think about the right business partner, and not on the amount of investment. This is not an eBay auction where the winner is the one who will offer the best price. You need to look for long-term investors — strategic partners.

No rush. it is Difficult to build long term relationships with investors, if you hear his 30-minute presentation and need to immediately write a check, or you leave the room.

Attract more money. more money in the account may be useful for scaling of the business, which is necessary in preparation for the next round of funding. It is now believed that the seed level normal are investing $1.2 million

the price of a stock (priced round). Thanks to the convertible debentures at startup there is almost no risk of sudden closure. You can always attract more money, yet is willing to write checks. With documents in the round AA don't need to discuss the terms. If previously the process took two months, now — five days. But the problem with convertible bonds is that there is an upper bound estimate, and if your startup is the same as 80% of other startups, and it won't go off abruptly, then the next round of funding may be less than this limit, then there would be some problems.

And we must remember that "gold fever" will not last long and the pendulum, as always, and then swing in the opposite direction.

Article based on information from habrahabr.ru