Your business needs money as soon as possible. Like, today. Maybe a big order just came in and you don’t have the necessary supplies to fulfill it. Perhaps a major customer payment hasn’t arrived on time, or a tax deadline is approaching, or an expensive piece of equipment just broke down.
It’s time to bring your business to the next level. Maybe you’ve recently launched and sparked significant interest in the market, or maybe you’ve been building the company for several years and have recently achieved a sustainable pattern of growth and momentum. Whatever stage you’re at—whether you’re looking for seed capital, early stage funding, or later stage financing—you’re entering into serious discussions with potential investors.
- Do you know which investors are worth your time and energy?
- Are you able to pick out the worthwhile sources of capital and smart strategic partners from the crowd?
If you can’t, you risk not only wasting your own time, but potentially setting your business up for significant legal and financial instability.
GAAP. It may seem like accounting jargon, but if your business is entering a Series A round and you’ve begun to have serious discussions with potential sources of capital, those four letters can be the difference between securing and losing out on funding. That’s because investors, banks, and other outside parties expect your business to comply with GAAP.
Let’s back up. What is GAAP accounting, and why is it important? What are the benefits of GAAP? When is GAAP necessary? Which businesses must use GAAP?
So many questions, so few clear answers out there for business owners who aren’t already CPAs. Here’s everything you need to know about GAAP—what it means, why it matters to your startup, its pros and cons, and when you should start thinking about making the switch to GAAP accounting.
They’re the two words that can make or break a deal with an investor—the two words that cause even the most seasoned entrepreneurs to grimace:
Make no mistake: due diligence can be stressful. But amidst all the fun and exciting parts of attracting investors to your business—innovating, creating a brand, traveling, pitching ideas, forging new connections—due diligence is always a necessary step. It’s how you build trust with investors. It’s where you show your work.
If you run a Software as a Service (SaaS) company—that is, if you provide licensed software via the cloud—I have some good news for you. SaaS is on track to reach a public market value of $76 billion in 2020.
Let me put that number into perspective. In 2016, the SaaS public market was worth $38.5 billion. We’re talking about an already-booming industry with the power to nearly double in size in just four years.
Which leads me to my other piece of good news: SaaS companies present enormous opportunities for investors. But you probably knew that. Maybe you have a few investors on board and engaged in a funding round right now.
In any case, I’m here to help you attract investors and consistently exceed their expectations. The key, much like that $76 billion figure above, lies in the numbers. Take a look at a few essential metrics investors pay close attention to when evaluating your company’s performance:
If there’s one four-letter word on the mind of every investor, it’s “risk.”
While virtually all investment opportunities involve some level of uncertainty, the people and organizations who eventually invest in your company—be they bank lenders, venture capitalists, or your friends and family—are the ones who are confident they have minimized their risk. Sure, they want to feel excited about an opportunity, but what they’re ultimately looking for is a safe bet.
How can you ensure that the company you’ve built poses the least amount of risk to investors possible? The answer is in your books.
When was the last time you were at the gym, and cringe-worthy music completely distracted you from your workout? Or worse, while enjoying celebratory drinks out with friends, has gloomy background music brought down the atmosphere? Music is the social glue that binds us together, and yet in public spaces, we’re exposed to music we don’t like and no ability to change it.
Polish entrepreneurs Hubert Kawicki and Adam Krzak created a digital jukebox, Moozicore, to allow you to create your ultimate playlist at gyms, restaurants, or clubs directly from your phone. Giving the power back to the people, it starts at only 50¢ a song.
“You have to spend money to make money.” The familiar business adage is perhaps nowhere more true than when it comes to fundraising. From researching VC firms to developing the pitch deck to buying that carbon fiber bike and lycra suit for cycling-based networking, finding investors is an investment in and of itself.
With the right team of financial professionals, however, you can minimize your upfront expenses and maximize your fundraising ROI (or is that ROIOI?). Whether strategizing with you as a co-pilot or merely taking some responsibilities off your plate, bookkeepers, accountants, controllers, and CFOs all play major roles in your startup’s fundraising success.
There are many articles out there that provide a wide array of lofty advice about fundraising. Some of the groundbreaking tips in those articles may cause you to rethink minor details such as the order of the slides in your deck or even something as major as your go-to-market strategy. This is not one of those articles, but we do have an ebook full of stories that are sure to inspire here.
Early in his company’s history, entrepreneur Greg Vetter achieved a seemingly impossible feat: he convinced Whole Foods to distribute his family’s line of salad dressings on a national level.
Although the green light from Whole Foods provided an incredible opportunity, Greg knew it meant he needed capital—fast. So, he liquidated his and his wife’s 401(k)s, maxed out his credit cards, and even used his parents’ home as collateral to secure a bank loan. Then, he raised an additional $1 million from about 30 friends and family members.