The Importance of Deadlines for Entrepreneurs

There are several elements that work for regular employees but cannot be applied to entrepreneurs. However, what stays relevant and significant for both are deadlines. Deadlines are imperative when it comes to setting and achieving goals. For entrepreneurs, it is imperative that their deadlines be strategically specific and not capricious. It is only then that they can allow one to excel towards their goal and experience small wins on the daily as opposed to always stressing about bigger goals set for a longer future.

However, not exhibiting or following deadlines with a clear head can backfire. Some entrepreneurs get stressed and react whereas others get so caught up in the deadlines that they neglect major business priorities. For business newbies it is important to learn how to do things effectively. Deadlines can be daunting, but they can also excite, inspire and give your team the motivation and purpose. Here are some reasons why deadlines are important for entrepreneurs:

  1. You become liable for your goals

It is imperative for entrepreneurs to take the sole responsibility of several aspects of their business in order to ensure things ensue in the right direction. Deadlines have the power to grab one’s attention and that is how they define the varying levels of importance set for different tasks. Hence, regardless of who sets the deadline, if the objective is singular, it instills a strong sense of liability for attaining goals.

  1. They encourage positive impetus

Strategically set deadlines ensure entrepreneurs work towards meeting them. Approaching a deadline often spurs emotions and that is what induces in them the desire to act upon their feelings thus meeting or evading a deadline. Meeting deadlines instills a strong sense of positive impetus because it translates as a success. It enables entrepreneurs to believe in them and get excited for bigger deadlines. Despite the magnanimity of a deadline; meeting one is always positive.

  1. They tend to instill Creativity.

For entrepreneurs who feed on success, deadlines become a challenge that forces them to engage with their work creatively. They see deadlines as an opportunity for them to prove their own worth. It has been recorded that renowned individuals like Steve Jobs were known to set unattainable deadlines, primarily to set a singular objective for his team and force them to think creatively to meet it. Deadlines should be used to fuel creativity and should not be leveraged by entrepreneurs looking to remain motivated.

  1. They help Prioritize

When one sets a deadline, it helps them value not just their time but the time of everyone involved. It helps entrepreneurs struggling to make it big to organize and manage themselves and therefore, prioritize tasks not just for themselves but for their entire team. This is what enables them to keep the momentum going and not meet a standstill when it comes to meeting bigger deadlines that matter. Deadlines help say no when one feels like they’ve been stretched too thin.

  1. They keep you on your toes

Deadlines are a great way to identify what needs to be said yes to and what needs to be ignored. Setting a deadline helps entrepreneurs say no to various tasks and thus never compromise on the quality of the work being done. However, it is important to not slack and say “no” to pressing tasks out of sheer laziness. Setting deadlines to meet the expectations of the clients ensures that you stay on your toes. Additionally, it also ensures that entrepreneurs make only those promises that they can deliver. As an extension, this teaches them the integrity to run their business.

  1. They allow space for small failures and successes

For entrepreneurs with a team in place, it is significant to delegate. Seeping into everyone’s decision making process can become quite problematic and can only add to unnecessary delays. Therefore, as an entrepreneur or the founder of a business, one must allow the space for small failures and successes merely to identify what type of deadlines work for everyone. This helps establish and set productive, effective and strategic deadlines for everyone in the team, in the long run.

  1. Meeting Deadlines Builds Buoyancy

When one starts meeting small deadlines on a regular basis, it tends to establish a strong sense of faith and belief in one’s team in the long run. It equips entrepreneurs to approach bigger and more important deadlines with a strong sense of buoyancy. This is very effective in inducing customer happiness and enables more team members to take on more responsibility.

  1. Helps Assess Success

There is no denying that meeting deadlines helps entrepreneurs assess the calculable progress of their business. It helps them assess their own performance and the performance of their team members.

There are many opportunities that exist in the entrepreneurial world. These vary from international grants to opportunities that can change the face of a small business as we know it. Setting deadlines and approaching them seriously allows entrepreneurs to meet more significant deadlines in an organized and strategic manner and that is what helps them upscale their business.

UX for Online Business – A Short Series

Series 2: Essential UX Aspects for Ecommerce

There is a reason why people prefer walking into a physical store as opposed to ordering online. Primarily, this is because they enjoy touching the products they intend to purchase and experience them physically before having to decide. Online shopping has this one drawback – the inability for people to experience the product before buying it.

However, with properly implemented UX elements you can easily fill in these gaps and ensure increased purchases. A very basic example to accomplish this is to avoid putting in a lot of information all at once, avoid using complicated language and make things look simple and approachable. Following are a few other elements that must be kept in mind:

Making the First Impression

If a customer is not impressed with your home page and if you’ve struggled to leave a strong first impression, then don’t be surprised if they prefer a different retailer within the first couple of minutes. Not only does it need to be compelling, it must also focus and help the user focus. The easiest way to do this is to provide a captivating story to the customer telling them why you as a retailer are a better option as opposed to several others that exist. This does not mean you complicate it. Keep it simple and focused.

Have a Diverse Collection

It always helps to have a diverse collection. This can be displayed in a grid system with the most popular items appearing first. You can also recommend products that have received better reviews in the past. Don’t force your users to make purchases of items you are unable to sell. Instead, allow easy filtering and comparisons for them so that they are able to choose based on their interest. Using a grid allows more collection items to displayed all at once.

Marketing Scheme

Research and statistics in the past have recorded that almost 70% of the users abandon their cart post an online shopping spree. It is very important to treat the customers differently. It is important to ensure that if someone has added certain items in the cart, they purchase them and do not abandon them. Here are some ways good UX experience can be accomplished:

  • Use a marketing software for emails.
  • Make New offers
  • Use promotions on Social media actively
  • Hold Contests to intrigue users
  • Announce Sales with timers and
  • Offer Free shipping for a certain amount spent on purchase.

Plausibility

An online store can only build its plausibility and credibility as a retailer through demonstration of testimonials. You can have page ratings and reviews and even product reviews so that users can see what people have to say about the brand and the services.

Always Have Customer Service Strips

It is very important to sustain a well-made first impression all the way through to the future. Customers will evidently have questions that cannot and should not be ignored by the retailer. This is why it is imperative that your website offer tabs where they can leave their grievances for you to cater to. This can also be done through live chat boxes or customer service strips at the top or the bottom of the page.

Make Checking Out Simple and Secure

A secure checkout should be a priority for all retailers. Build a sturdy platform and follow it up with speed and security. A single click for checkout works best so this should always be the aim for the retailer.

UX Experience

A decent UX experience is what will guarantee that a user returns to your store. In order to do this, it is essential that the retailer thinks about how their user feels when clicking the cross. Whether you feel that your products lack some sort of a zeal, or even if the business is about bed sheets and herbal teas; photos make all the difference. Get creative to leave the user with a feel.

To Sum it Up!

From the first impression on a visitor to the last on a consistent user, A UX experience for an e-commerce business if very important.

UX for Online Business – A Short Series

Series 1: 7 UX tips to Convert Visitors to Users

When it comes to making a sale, whether you run a conventional market or an online one; it all boils down to user experience. Without one’s users, their business is as good as dead. Here is an analogy to help you understand online user experience; when people walk into a shoe store, they walk in with certain qualitative expectations.

This is why, if upon arrival they find it difficult to locate what they’re looking for and no one there to assist them, they are most likely going to walk out disappointed and with a promise to never return. This is the kind of impression that has a lasting impact on them. This is exactly how it is for those who run online businesses. An online user’s experience boils down to how they felt when they clicked your link.

Here are 7 highly effective and useful UX tips for all the people who earn or want to earn a livelihood through their online business:

  1. The Landing Page

To boil it down further, this is specific to the upper half of the front page. When a new user comes across a website, it takes them just a few seconds to decide whether or not they will stay on or not. This is the very reason why the above-the-fold space of your home page is imperative.

The incentive behind bringing a new user to this page is to encourage them to want to look around and scroll. The best way to achieve this is to ensure your design is highly interactive. Do not cram a lot of information in the above-the-fold space. This is the make or break space that allows the visitors to decide based on experience if they will become a user or not.

  1. Keep Things Simple and Familiar

It has been recorded by Google AI blog that visitors often take less than 50 milliseconds to decide if they will continue scrolling through a website or not. That is far less than the time one takes to even blink. To ensure these seconds work for your benefit, it is always recommended to keep the design fairly simple and familiar for the visitors to understand and maneuver through.

If a visitor is having a hard time just locating things on their page or getting distracting by all that is happening, they are most likely to not return. Keep is easy for the visitors to move through and click around to explore as much as they can and have an experience that makes them return each time.

  1. Don’t Make Things Too Long

A lot of the times businesses make the ridiculous mistake of turning text as a fluff needed to fill in the gaps. The easiest way to identify whether or not people read big blocks of text is to observe yourself. How often do we read pages upon pages of policies? Almost never.

The 21st century generation is one of bullet points and visuals. You are required to use this to your benefit. Write bullet points that catch the attention of the visitor. This does not mean you stick purely to text or to visuals – the intention is to be able to find the right balance. If you feel there is a lot of text that is important for them to know, break it down and use it in small portions that are easy to read. Embolden the words that you think will catch their attention and force them to read what needs to be read.

  1. To all the copywriters

When it comes to introducing what product it is you are selling, do not dilly dally with your language. Keep your language simple and clear. Confusing your visitors won’t do you any good.

  1. Make Forms Friendlier

When it comes to filling out forms, you have to take into consideration the ease of the user. Do not start your website with the form. It is important that the user develop some sort of amicability with the be website. In that regard, place the link for the form at a point where you believe conversion is possible the most.

  1. Study Conversion Based on Devices

An example to follow to increase conversion rates is the Monetate Ecommerce Quarterly. The main reasons why this happens is because they immediately provide their users with useful details that help the retailers make quick decisions. This is the kind of impact your business you have on the people visiting your website for the first time. It is important for online businesses to know the upgraded rates of conversion based on the device being used. This allows them to be better prepared. People using smartphones is often beneficial for businesses.

To simplify this thought further, one must question what makes consumers to buy something using a smartphone? Because of the ease and convenience, smartphones are preferred over desktops, however for purchases, only desktops are used. Therefore, to increase conversion rates, online businesses must understand the audience’s requirements using smartphones.

  1. Sustaining Conversion

Only if your visitors and users have had a good experience will they click on the call-to-action posts. It is important that the little things be taken into consideration. Thank your users for sticking around, encourage interaction, inform your users by recommending products and also provide incentives like freebies to show appreciation.

And to Wrap it Up!

It never hurts to learn, unlearn and then put to use what has been learnt.

Creating Good Content for Your Website

Anyone can write, but writing details in a captivating and easy-to-read manner is what makes a website successful. When a visitor comes to a website, it only takes a few seconds for them to gain interest and stay on. It is this first impression that helps people identify whether or not they want to stay on your website. With newer businesses and websites being launched on the daily, there is too much competition that needs to be met and this can only be accomplished with the right tricks up your sleeve.

Edgy content is what immediately grabs the attention of your audience. It is imperative that the quality of content is one that is challenging and amusing. The content on the website should be provocative enough to make people revisit with the same enthusiasm.

Here are some ideas:

  • To write well, you must read well. Always stay familiar with reading books, articles, documents and journals.
  • Don’t be afraid to discuss the idea with others; sometimes ideas and creativity gain finesse when discussed.
  • In order to get to the proper end result, don’t be afraid to challenge consumption.
  • If you have an idea look the pros and cons.
  • Don’t be afraid to build a narrative around the idea. An idea that reads like a story is always more effective.
  • Always get into a conversation with others and try to come up with newer ideas based on these conversations.
  • Try to interact with communities.

The content needs to be considered not just in the form of written text but also audio and video. Three elements need to be taken into consideration:

  • Plan. It is important that your website be planned and designed well. It has to be appealing to the viewer and must have engaging content in order to ensure that it allows your viewers to navigate their way through your website easily. Use imaged and videos and ensure that the words written are such that are engaging and interactive.
  • Content. It is imperative that the content answers the questions your viewers have without them asking. Strong content should be developed while constantly ensuring that it is evolving.
  • Strategy. Without knowing what your business is and does you cannot have a strong strategy. Develop a strategy decide how you can easily communicate with your audience.

The combination of the above three are what allow a site to be very effective. A well-designed and well-planned site makes the audience feel like proper thought has been put into it. Their navigation automatically makes them comfortable.

It is always a great idea to focus on things that are most important for your credibility and help build brand loyalty. Creating strong, well-thought out and provocative content is a great start.

5 Things you learn at a Design Thinking Workshop

Design Thinking is a revolutionary process that has taken over the business world. It allows creative solutions to complex problems, allows collaborative innovation and ensures the results are humane. To instill all of the above and more in our incubated startups, NIC has organized a 5 day design thinking workshop for the entrepreneurs.

Here are 5 things you can expect to learn at a design thinking workshop:

  1. Prepare for the Unknown!

During a design thinking workshop, your learning is more hands-on thus reducing reliance on gadgets. It is an experiential learning environment that allows and enables more hands-on work that moves at a quicker than usual pace. Therefore, be prepared to be taken by surprise because this is a learning process that will provide profound insights within a short span. The unexpected is a vital element in such a workshop because to break the mold, the entrepreneurs need to be taught how to unlearn and learn through a design thinkers mind.

  1. Take Steps Collectively

Though in the grand scheme of things, the 5 day workshop teaches design thinking but there are several more minute aspects that go with it. More than anything else a driven and passionate entrepreneur learns about their team members allowing empathy. Empathy is key in enabling the creative side of the brain. This understanding is pivotal in pushing ingenious boundaries that are invigorating and overwhelming all the same.

  1. Breaking the Mold

In order to learn something new one must always unlearn a facet of the old. Such a workshop provides a refined culture for the attendees. Thus, it allows them to be more confident in their own creativity and allows them to break the mold they believe they need to fit into otherwise. It teaches listening, analysis, synthesis, testing, resolution and a plethora of other useful skills that work as enabling forces in the future of the entrepreneur. However, as the mold breaks don’t be overwhelmed by the ambiguity of the learning process.

  1. Be Open to the Likelihood of failure

The whole idea behind a successful business it to make the user feel they need the product as opposed to vice versa. This is why it is often difficult for entrepreneurs to welcome and realize that the possibility of failure is high. The product is designed on the basis of user needs that are often undiscovered; even by themselves. A design thinking workshop welcomes failure as a learning curve. It makes the entrepreneurs less afraid to fail and more likely to come up with effective solutions.

  1. Prepare to face the Music

It is very important to challenge ourselves as we step into the professional world. A design thinking workshop will challenge you to understand the process itself. So be prepared to face the music and learn, to welcome challenges and be in the moment of not knowing the solution to something only to figure out the most creative way to do it.

NIC understands the significance and relevance of equipping its startups to the very brim. So if you’ve had the opportunity to be incubated with NIC, don’t miss out on the chance to attend Shahid Khan’s 5 day design thinking workshop in September.

Startup Playbook by Sam Altman

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5 Famous Business Leaders on the Power of Mentorship

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The Ultimate Pitch Deck to Raise Money for Startups

The Ultimate Pitch Deck to Raise Money for Startups

(By Chance Barnett, CEO Crowdfunder.com, angel investing, JOBS Act leadership)

Great startups don’t fund themselves. Raising money from investors for your startup is challenging at any stage and requires a great pitch, even for experienced founders with significant traction in their company.

The good news is that there’s a formula for pitching your startup that has helped startup founders raise millions.

In this article below I’ve distilled the investor pitch formula down to the 11 core slides you need in your initial pitch deck. I’ve also provided specific examples including the actual deck that Reid Hoffman used to get funding for LinkedIn from Greylock.

Most importantly, I put all this into a single pitch deck template you can download (Power Point), and shared tips for using your new pitch deck to raise funding for your startup. The template doesn’t have fancy design, just the content outline you need.

Download the template, and read through the tips and examples below to create a compelling investor pitch that you can both share with investors directly and put online to run a successful equity crowdfunding campaign.

DownloadInvestor Pitch Deck Template (PPT)

Note: The formula in this deck was developed after raising money for my own ventures over the years, after seeing and evaluating the founder pitches sent to me as a seed / inception stage angel investor, and after seeing the almost 10,000 company profiles and pitches on Crowdfunder.

This formula also takes cues from leading active startup investors including Dave McClure of 500 Startups and others (disclosure: 500 Startups / 500 Mexico is an investor in Crowdfunder).

I also recommend that you use this outline/template, then put your own pitch deck online at a leading equity crowdfunding platform. It’s free to create a Company Profile that showcases your deck online, and sets you up to launch an equity crowdfunding campaign and attract investors.

What Investors Look For In Your Pitch Deck

Listed below are the 11 slides every Entrepreneur should look to include in their initial investor pitch deck.

Within the template / Power Point I created for you, on each slide I explain more about what kind of information to fill in and share. Further below I’ve also linked to some actual pitch deck examples that have raised funding from angels and VCs.

Here are the 11 basic slides:

Slide 1: Vision / Elevator Pitch

Slide 2: Traction / Validation

Slide 3: Market Opportunity

Slide 4: The Problem

Slide 5: Product / Service

Slide 6: Revenue Model

Slide 7: Marketing & Growth Strategy

Slide 8: Team

Slide 9: Financials

Slide 10: Competition

Slide 11: Investment ‘Ask’

A few important notes about these slides and pitch decks in general:

*It’s my opinion that including much more information that this in your initial pitch can be counterproductive. You want to leave some questions unanswered, hit the big points in a clear way, and avoid over-sharing.

*I encourage founders to put their key numbers and traction at the very beginning of their deck. This grabs attention and clarifies the market opportunity, especially if the numbers are good. Don’t make an investor wait until 5 or 6 slides in just to see what is going on.

*The pitch deck template does not have fancy design, just the content you should include. Design and visuals are a great thing to invest in, as long as they better tell your story by simplifying and clarifying.

*There are other optional slides I mention in the deck template including: Exit Strategy, Product/Demo Shots, and more.

*Use separate documents like an executive summary or dedicated technical documents to cover complex product images and descriptions, patent details, technical explanations, or detailed financial and marketing items. Let investors choose to dive into those by their choosing, outside the deck.

Pitch Deck Examples

Here are some pitch decks and examples that have helped companies raise Seed and Series A funding in the past: some from Crowdfunder, some posted by entrepreneurs on their blog after the fact, some templates and recommendations on how to pitch from VCs:

Pitch Deck Tips That Win Startup Investment

Pitch decks done well are one of the most compelling ways to tell your story and get investor interest, in lieu of face to face meetings. They are also critical to your success in equity crowdfunding.

Here are ways that successful fundraisers use their deck to capture attention and close investors:

Tip 1. Get Intros: Many investors want to “discover” deals, not get pitched a deal by the Founder. Make sure to seek out and ask for direct intros to potential investors – but only do so from people with strong professional reputations.

Quality referrals are one of the best ways to capture the attention of big active investors.

When you ask for intros, give the person making the introduction a very short email ‘blurb’ of suggested language for them to use. Make sure that blurb includes a single link / call to action. By using a single link to your online profile on a site, you can allow people to pass along your pitch and all your core company info with a single URL. The moment that any potential investor clicks on that link, they experience the pitch and message you’ve crafted for them online, in a more dynamic and powerful environment than just a PPT attachment.

In my case, when I was fundraising for Crowdfunder in the past and people made intros to investors, that message and link went something like this:

“Hey,

I wanted you to meet Chance, the CEO of Crowdfunder.

He’s doing some interesting stuff with equity crowdfunding and the company has some great growth as a leader in the space. Thought you two might want to chat.

His deck and info on the company are here:

http://crowdfunder.com/crowdfunder

Hope you two connect,”

This simple message and link showcases my pitch deck, video, as well as my existing investors / advisors / team – all streamlined in my pitch on my Crowdfunder Profile. What’s more, my pitch now has the powerful social proof provided by the people and investors already involved in Crowdfunder who are listed on my Company Profile. Seeing who else is involved or investing can make a real difference for investors taking a first look.

When my latest round was live on Crowdfunder investors who saw this could even make investment commitments right then and there, or Follow my company to stay up to date. This process, along with our Crowdfunder campaign, helped us quickly raise $1M in Seed funding.

Tip 2. More Story, Less Information: Data and bullets on a deck don’t sway investors. What takes your pitch from good to great is the story you tell and how it engages the imagination of an investor.

All great pitches have a basic “meta story” that is emergent from the overall pitch. This meta story can take a few forms, but it generally sounds something like this:

“There is a huge opportunity to do X as a giant business. We’ve cracked the code, and this is how my company is doing it and will dominate this market. Here’s who myself and my team are, and why we’re the only people to back in this space. It’s working, and now we need money for X and Y to grow.”

Your pitch deck should be more of an experience that communicates this overall narrative / story about you and your startup visually and with words simply by scrolling through the series of slides.

It’s also a great idea to start with, or include, actual present tense ‘user stories’ or use cases about your customer experience or customer success that is at the core of your product or service experience. As in, “Jane is looking for investors for her startup. She goes to Crowdfunder and clicks a single button to connect via LinkedIn. This automatically creates a rich and socially connected pitch profile for company that engages her existing network and is visible to a larger network of active accredited investors on Crowdfunder.”

One of the world’s best at teaching this kind of pitching and storytelling is Tyler Crowley of the LAUNCH Conference, CEO of Skweal, Crowdfunder Advisor. Here’s a great short post on storytelling by Tyler.

Tip 3. Ask For The Money: Many entrepreneurs fundraising love to drone on about their company and pitch all the features, traction, strategy. But when it comes time to define the investment opportunity and ask for an investor to write a check, suddenly they’re shy and can’t find words.

Be prepared to ask each investor you communicate with to come in to your round directly, and even ask them for how much money you want from them, and why.

Also, be prepared to succinctly describe the use of funds for the money you are raising, and where it will get you.

Think of this as “good hygiene” when fundraising. Make sure you know your numbers, your financing, have a timeline for your round, and be clear and direct on your asks.

Tip 4. PDF Your Deck: Don’t leave yourself open to the formatting pitfalls of Power Point. Turn your Power Point or Keynote pitch deck into a PDF. This makes sure that investors see the deck the way you designed and intended it.

This also makes sure it displays well if you use it in any online equity crowdfunding efforts.

Tip 5. Continually Update Your Deck: Entrepreneurs who do well at fundraising treat their pitch deck like the most valuable piece of content or advertisement that they will ever write.

Example: a Founder who recently closed $500,000 on Crowdfunder literally went through 7 iterations of his deck in a few months. Each time his traction grew, he would update those numbers in the deck. Each time he had a big win or development, he would update the deck.

If you’re using your deck correctly, you’ll find that it reflects the rapid learnings and growth you’re experiencing as you pitch investors, get feedback, and refine your story and approach.

Good luck in pitching investors and your fundraising efforts.

Make sure you spend time both pitching investors in person to learn and get feedback to improve your pitch, and take advantage of the new opportunity to get your pitch in front of thousands of investors online via equity crowdfunding.

Original link: http://www.forbes.com/sites/chancebarnett/2014/05/09/investor-pitch-deck-to-raise-money-for-startups/

 

How Does Equity Dilution Work for Startups

How does equity dilution work for startups?

(By David S. Rose, Founded six startups, funded 90. CEO of Gust, Founder of New York Angels, Entrepreneurship Founder at Singularity University. Etc.)

Equity dilution works when the same pie is divided among more people. The Founder of a company starts by owning all the shares representing ownership of the company. Over time, other people receive pieces of equity in exchange for work (employee stock options), money (seed, angel and venture investors), services (attorneys, directors, etc.)

Because the total percentage of equity will always equal exactly 100%, every time anyone gets another piece, by definition it “dilutes” all of the previous equity holders. Therefore, to avoid dilution to its existing equity holders, all a company has to do is not hire any more employees who get options, or take any more money from investors.

Otherwise, the laws of mathematics are pretty immutable, because “protecting someone from dilution” simply means that someone *else* is going to get doubly diluted.*

To see this graphically check out the online Equity Simulator at OwnYourVenture.com:

*Advanced Discussion: Note that because any method of handling “anti-dilution protection” has the effect of helping the equity holder who is being protected at the cost of someone else, this type of provision is hotly negotiated, and is *always* for the benefit of investors at a cost to the founders and employees. In the real world, it is completely and absolutely unheard of for founders or employees to get prophylactic anti-dilution protection, because of the Golden Rule of Early Stage Investing: “the investor with the gold makes the rules”.

That being said, there are certain circumstances where management (but virtually never founders or rank-and-file employees) has the negotiating leverage to get *some* protection for themselves. This typically happens when the company is facing tough times, and the value of management’s original options has greatly decreased to the point that the equity no longer serves as an incentive for staying with the company. In that case, faced with a potential exodus of management needed to keep the company going, investors might do a one-time management option grant to effectively protect some of their equity, or, if the company is positioned for sale, promise them a “management carve out” from the proceeds of the sale (which means management gets a stated piece of the cash up front, before the investors).

Rather more common is the practice of “evergreening” employee options, in which employees are given one or more additional option grants once their original grants have fully (or partially) vested. That keeps the carrot out ahead of the employee, with a continuing incentive for remaining with the company (otherwise, once all the options are vested after four years, there is theoretically no additional equity benefit to the employees in sticking around.)

Original link: http://www.quora.com/How-does-equity-dilution-work-for-startups

Top 5-7 Questions a Start-up CEO Should Ask of an Angel Investor

What are the top 5-7 questions a start-up CEO should ask of an angel investor to determine if they, you and your project are a potential fit?

(By Mikko Alasaarela, Creative Entrepreneur)

Doing due diligence is as important for the entrepreneurs as it is for the investors. It pays off to check the backgrounds of the investors for potential culture or chemistry clashes, as well as to find out if the investors really support the entrepreneurs in their portfolio.
1. Could you refer me to entrepreneurs who you’ve worked with who highly recommend you?
With this question, you can check how the investors get involved with the companies they invest in from the source. This will also give you the “success” perspective of the investor.

2. How many Founders/CEOs have been fired by the board from your portfolio companies? Can I talk to them? With this question, you can check if they stick with the entrepreneurs they choose to invest in. From entrepreneurs’s perspective, this is crucial information to know.

3. How much return have the entrepreneurs seen from exits in your portfolio? This will show you how much equity the founders have kept and if they did well too in the exits. Truly great investors care about entrepreneurs in this sense as well, while protecting their own interests.

4. Can I talk to the founders of failed companies in your portfolio? This is a good way to check how the investor deals with startup failure. You want to hear those entrepreneurs to tell stories of persistence and support in tough times.

5. What kind of follow-on investment do you think the company needs to succeed? It is important to be aligned in the targets of fundraising in subsequent rounds. This question may be hard to answer within the initial discussions, though, so leave it to later stages of the negotiation.

6. What is your end game? It is important to know how the investor’s end game is aligned with yours, whether you look to build a company that sells for $50M in 2 years or a billion dollar standalone business.

At the end, entrepreneur’s choice is limited by the interest of the investors. Some celebrity entrepreneurs can pick and choose the investors to work with, but for most entrepreneurs, it is a just choice whether to accept the terms of the investor who offered or not.

Original link: http://www.quora.com/What-are-the-top-5-7-questions-a-start-up-CEO-should-ask-of-an-angel-investor-to-determine-if-they-you-and-your-project-are-a-potential-fit