Comments on: Early stage money: The problem with PPMs

By: Anthony Alfidi

Anthony Alfidi — Tue, 24 Feb 2015 23:18:54 +0000

Thank you, Mr. Payne. It sounds like PPMs are suitable only for later stages of capital raising once a startup is mature. The PPM is a very costly way of raising money for startups that must preserve cash in their early days.

By: Allen Ruszkowski

Allen Ruszkowski — Tue, 27 May 2014 18:52:36 +0000

Thank you Thank you thank you!!!!!

By: John Hustom

John Hustom — Tue, 27 May 2014 16:40:14 +0000

This topic hasn’t gotten enough airtime in my opinion so thanks for hitting it hard! Incidentally, next Monday OTAF will close on our 45th portfolio company and over the last 125 months of our operation we have broken our “no PPM rule” twice. The first time we did so by stipulating that the PPM be changed to reflect our standard deal terms. This cost the company an additional $10K of legal fees. In the second case the CEO of the company was an OTAF member and his brother (a local lawyer active in our space) wrote the PPM gratis and it reflected our standard terms.

Great post…

By: Jim Connor

Jim Connor — Tue, 27 May 2014 16:23:56 +0000

I agree with Bill, and while a PPM may have a place in some part in company financing, the startup company generally needs to find the investors first to determine the general terms available to a qualified company, determine if they can meet those terms, conditions, and diligence procedures and then move forward. Raising capital is a consuming job, and many entrepreneurs go through a time consuming learning cycle that only delays their recognition that generally every deal is negotiated with the investors who best understand the company’s value proposition, valuation, and terms that will attract investors.

By: Bob Fried

Bob Fried — Tue, 27 May 2014 16:12:33 +0000

Well written and very clear. Thanks.

By: Louis Dienes

Louis Dienes — Thu, 22 May 2014 17:17:08 +0000

I agree with all of these recommendations, and I prepare several PPMs every year. They have their place in capital raising, but they are pretty much never the right tool for a startup.