{"id":5370,"date":"2023-08-24T10:00:26","date_gmt":"2023-08-24T17:00:26","guid":{"rendered":"https:\/\/berkonomics.com\/?p=5370"},"modified":"2023-08-10T11:54:56","modified_gmt":"2023-08-10T18:54:56","slug":"take-only-smart-money-investments-2","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=5370","title":{"rendered":"Take only \u201csmart money\u201d investments"},"content":{"rendered":"

This statement could be considered controversial. <\/strong><\/p>\n

We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations.\u00a0 Now we explore the other side of that coin.\u00a0 Professional investors usually bring \u201csmart money\u201d to the table, defined as money that comes along with good advice and great relationships for corporate growth.\u00a0 Often, that money is worth more than the cash invested, because the investors who often become members of the board bring a wealth of experience, insight, relationships and deeper pockets to the table.<\/p>\n

Smart money at the table\u2026<\/strong><\/p>\n

I have served on the boards of several companies with just such VC talent at the table, \"\"partners in firms that made subsequent investments in companies where I either made early investments or led a group of fellow investors in early rounds of finance.\u00a0 Each of these companies needed more cash than professional angel investors were willing or able to provide, and we turned to the venture community for larger investments.<\/p>\n

Finding your champion investor\u2026<\/strong><\/p>\n

[Email readers, continue here…]<\/em><\/span>\u00a0\u00a0 Attracting a VC investment means finding a partner in a VC firm who is willing to champion your opportunity before their partnership and then represent that firm with a seat on the board once the investment is made.\u00a0 In a number of cases, these VC partners have made the difference between success and failure or at least growth vs. stagnation.\u00a0 These VC partners have relationships with later stage investors further up the food chain, with service providers, with potential \u201cC\u201d level senior managers, and with other CEO\u2019s with great timely advice or partnering opportunities.<\/p>\n

Recalling a case where this worked\u2026<\/strong><\/p>\n

\"\"In one such case, the angels were tapped out at $6 million invested, an amount far above their usual taste, but for a company we thought had a billion-dollar potential.\u00a0 The VCs subsequently invested $18 million, well beyond what angel investors usually can project from their own resources. \u00a0Without the VC guidance there would have been little opportunity to even dream of a billion-dollar valuation goal.\u00a0 There is no question that the company took smart money and leveraged it for maximum growth, using the money, guidance, contacts and more from these large VC investors.<\/p>\n

So now, in this series of insights, we have explored the early stages of formation and finance.\u00a0 It is time in our next posts to turn to fine-tuning the business and its strategic plan to exploit its maximum potential, finding the ideal niche for a company and its core competency.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

This statement could be considered controversial. We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations.\u00a0 Now we explore the other side of that coin.\u00a0 Professional investors usually bring \u201csmart … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-5370","post","type-post","status-publish","format-standard","hentry","category-raising-money"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/5370","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5370"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/5370\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5370"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5370"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5370"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}