Raising an Inside Round

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Most startup fundraisers seek capital from outside investors who are new to the round.

This brings new investors into the cap table.

There are rounds in which the existing investors fund the startup.

This is often done for bridge rounds.

Instead of raising the next major round, the startup raises additional capital to prepare for the next major round.

This often happens between the seed and Series A, which is a bigger step compared to other rounds.

An inside round often occurs around an important milestone, such as reaching cash flow positive or achieving a specific metric.

They are often smaller fundraisers in terms of amount.

They focus on existing investors.

The goal is often a key metric needed to raise the next round.

They are often priced at the same valuation as the last one.

It’s easier to raise a small amount from the existing investors than from outside investors.

Inside rounds are common and don’t necessarily indicate the startup is in trouble.

Consider an inside round for your startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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Using Rule 701 To Issue Equity to Employees

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In a startup, it’s helpful to compensate employees with company stock.

Most companies use stock options.

Rule 701 gives the startup the ability to issue equity to its employees.

This works even if they are not accredited investors.

The limit is $10M or 15% of the outstanding shares in a 12-month period.

Once you set the 12-month period, it must remain fixed.

Rule 701 provides an alternative to the traditional stock option plan.

It’s more flexible than an options plan and can be used to create more specific compensation plans.

Founders often align the 701 disclosure with the fiscal year of the company.

The shares are restricted stock, which means they must be registered with the SEC before one can trade them.

Consider Rule 701 for your stock compensation plan.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

Create a Sense of Urgency

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In running a fundraiser, it’s important to build a sense of urgency into the campaign.

Here are some key steps to create that sense of urgency:

Break your fundraising into smaller rounds or tranches.

Demonstrate this by showing the fundraising plan that has more funding to come, but at a higher valuation.

This lets you run deadlines at the end of each round, creating urgency with investors.

Show how other investors are joining the round.

Show the interest and committed investors, as well as the funds invested.

Call out milestone events such as finding a lead investor, closing the round, or hitting the 50% mark of the fundraise.

Start canvassing investors before you begin the fundraise to educate potential investors on the campaign.

This moves investors down the path by learning the details of the business.

Provide regular updates to the investor on your progress.

Show how now is the right time to invest.

Use these tools to create a sense of urgency for your fundraiser.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.