My CEO Life

I invest in around 12 different companies and at any point in time one of them seems to be raising money.  When a company raises money they are either in a position of running out of cash and need a new injection to survive, they are on a rapid growth path and need new cash to accelerate growth or in some instances they need capital to fund an acquisition (and thus accelerate growth).

Capital raising is always a fun process.  You need to get the balance between valuing the company as high as possible to avoid too much dilution while at the time providing the new investors with upside.  However the balance of power is often driven by your current cash position and just how desperate you are to raise money.

Read more…

As mentioned yesterday, i had an interesting discussion with a property portal from Russia that was looking to raise money.  As part of the discussion they sent through a P&L with their projections for the next 12 months.  This was all to help me understand how they expected the business to grow and what their capital requirements would likely be.  The problem with this was they were cutting it way to close and in my expectation, they would run out of capital in the middle of the year.

Therefore, the question that all investors ask is, do you have enough capital to either reach profitability or to deliver enough results that demonstrate great progress and will ensure more capital can be raised?

Read more…