Appendix C

Dictums of Entrepreneurial Finance

On Knowing Your Investor

  • The primary objective of a prospective investor is to make money, not fund a hobby, not support a cause, or win first prize in a science fair.
  • More often than not, the primary determinant of the failure or success of a technopreneurial venture is whether it receives good money or bad money.
  • Good investors mitigate their investment risk by helping you mitigate risks associated with your business. Bad investors mitigate their investment risk by trying to establish a comparatively favorable position for them vis-à-vis other stakeholders without much regard for the risks these terms may impose to the business.
  • Pay a premium for good money and turn down bad money offered at better financial terms.
  • Do not succumb to the mad scientist syndrome. No matter how spectacular and intriguing your innovation, investors are more interested in profits.
  • Vulture capitalists focus on desperate people. If you send out the vibe that you are seeking funds to avert the end of your venture, you are lining yourself up to be a hot dinner for a vulture capitalist.
  • A strategic investor is the most prized prospective investor offering the greatest perceived valuations for your venture. Your primary objective and challenge is to identify and position your business to attract such investors.
  • Investors do not invest in products; they invest in people.
  • The way to grab prospective investors is not to impress but to hit their sweet spots and ...

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