Comment pouvez-vous déterminer le bon montant de capitaux propres à abandonner lorsque vous cherchez du financement pour votre petite entreprise ?

In my experience there is a step before this one. Yes you need to identify and understand your funding needs, however you also need to understand if there another way to achieve your goals. You only have so much equity and you should not give this away lightly! Is it possible to grow a little slower? Is it possible for sales to raise the funds for you? Can you borrow a smaller amount to retain equity? Once you have less shares you also have more responsibility to answer for your belief of what the company should do and when. Once done if you still need the funding then you will need to think about who is funding it and do you like them! What type of investor will they be and do they understand you? All this will set you up for success.

It is always a matter of balance between what you are happy to give up for the amount you get and what the funder is happy to give for the amount they get. But my rule of thumb has always been 'give as little as you must and take as much as you can.'

Not every company is a fit for VC funding. That being said, avoiding it out of pride or something like that is foolish if the company is a fit. Explore all of your options and don’t assume!

It's hard to fathom at the time of need, but debt is always cheaper than equity. There's a reason why PE firms try to load up on as much debt as possible when doing a rollup. The other factor that all to often is minimized is how good of a fit for you is your equity partner. After they complete their investment, you will become intimately familiar with each other. Shared vision and values are crucial.

Here's the first step to understanding your funding needs - know the prospective ROI of the capital expenditure you intend to incur. Then compare it with the cost of funding. If the ROI of Capex < Cost of funding, scrap the capex plan and start working on a newer, more efficient plan. Secondly, understand that equity is the most expensive form of funding. Lose your equity only when you are bringing in a mentor and an expert in the kind of business you are in.

Equity is just the beginning. Investors are collaborative partners who bring invaluable advice and networks. Think of it as finding a co-founder. Seek an investor who embraces Ben Horowitz's philosophy: "we are there until the bitter end."

There are different types of funding for different stages and needs of a company. One of the best things you can do is to always have funding options available and keep looking for new ones as you see growth in your company. Once you grow your company, you can use the negotiations for funding to your advantage, because there will be more options available to you.

Funding requires mid and long term goals if I were the investors, then we have exit strategy and so on. I believe it is a healthy exercise for small business owners because it really gets your attention away from day to day operation. And you need to have a bird eyes view and blue sky thinking in a way.

Also, pick your "partners" wisely. Is it a small business with active partners? Do those partners have significant others who may push their agenda with your "official" partners? Strong boundaries may need to be set when crafting an agreement.

The more the better, that's how funding options should be considered. One of the best ways to start is to go through an incubator and accelerator as they will give access to their network of partners and investors which can increase your chances of success. Also, usually they take less equity and their stamp will attract more interest. Keep in mind it's not a one size fits all, always ask your investors what is the overall value they are bringing to the company and what are they willing to commit. It's a long journey and it's better to go on with someone trusted that will have your back during the ups and downs.

Valuation, the Achilles heel of so many entrepreneurs. It needs to be realistic not based on selling one widget to everyone on the planet. Make sure it’s feasible to a reasonable person. Over valuations filled with fluff and pipe dreams turn investors off. Undervalued and investors don’t think you realize your potential.

The rubber hits the road with valuation. Do your homework. Justify your valuation by clearly delineating your potential markets. Tell a compelling story on how the investment will be used to execute upon a logical and feasible plan. Anticipate challenges to any assumptions. Discuss how the investor may help beyond funding. Investors often pursue opportunities in areas, either geographic or business type, in which they have expertise.

Business valuations are mostly audits of investor risk and small businesses are consistently undervalued. No the name of the methodology they are all hypothetical. Consult those like Warren Buffet, who grasp intrinsic value. Valuations encompass numbers and storytelling. A low valuation? Showcase your compelling narrative and vision.

If I were an investor, I would need to know how you would spend the money; cash flow projection, ROI, and do you need a second round... etc. Even though you may run your business for years, from me as an investor point of view, it would be a startup. Of course, the difference between startups and existing business will be years in business, proof of concept or/and experience with your industry etc... But, the question you have to ask yourself, why do I need that money and I growth without it.

Search for industry standards as it is different between sectors, always try to put yourself on the other side of the table and make sure what you see is an attractive offer. Find balance between your dreams and what investors are willing to pay for.

This is way too soon to think about that cause usually it won't be the same as you walk in. And your idea of fairness won't necessarily be the same as an investor(s)

How we view negotiation is key. Negotiation isn’t about dominating, it’s more like a relationship and relationships thrive when we can find ways to move together in unison. Moving together however comes from researching, finding out if what you’re asking for is realistic. What do I want? What does the investor want? What would make me walk away from the table? Have strategies in place so you don’t get emotional, and then build your case from there. Why you are asking for that amount, and why your business is deserving of that ask are good places to start building from.

The bigger your company gets, the more advantage you will have in negotiating funding options. It's important to understand how badly you need the financing, how many options you have available, and how much wiggle room you have for negotiating, as well as how long it will take. You don't want to miss out on significant opportunities by trying to save a few dollars.

Negotiation is more than a deal; it's trust. Embrace Warren Buffet's approach—deal with people you trust absolutely. It's a relationship, not posturing. Use it to understand the investor's stance on all issues. Seek seasoned legal advice, know your objectives, arrive prepared.

When negotiating something, consider yourself on the other side of the deal. No one wants a bad product and only a very few wants a good product that's too costly. Balancing the product with price is key to extract value in a negotiation. A good way to achieve the founder's expectations in a round is to follow a variable pricing strategy, which for each investor a different valuation can be offered in order to have an average. Start low, build funding traction and sell the remaining equity higher.

Cap tables should be updated as there are changes. Services like Carta help not only keep track of changes in your cap table, but can also serve as a centralized file for all equity awards and can assist in calculating stock based compensation expense.

For a mature small business with a single owner holding 100%, the traditional cap table doesn't apply. It's about your vision and strategic journey. So, in this case, cap tables may not be relevant.

A good way to plan for the future is to have a 3-month goal, 6-month goal, 1-year goal, 3-year goal, 5-year goal, and 10-year goal. This way, you will be able to understand where you are located in the big scheme of things.

I agree with being aware of the potential challenges as you plan for the future, and I would also add that we need to be clear on how much capital is needed to run and keep the business running until it becomes cash-flow positive. Case in point is the restaurant industry (the #1 business that fails), because the owners typically only raise enough money to get the doors open, and don’t have enough to sustain them until they have built up a consistent clientele. We should be able to estimate sales in order to calculate revenue and move forward from there.

Funding a business is a subset of the vision. The funds provide the fuel and the business is the jet. The vision is the journey to the ultimate destination and what it looks like when you get there. Most business visions are boring and dull. I find that a compelling vision is the most critical component of the funding plan. Like the cat’s advice to Alice in Alice and Wonderland, if you don't know where you are going, any road will take you.

1. Comprehensive Valuation: Conduct a thorough business valuation by considering financial statements, market trends, and growth potential. Utilize established valuation methods like discounted cash flow (DCF) or comparable company analysis (CCA) to determine the company's worth objectively. 2. Risk-Benefit Analysis: Assess the financial risk associated with funding against the benefits gained. Evaluate the impact on ownership percentage, considering potential dilution and future valuation. Strike a balance that aligns with the business's growth needs while ensuring a fair and attractive proposition for both investors and founders.

Don't stop fundraising, raising capital is a continuous task and it takes time, do not let your funds dry to start raising again. Finding product market fit takes time and funding is necessary to do so. Constancy is the key to success.