Tue, 26 July 2022
Startup Boards -- Building Your Entrepreneur Ecosystem
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
I have found a number of investors want to build their entrepreneur community as part of their investment thesis.
The most common lament from a startup investor is, ‘I invested my available funds and must wait ‘til I see something return before investing more.’
This makes it difficult to build an ecosystem as the funds are tied up for a long period of time.
One solution is the Early Exit term sheet; this gives the investor the option to take back their investment at year 3.
To provide funds to more startups, you could take the gains from one startup investment to invest in other startups.
For example, in a 3X in 3 years redemption right, a $50K investment would yield $150K in 3 years.
You could divide the $150K as follows:
$50K -- leave in the startup as equity or debt
$50K – take from the first startup to fund a second startup
$50K -- return to investor funds
This creates an evergreen fund for investing in more startups.
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Direct download: Building_your_Entrepreneur_Ecosystem.mp3
Category:general -- posted at: 6:00am CDT