Fri, 20 May 2022
What You Should Do After You Sign the Check
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
An investor does a great deal of work before the investment is made and must also do work afterward.
Here are some key points to consider:
As an investor, you need to maintain contact with the startup.
Make sure there’s control over the compensation of the CEO.
Their compensation is the exit and not the payroll.
Make sure the company has sufficient cash runway.
Losing too much runway can throw the company into a fundraise with ‘fire sale’ terms.
Monitor your list of what must be done from the diligence report to see how the company is progressing.
Keep those items on the top of the CEO list.
Make sure the board remains focused on their duties and sees that they spend their time well.
I’ve found many startup boards become co-complicit with the CEO and fail to maintain accountability for results.
Talk with other investors in the deal and share information as the startup may not keep everyone up to date consistently.
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