Many exits happen at much lower than expected values. Even a three or four fold increase in company valuation may not produce positive returns for the early risk-taking investors. Angel investors and first-round investors are taking it on the chin all too often. Here’s how to stop it. Continue reading
Category Archives: Business Blog
Making the Business Case
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Thinking about starting a business? Why? Can you explain what the business opportunity is and how you will make money? I hear hundreds of pitches every year from budding entrepreneurs. Their main challenge is making the business case. Continue reading
The Importance of a Shareholders Agreement
A company is owned by its shareholders who, in turn, appoint a board of directors and officers. The person (or persons) who have more than 50% of the voting shares determine who the directors and officers will be. These officers and directors will then run the company. A Shareholders Agreement is essential in giving minority shareholders certain rights and in defining how a company will be governed. Continue reading
Business Basics – Negotiating a Term Sheet
A “Term Sheet” is a document that summarizes the terms of an investment. It’s usually proposed by the investor(s) and spells out what they want in order to proceed with an investment. I’m not sure why it’s not called a “Terms Sheet” since there are many terms in it. Perhaps that came about because the terms offered by an investor were good for a specified term (time period). Continue reading
Shares vs Stock Options
This article discusses the pros and cons of stock options vs shares for employees of Canadian – private and public – companies. The taxation issues are poorly understood and can be very confusing. Current tax regulations can make it difficult for companies to bring new employees and partners in as shareholders. Continue reading
The Valuation Question
What’s my baby worth? Figuring that out is the biggest challenge entrepreneurs face when attracting investors. Many negotiations break down over this issue. The good news is that there are contractual mechanisms that can be used to resolve any disparities. Continue reading
Business Basics – Introduction
Over the years, I’ve written a number of articles to assist entrepreneurs, especially tech entrepreneurs, with an understanding of business matters. On the Simon Fraser University Website, much of this can be found at www.sfu.ca/~mvolker/biz. These articles are in the process of being updated, with new ones added, and will gradually start showing up on this website. Continue reading
Business Basics – Better Boards Build Better Businesses
Good corporate governance – having an active board of directors – is essential in building a good company. Assembling a capable board should be done sooner than later. Why? Continue reading