Entrepreneur Forge 360’s Post

#SAFENotes #ZombieStartups #TaxAdvice #Investing Hey everyone! 🌟 I’m in a bit of a pickle and could really use your insights. A while back, I invested in a small startup using a pre-money SAFE note, and let’s just say things haven’t gone as planned. It feels like this company is slowly fading away—no investor updates in over a year, and it's tough to see it struggle. Now, I’m grappling with a few burning questions about how to handle this situation both emotionally and financially. Here’s what’s lingering in my mind: Is a SAFE note considered debt? Since it doesn’t convert to equity unless something happens (like a major funding round), I’m wondering if it falls into the debt category for tax purposes. Can I sell it back to the founders for a buck? I’ve heard of this happening before, and it could be an easy way to claim that loss. Can I sell it at all? Would any investors or buyers be interested in purchasing a SAFE note from a company that’s practically a “zombie”? What if t... How Can I Navigate a SAFE Note with a Failing Startup? Answers: https://lnkd.in/guT6sPpE

The #1 investor myth is that we have bottomless wells of cash!💰 No, seriously. I’ve talked to so many people, both founders and non-founders, who truly believe that VCs have hidden sources of money that they can keep spending without thought. And as much I wish that were true, here’s the thing - VCs are founders too! We are running our own businesses. These businesses have the same considerations as other startups! And as VCs, we are actually far more careful about getting our ROI for every dollar spent. This translates to our personal lives as well. I, for example, love my little freebies. Every time I plan a trip, much of my time is spent figuring out what credit card reward points, cashback bonuses, or discount coupons I can use up. Sometimes this makes a significant difference in expenses, other times not so much. The point? Money, regardless of who holds it, is a finite resource. And it has to be invested - or spent - wisely. So while we may be in the business of big investment, we VCs will be budgeting and accommodating financials just as much as other business owners, if not more. 💸 Ps: What other VC myth-busting would you like me to do? #finance #venturecapital #money #investing #startup

The most common question asked by #Investors and #VCs while you hustle to fundraise is, “How much cash is in your account?” While many #founders wave this off as a basic question, it actually screams volumes about the business and its operational/cash flow strategy. Your money in the bank determines how long the business will last if founders fail to fundraise. That said, many successful #startups have achieved a great deal because they chose to burn cash and capitalize on opportunities. But, founders need to strike the right balance between sufficient and excessive burn rate. Achieving the right balance may require some trial and error; however, if the founder works on their “Unit Economics” and “The cost of growth,” one can make an informed decision on how much money exactly needs to be raised to cover the burn rate to achieve your goals. Unit Economics: Unit economics is the amount your #company earns on every item it sells. Break costs and revenues down into individual units to see if the cost of producing and selling each unit outweighs the revenue received from it. Cost of Growth: When it comes to the cost of #growth, the main expense for most companies will be #employees. 60% of a startup’s costs will be for payroll. If these are not factored in well, founders will underestimate the number of employees they need. To Learn: Instead of figuring out what you will do with the money received from the next #funding round, plan on the #money you already have in the account.

🚀 Startups, don't let loan covenants catch you off guard! Having advised numerous startups, I understand the pressure of managing finances while scaling. Knowing the ins and outs of financial covenants can prevent your startup from falling into default. Stay ahead of the game by checking out our comprehensive guide. Link to the article in the original Kruze Consulting post. #StartupFinance

wonderful treatise on the point of having a balanced and sufficient cash in hand. The subject though, can be dealt only when there us sufficient data point on sales as well as available imperical metrics. This also depends on whether the growth is planned for new geography, or in the existing setup. The more the business is dependent on people, the more difficult unit economics could be. Nice post.

🔍 Founders, understanding loan covenants is key to avoiding default! As someone who has worked with hundreds of startups, I know how crucial it is to stay informed about financial and negative covenants. They are not just terms on a sheet; they are guidelines to keep your startup thriving. 📈 Dive into our latest insights on how to navigate these challenges. Find the link to the article in the original Kruze Consulting post. #StartupFinance

🚨 Founders, are you aware of what happens when your startup is in default? 🚨 The most common cause of startup default is triggering a loan covenant. Understanding the intricacies of loan covenants is crucial for startup success. Financial and negative covenants are designed to keep your business on track, but violating them can lead to serious consequences, including default. 😬 Learn how to navigate these challenges and avoid the pitfalls of default. Knowledge is power, and staying informed can save your startup from unwanted outcomes. 💡 Check out our detailed guide on what default means in finance and how to steer clear of it. Link in the first comment. #StartupFinance #VentureDebt

💡 Founders, are you prepared to tackle loan covenants? If your startup is going to take on debt, understanding financial covenants is essential. They are the rules of the game, and knowing them can keep your startup safe from default. Explore our article for valuable insights. Check the link in the original Kruze Consulting post.

In a Slicing Pie company, the deal you strike with investors depends on their relationship with the company and the amounts of their investments. Participants in the business are investing their time and unreimbursed expenses in exchange for slices in the Pie as Grunts. Small investors are Angels and should get a convertible note so as to avoid setting a premature valuation. Professional investors who provide substantial funding can negotiate a priced round. Read more: https://lnkd.in/gz9G6qh6 #investors #startupinvestors #fairequity #equitycalculator #cofounder #founder

Securing investors is a critical part of growing your business, but with so many options, it can feel like navigating a maze. Let's break it down. First, there’s the classic route: banks and venture capitalists (VCs). Banks offer loans with clear terms—think of them as the more traditional, buttoned-up option. VCs, on the other hand, provide big chunks of capital but will want a slice of your company pie. They also come with a side of advice and connections, whether you asked for it or not. Then, you’ve got angel investors. These folks are like startup fairy godparents—showing up early, offering money in exchange for equity or convertible debt, and maybe even throwing in some wisdom. Private investors are another option. These are individuals or institutions ready to invest in your business without all the formalities of VCs. Just make sure you’re clear about how they’ll get their money back—they didn’t get rich by being careless. Finally, there’s the friends and family route. These are the people who already believe in you—no pitch deck required. Just remember to keep it professional, because mixing money and Thanksgiving dinner can get messy if things go sideways. Each option has its perks, so the key is finding the one that best fits your business goals. What’s been your experience with securing investors? I’d love to hear your stories—especially the funny ones! #Investing #StartupLife #FundingAdventures #VentureCapital #BusinessGrowth