Finding the Right Lead Investor

Are you struggling to find a lead investor for your business?

Finding the right investor is more than just identifying those that invest in your industry and life cycle stage. Investors, and in particular lead investors, are commonly going to take an active advisory role in your company.

Alignment with your lead investor on values, belief systems, and overall goals is essential. When you are faced with this decision, realizing this is a long-term relationship that will impact your company’s future is an important aspect to your success.

What Defines a Lead Investor?

The definition of a lead investor varies on who you ask:

1. Someone that helps work with the entrepreneur to organize the other investors and any soft commitments.

2. The first person who invests in a particular round. However, this does not necessarily mean that your first investor will provide the greatest amount of capital.

3. Someone who provides the highest amount of capital in a syndicated round.

Regardless of which definition resonates with you the most, it is important to know that our lead investor will be an important one to the success of your business. Keeping that relationship positive and professional will expand your capital even further down the road in various aspects.

Why is Choosing the Right Lead Investor so Important?

Beyond providing essential operational capital, lead investors have other effects on a company. To start, securing a lead investor will provide a level of comfort to other potential investors. Nobody wants to be the first to show up to the newest and hottest night club, right?

Similarly, every investor or investment fund combs through their deal flow, looking for the right opportunity. Having a noteworthy first or lead investor can shorten a financing round, for it conveys a sign of trust.

Without a lead investor, other potential investors will have reservations, even in the best of market circumstances. As we’re all experiencing this challenging financial climate, entrepreneurs need to take every possible step to reduce the perception of risk.

Securing a lead investor is critical in that trust-building process. They signal that there is a future promise of an ROI and solidify the team and business model are strong. Partnering with a lead investor who places a sizable initial investment signals confidence, and like a gravitational magnet, pulls in other investors more easily. This helps propel your valuation and closes your round at the desired amount

Finally, investors travel in circles. Landing your lead investor gets you access to their network of influence, again improving the likelihood of closing your round more quickly.

Where are the Lead Investors?

While success depends on networking and follow up (Remember: The noisy wheel gets the deal!), there are a large number of tools to help streamline this critical part of the job.

For starters, entrepreneurs can purchase subscriptions to sites like CrunchBase and Pitchbook. These sites provide endless amounts of data, from who has raised capital, when, and how much. They also show the investors that are backing each company.

Finding investors can be done without purchasing expensive tools. Sitting down and doing research on Google or inside LinkedIn can reveal investor networks in your area. Most large cities or entrepreneurial communities have investment funds, accelerators, and groups that are always searching to build upon their deal flow.

After putting in the work to network, build relationships, and develop your pitch, entrepreneurs can also apply to pitch competitions, further exposing them to high net worth individuals. If you still need help, you can always hire an investor relations ninja to help open doors and make introductions

Finally, if all of this isn’t working, you can work on the other side of the equation and network with recently funded companies. Communicating with other founders in your space and life cycle stage can help open opportunities for networking and capturing investors, all while possibly teaching you valuable information about their experience with their personal process.

The Importance of a Good CRM

The best way to find a lead investor is through prioritization of your leads and management of those relationships through a CRM, or Customer Relationship Management platform.

The main benefit of utilizing this tool is to organize and assist with communication and to respond to any requests promptly, such as providing information or updating pitch materials to potential investors.

Key metrics to prioritize investors by include:

· Their track record as a lead investor

· Their ability to syndicate

· Knowledge and experience in your space/business stage

· Ability to interact with and manage other investors if necessary

· The amount of capital they have to deploy

This certainly isn’t an exhaustive list, and there will be other factors to consider. As you go through the process of raising capital, remember that patience and positivity are essential. Raising money is a brutal

process, and the road is riddled with many who will say no. Just keep building and remember that timing is everything, and eventually, your day will come.

Polymath and Equa

Equa Added to the Polymath Token Studio Service Provider Marketplace

February 26, 2020 — Equa, which helps organizations manage their agreements while empowering better ownership decisions, is now listed in the Polymath Service Provider Marketplace. In the marketplace, security token issuers can connect with various service providers, such as cap table management providers, broker-dealers, law firms, KYC providers, and more for their security token offerings.

Equa is an all-in-one integrated technology platform focused on streamlining systems, agreements, and ownership rights. From seed to fruition, they help businesses grow by minimizing the chaos and headaches of being an entrepreneur and a business owner. The Equa solution includes digitized, trackable workflows with automated signing, approvals and group voting tech, easy execution of ownership rights, and a certified immutable record keeping system.

“My mission is to relieve the pain and anxiety associated with the difficulties of running a business that can result in lost capital and peace of mind.” said Shawn A. Owen, Founder & CEO of Equa, Inc.

“The ongoing management of a security token is an integral piece of the puzzle for both issuers and investors” said Graeme Moore, Head of Tokenization at Polymath. “Now, security token issuers using Polymath’s tokenization technology can leverage Equa for corporate actions, cap table management, transfer agent services, and more.”


About Polymath (polymath.network)
Polymath Network (Polymath) is a decentralized platform that makes it easy to create and manage security tokens. The platform simplifies the complex challenges of creating security tokens and aims to provide the technology to bring the multi-trillion dollar financial securities market to the blockchain.

About Equa (https://www.equa.global)
Equa is a technology company focused on adding value through bringing peace of mind to its users. Our mission is to build technology that improves how people come to agreements and document their most valued records.

My Business Document Struggles: A New Solution Around The Block?

The year was 1993. I registered my first corporate entity, an S corporation for a new Chicago-based business I’d decided to launch.

Several months later I sat in stunned amazement after receiving a voluminous three-ring binder with all of my documents.

“Yipes”, I thought. “What have I gotten myself into?”

Keep in mind that these were the pre-Internet days. There was no web, no cloud service to house the documents on, no email, nada. Yet somehow, I had to figure out how to keep all of these documents straight.

My solution? Tuck the binder away for safekeeping and never look at it again.

Sound familiar?

A Flurry of New Documents

I’ve now established corporate entities in states like Indiana, Nevada, California, New Mexico, and Colorado over the years. And thankfully, with the growing adoption of the Internet, the process of setting up a business has become exponentially easier.

Take a look online and you’ll find an ocean of corporate entity services for setting up LLCs and the like. They’ll file the appropriate Secretary of State documents, set up a tax ID number, and secure a resident agent for you if you reside out-of-state.

The good news is that many of these companies are now able to send you an electronic version of your documents. Unfortunately, if you’re anything like me, these documents are rarely given any attention. In fact, often they end up getting parked in an e-repository gathering cosmic dust, vulnerable to security hacks.

The filed formation documents, however, hold great importance in terms of equity holder rights as well as the management and operation of your entity. For corporations, this is embodied in what is known as the “articles of incorporation” and the “bylaws.” Limited liability companies (LLCs) on the other hand utilize certificates of formation and operating agreements.

Limited Liability Companies, in particular, have grown in popularity over the years in part due to less onerous document requirements. On the other hand, if you form S Corporations, C Corporations, and certainly Limited Liability Partnerships, you’ll likely find your paperwork to be much more voluminous.

In the end, every business needs a written agreement outlining the operational roadmap, protocol, and rules. These operational documents are your company’s governance model, akin to a written constitution or charter.

But wait, you’re not done.

Once your business is operational, you will find that it will spawn all sorts of other documents that can be challenging to keep organized. By way of example, Nevada and Wyoming corporations offer major benefits in terms of asset protection. So, documents tied to brokerage accounts, gold certificates, cars, homes, and other tangible assets placed under say an LLC must be properly accounted for and stored in a secure and safe environment.

The Blockchain of Business

equaSTART is a promising new company positioned to deliver a compelling solution to the morass of documents that business owners are required to manage. It combines the ability to easily and seamlessly form a new business entity with the ongoing support needed to ensure that documents are up-to-date, organized and easily accessible.

equaSTART’s key value proposition is the ability to foster the living core documents that are the brain of your business. equaSTART effectively facilitates the constellation of start-up documents and business agreement by employing the emerging technology known as Blockchain.

In his book, The Blockchain and the New Architecture of Trust, Kevin Werbach, Professor of Legal Studies at the Wharton School of Business defines blockchain as “a data storage system using linked sequential chunks of information. It is literally a chain of blocks designed to create an immutable ledger of transactions.”

In other words, blockchain as a digital ledger is exquisitely efficient in organizing records of business agreements and transactions. It offers privacy protocols that regulate how information can be accessed as well as a digital trail identifying who and when the information was accessed.

An additional element in the blockchain constellation, known as smart contracts, mitigates the need for intermediaries, boosts consistency and creates accountability in the workflow process. This helps boost the efficiency and effectiveness of a business.

New Frontiers of Business Asset Management

Back when I formed my business in 1993, the three-ring binder full of documents I received included stock certificates to issue shares to investors. Moreover, any assets held by my company were to be recorded on a paper document and filed away appropriately.

Today with blockchain’s emergence, tokenization is the next evolution for the future of business. Literally, anything of value can be tokenized by recording it on a blockchain with the digital tokens signifying value and ownership. Investor shares can be easily purchased and sold from your business via tokens, all easily transferable via the blockchain network.

All of this reflects the next wave of proprietary rights tied to the tokenization of assets whether they be commercial real estate, cars, even gold. equaSTART can offer direction on how to build a digital token framework for managing these assets in a secure and efficacious way.

Now with a living version of your organizational documents and tokenized assets, you’ll no longer be working with a static document that is sitting on a hard drive on some computer. That’s what sparked my interest in equaSTART and I hope you’ll invest the time to learn more about this exciting startup as well.

Michael Scott is a Las Vegas Blockchain Journalist and blogger for EquaSTART

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

The TEDx Talk Every Business Owner Must Watch!

Consciously or unconsciously, there are three desires every business owner strives for: They are time, money and significance.

Sadly, however, most find themselves at the whim of a never-ending flow of demands on the entrepreneurial journey. As a result, their businesses often never reach a place where they can untether themselves to enjoy the fruits of their labor.

Chuck Blakeman, author of the bestselling book Making Money is Killing Your Business: How To Build a Business You Love and Have a Life, Too, reminds his readers that the primary reason many people start a business is not to focus on making money at the exclusion of everything else. Rather it’s to build an enterprise that’s financially self-sustaining so that it aligns with one’s personal freedom and contributions in life.

Selected by the National Federation of Independent Business as its №1 Business Book of the Year, Blakeman provides a first-hand account of the stumbles and mistakes he’s made as a business owner. He delivers a practical, no-holds-barred set of ideas that are easy to comprehend and put into practice.

Formulating a Business Process and System

Blakeman is also a huge proponent of documenting your business systems, what he refers to as a “Process Map.” Instead of asking “How do I do this?”, he says the question should be “How do I do this for the last time?”

Ultimately, says Blakeman, those who determine how to do things for the last time and adopt an ongoing commitment to maximum productivity and efficiency in their work receive both time and money back from their enterprise. “No biggy,” he says — “it’s just your freedom and your life that is at stake.”

Below is a TEDx talk that Blakeman gave that underscores these themes as a part of the new Participation Age business model that he espouses.

equaSTART’s quest to simplifies agreements aligns well with the Participation Age philosophy that Blakeman subscribes to. Utilizing a process that facilitates a roadmap from creation to execution, they will assist you in building a constellation of contracts that become a living adaptable core foundation for your business.

When launching a new business and the agreements that support it, the last thing you want is to find yourself in a sea of documents and paperwork. equaSTART will help with the heavy lifting here, breathing life into your living documents when they’re required for critical business decisions. In the end, you’ll find yourself with more time and money as your most important documents are managed on the Blockchain, the most revolutionary technical advancement of our lifetime.

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

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When Corporate Governance Fails

When Corporate Governance Fails

When Corporate Governance Fails

Humans have organized the world through an infinite string of agreements and social contracts. Whether people agree to stop at a red light or get in line at the grocery store, a functioning society depends on these kinds of agreements. Managing organizations like nonprofits and corporations require layers of agreements between stakeholders.

At formation, organizations must abide by government policies by registering with the state and obtaining a tax registration ID. If these rules aren’t explicitly outlined by the regulatory body, they are covered by an operating agreement. Fully understanding the contents of your operating agreement and knowing your organization’s needs can save you many sleepless nights.

Aside from the largest liability of not having an operating agreement, to begin with, another common mistake includes assuming that all signatures have been collected to make the document legally binding.

As your trusted tax advisor will tell you, different organizations fall under different tax categories and your operating agreement needs to align, accordingly, from the start. Further, most businesses “set it and forget it” when it comes to their operating agreements. Similarly, changes in IRS tax policy may necessitate changes to your operating agreement. equaSTART brings dormant agreements to life via its cutting-edge technology.

The second major agreement that organizations must pay significant attention to is the capitalization table, often referred to as the “cap table”. Since this is a ledger deciphering who owns what and how much, the cap table needs frequent analysis to ensure accuracy as it can impact company valuation, capital raises and even recruiting talented executives.

Many cap tables are created using spreadsheet software and most cap tables have errors stemming from duplicated files that have been shared among multiple owners. Depending on basic spreadsheet software to account for true ownership when dealing with vested shares, options, dividends, transfers, buybacks and cancellation of vested shares due to employee termination can result in an accounting nightmare. Furthermore, correcting mistakes involves costly attorneys and accountants. Unfortunately, these mistakes are usually overlooked until a company is pursuing a capital raise. However, in today’s competitive capital markets, money may dry up while investors wait for a resolution to this oversight.

This is where equaSTART can help!

As a technology company, equaSTART understands these problems and has built an incredible team of entrepreneurs and developers to automate the management of operating agreements, as well as the organized maintenance of a cap table. Our technology empowers any organization to swiftly make decisions covered by an operating agreement. Every vote is captured and recorded securely and in real-time through our web application and mobile app.

Fundamentally, this process reduces friction by adding velocity and accountability to organizational management such as owner or director level decision-making processes. Our technology also includes a single source of truth that allows a fully transparent and auditable ledger of an organization’s ownership. The combination of equaSTART’s advanced agreement and ownership management provides peace of mind to busy business owners. Further, our tools provide them with the ability to timestamp and permanently store their decisions in a system for easy dispute resolution and reconciliation in the future.

equaSTART: Frictionless agreements. Cap Table Management. Business Simplified

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

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Common vs. Preferred Stock: A brief primer 1

Common vs. Preferred Stock: A brief primer

What Is Common Stock?

Common stock is a form of corporate ownership shares that serve as a claim on profits (dividends). When a corporation earns a profit or windfall, it is able to re-invest it back into the business. It can also direct a portion of the profit in the form of a dividend to shareholders.

Investors generally receive one vote per owned share to elect board members who have oversight over management decisions. Voting allows them to influence corporate policy and management issues.

What Is Preferred Stock?

With preferred stocks, shareholders typically have no voting rights nor control over management and corporate policy issues. But the company may choose to have a provision which allows for dividend payments based on company profits

In early-stage startups, there are typically two categories of equity holders:

(1) founders and early employees, who are more than likely to receive common shares, and

(2) investors, who are generally issued preferred stock as a receipt for their investment in the company.

Startup founders need to be cognizant of a few key things relative to preferred and common stock. These include but are not limited to:

1. Who has voting rights

2. Clauses that dictate preferred stockholder arrangements such as liquidation preferencesright of first refusalpro-rata rights, and even anti-dilution rights.

Adds Croyle: “These clauses are rules that must be followed, and there are severe ramifications for not doing so, not only from a compliance standpoint but also from a reputation perspective. At the end of the day, you don’t want to be known as a founder who is neglectful with investors.”

3. Allocation of proceeds upon liquidation:

“If a company liquidation event occurs (sale, bankruptcy, etc.), the allocation of proceeds across all shareholders (preferred and common) depends on the ownership structure breakdown and the clauses identified above. These can significantly (and possibly negatively) impact the amount that founders and early employees receive,” says Croyle

Croyle says that keeping track of a real-time Cap Table assessment as well as a Preferred vs. Common breakdown and its impact on future liquidation allocation amounts, is not something most businesses want to deal with, nor is it usually a priority. Rather it would much better for those company founders to focus on their core business.

“You probably have hired outside firms to track all of this and make sure that mistakes are not made. As we all know, however, every touchpoint with these individuals is costly, time-consuming, and also not error-free.”

He concludes:

“Using Equa can provide founders (and investors) a source of truth for their ownership structure. It provides ease with following the rules, it helps to remove the friction in using lawyers and accountants for every single action item, and it allows them to focus on and speed up the lifecycle of their core business.”

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

Mistakes to avoid entrepreneurs make

Seven of the Most Common Pitfalls of Startup Entrepreneurs

Funding is the lifeblood of a business. For without a sustainable financial foundation, one’s likelihood of entrepreneurial success is greatly diminished.

Seed funding is just one of a number of financial pipelines to tap into. In brief, it’s a form of securities offering where an investor pours capital in a startup in return for an equity stake in the company.

The goal? To provide new and emerging entrepreneurial ventures with capital for things like management team salaries, R&D, proof-of-concept, prototype development, and beta testing, among others.

Series A, Series B, and Series C represents the compendium of business funding rounds. Taken in alphabetical order, here is a brief overview of each.

Series A

Series A is the first round of institutional financing for a business and is often directed by one or more venture investors. Valuation in this round reflects advancements achieved with seed capital, management team consultation and other evaluative benchmarks. Typically, Series A investors will purchase a 50% ownership stake a the company.

Success at this funding stage allows a company to proceed forward along a number of different fronts, including development, talent acquisition, business development initiatives and other activities valuable to their business expansion.

Series B

Series B is the second round of funding for businesses. It typically takes place when the company has reached certain milestones and is beyond the initial startup stage. Funding at this financing round can occur in various ways including private equity, venture capital, crowdfunding and credit investments. Financing acquired may be directed toward a number of different aims including operational enhancement, product development, revenue systems, as well as value creation for the next funding stage.

Series B is the stage where publicly traded companies are often seeking to boost their number of shares available on the open market. It’s here where equity investors typically prefer convertible preferred stock to common stock due to the dividend accrual and anti-dilution features, that may be unavailable with common stock.

Series C

Series C is a later-stage financing mechanism that businesses often employ to strengthen their balance sheet, acquire operating capital, finance an acquisition, launch new products/services, or prepare the company for an IPO or acquisition exit. The company often has a solid track record at this juncture of its business trajectory providing outside investors with multiple levels of reassurance to justify a higher valuation.

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