Tip #77: Clear structure

Tip 77: Deal structure – “a clear structure”. After the amount, the second most important piece of information is the structure.

It is harder to offer tips on this, because it is a complicated subject. The easy recommendation is to do your homework.

Start with market practices for the kind of money you are trying to raise. Who are the right types of investors, and what drives their investment (or lending) decisions.

Delve deeper into the specific targets. If you’re approaching VentureSouth, know what we won’t fund (or probably won’t fund) and the deal structures we like ($500k angel rounds of preferred equity at a $2M pre-money valuation) and won’t invest in (like convertible debt, common stock, or deals priced based on Silicon Valley and Sand Hill Road valuation metrics).

This should happen before your pitch, but you should be crystal clear during the pitch what the deal terms are.