Fundraising

Funding contingent on lead investor?

Anonymous

February 16th, 2017

My pre-revenue venture recently landed a Definitive Agreement from a Fortune 500 Company that projects $30M in revenue. A MD at a family office is interested in investing $1M-2M of our $5M+ ask if we can find a lead to put in $800k+ and conduct due diligence. The MD says he'll offer a Letter of Intent regarding that investment if his partners are on board. This firm mostly invests in much bigger deals in a different vertical.


How common is it for an investment firm to step out of its comfort zone with an offer like this?


Is it common to receive a LOI for an investment that's contingent on a lead investor? I wonder how other investors will react if we approach them with such an LOI the Definitive Agreement.

As a founder, you’re always in fundraising mode (whether active or passive). In this course, we’ll teach you how to successfully raise follow-on capital, establish a valuation for your company, build an investor pipeline for your next round, and more.

Irwin Stein Very experienced (40 years) corporate,securities and real estate attorney.

February 16th, 2017

The firm is stepping out of its comfort zone specifically because you have an agreement for $30 million in revenue. Many investors will make their investment contingent on your ability to raise all the funds that you need. If you are wondering how investors will react , you probably have very little experience dealing with investors. That alone is reason for you to hire someone who can negotiate for you.

Dane Madsen Organizational and Operational Strategy Consultant

February 16th, 2017

It is not uncommon. It simply says the FM is not comfortable doing the diligence and wants a professional to do the work and negotiate the deal. However, a verbal is an empty bag. If they are this committed they should put line it in an LOI. If not, keep looking. Dane Madsen Dane@DaneMadsen.com 206.900.5852 Mobile Sent from my mobile device. Forgive typographical and grammatical errors.

DOUG KRAKAUER 63 PRINCETON CS POST DOC LEVER

February 17th, 2017

I IWORK IN THE NON PROFIT WORLD BUT DO YOU DO "B" CORPORATIONS.


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