Funding Fun with John Dimmer

John imparts many important lessons when seeking investment. When looking for funding, it helps to know what angel investors are looking for. First off, investors want you to be successful. Nine out of ten businesses fail, and they want to back the winner of the group. This means that any investor worth their salt is going to do their due diligence. They want to see everything is in order, including patents, trademarks, copyrights to financials, contracts, and everything else related to business planning. It is important that the business is well run, planned, documented, and adequately protected. They also want to see that the founder has invested in the company. This demonstrates that the founder has skin in the game and is willing to commit. Once due diligence is satisfied, angels are looking for a 10x return on investment over five years. This is because they need enough of a return to offset the average failure rate of businesses. 

Typically businesses go through five stages of a business lifecycle: Concept, Start-Up, Expansion, Mezzanine, Exit. The concept is the pre-product idea stage. The Start-Up phase is where there is nominal or no profitability and ranges from concept to product release. Expansion is where the business has established itself but needs more capital for expanding operations. Then there's the Mezzanine where money is raised for an Initial Public Offering (IPO). Lastly, the exit phase is where money is raised to prepare to sell the company.

Then there are the stages of equity investments. At the concept phase the business is funded by the founder. The proof of concept, where the business is typical funded by friends and family. During product design fund are raised by angel investors. Finally, the expansion phase is funded by venture capital. All of this plays into funding one's business, but it is only scratching the surface. John was definitely a wealth of information, and knew all the details of funding. However, this blog post is just a small sample of all the information that John Dimmer shared.

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