Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com
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In the first three parts of this series I discussed major areas of focus for investors considering funding a company. Briefly, they were:
- Implementation – Are the founders implementing or just talking about implementing once they get the funding?
- The Value Proposition – How scalable is the business model, what are the margins and are they sustainable? Have the founders proven that they can monetize the value proposition?
- The Team – Is the team balanced, experienced and operating as a team? Are there weak members? Are they a team or a gaggle? What are the tracks in the snow that show that they can build and manage a company?
Generally these and many more questions have to be answered satisfactorily before a professional investor turns to the financial projections provided by the founders. Amateurs will start with them, but this is more an indication that they are amateurs than anything else. Financial projections need to be analyzed within the context of well developed and tested knowledge of the team that is providing them. Otherwise, you are looking at a series of spreadsheets that may or may not be realistic or reliable projections of an achievable future. Continue reading “The Money Chase: What Does Investment Grade Mean? Part 4” »
