Startup Funding Espresso – Milestone Your Valuation Caps

Milestone Your Valuation Caps Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In strategizing your fundraising, it's best to break your raise into tranches. Most raises start with a Convertible Note or SAFE Note so one uses a valuation cap rather than the actual valuation. Give the first tranche an investor-friendly valuation cap. For the second tranche, raise the valuation cap by 50%. In the pitch to investors make clear that there's a limited amount of the low valuation cap equity. When those funds are raised, move to the next tranche at a higher valuation. Continue this stair-step of the valuation cap for the remainder of your raise. This creates scarcity for the low-priced equity and encourages investors to come in early rather than late. Most investors want to do the smart investor thing which is to be the last investor in the round. Give investors a reason to invest early. This will help move your fundraising along and avoid stalling out. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let's go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Investors check out: https://tencapital.group/investor-landing/ For Startups check out: https://tencapital.group/company-landing/ For eGuides check out: https://tencapital.group/education/ For upcoming Events, check out https://tencapital.group/events/ For Feedback please contact [email protected] Please follow, share, and leave a review. Music courtesy of Bensound.