Startup Boards — Building Your Entrepreneur Ecosystem

I have found a number of investors want to build their entrepreneurial community as part of their investment thesis.  

The most common lament from a startup investor is, ‘I invested my available funds and must wait ’til I see something return before investing more.’

This makes it difficult to build an ecosystem as the funds are tied up for a long period of time. 

One solution is the Early Exit term sheet; this gives the investor the option to take back their investment at year 3.

To provide funds to more startups, you could take the gains from one startup investment to invest in other startups. 

For example, in a 3X in 3 years redemption right, a $50K investment would yield $150K in 3 years. 

You could divide the $150K as follows:

$50K — leave in the startup as equity or debt

$50K – take from the first startup to fund a second startup 

$50K — return to investor funds

This creates an evergreen fund for investing in more startups. 

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.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.