When to Follow On

In most startup funding, there will be a need for additional rounds of funding.

Here are some questions to ask before making that follow-on investment:

1. Does the team demonstrate integrity?
2. Do they have traction in the market yet?
3. Do they hit milestones and are they good to work with?
4. Is the follow-on round part of a plan, or did they just run out of money?
5. Does their original plan still hold, or is it now a whole new ballgame?
6. Does the startup have a board that is driving the plan, or does the startup seem rudderless?
7. Will the follow-on funding take them to the next level, or will they be back asking for more in six months regardless of this raise?
8. Do you feel like you understand the business and what is going on, or do you feel puzzled and concerned about it?

Add up the responses to these questions to determine if you should follow on with more funding.

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.