Thursday, December 15, 2016

Lessons Learned Seeking Funding -- New investors will not reimburse previous expenses

  Investors who join a venture that is already established want their money to be used on projects and/or operations that occur after they make their investment.  This is especially true of professional, truly arms-length investors (not friends or family).  They do not want their money to be used to pay old bills.  It is important for the initial investors in a venture to be aware of this; the money they put into the deal will not be returned or reimbursed to them by subsequent investors.  In other words, their money could be in for a very long time.

An exception to this would be when a subsequent investor buys out an investor that bought in to a deal earlier.  However, it is unlikely that that would happen without a deep discount.

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