| Question: | | | | paid them $10,000. What you might do is list Ceo |
| I want to raise $1.8 million from angel investors for | | | | Resource as a start up expense in the start up |
| my computer business to take it to the next level. | | | | expenses table even though you have already |
| Can I use $250,000 of the $1.8 million to pay me | | | | fronted the payment for their incredibly worthwhile |
| back the money that I have already invested in | | | | fees. In this case, you turn in the receipt after the |
| getting my company started? | | | | funding like an expense report...you have accounted |
| Answer: | | | | for the expense on the start up costs table...so the |
| This is one of the most frequent questions I get | | | | numbers balance. However...if you are going to do |
| from clients: Can I get back all of my money that I | | | | this...be sure and disclose it in full and glorious detail in |
| have invested so far in starting my company from | | | | the PPM. |
| the new investment dollars I get from angel | | | | - Obviously, the bigger the amount you want back to |
| investors or venture capital? | | | | you, the more resistance from prospective investors. |
| The short answer is almost never. | | | | - There are always exceptions...a client in Chicago |
| - Most will see it as a red flag and not invest. | | | | insisted their board members, who were their first |
| - Most want to see you so committed, financially, to | | | | round investors, get back $1 million in start up funding |
| the company that you can't afford to let it fail. | | | | of the $2 million they had invested. I jumped up and |
| - If you don't get paid back, then the company only | | | | down strongly advising against it for the reasons that |
| needs $1,550,000 instead of $1,800,000 to accomplish | | | | I just mentioned, but the client always gets the final |
| the same goals that are in your business plan. | | | | vote. They did allow me to totally disclose the |
| The longer answer is maybe a little. | | | | payback in the PPM I did for them. |
| - Sometimes...not often...but sometimes...you might be | | | | So, what happened? They sold the whole $5 million |
| able to pay yourself back some...or have the | | | | deal out to the first investment group who saw the |
| company assume, say a working capital loan you | | | | deal...and the board members got their $1 million. The |
| took out...or assume responsibility for a second | | | | company had such good traction on a product that |
| mortgage on your house where you can document | | | | was already in the marketplace that the investment |
| that all the funds went into the company. | | | | group agreed to the terms. So, even with all of my |
| - The other way that sometimes works is with direct | | | | experience, I can be wrong. However...it is the only |
| payments to others that you've made. For example, | | | | time that any client in 30 years has ever pulled out |
| say you hire that great consulting firm, Ceo | | | | more than $100,000. Ever. |
| Resource, to help your start up consulting, business | | | | Don't count on being an exception. |
| plan and PPM prep work. Let's say, you have already | | | | |