A-Series funding is exciting for everyone. The promoter has used his or her own seed funds, and the business model is about halfway to financial success, though without adequate cash inflows from operations as yet. It would be a crying shame to abandon ship at this delicate stage. It is only natural for venture capitalists to ask awkward questions, but the lure of superior returns is also irresistible.
There used to be a time when Alphabet Rounds were the preserves of Wall Street and the wealthy. High-technology, global business, and the dreams of academic researchers hoping to get rich have contributed to a more egalitarian spread of venture capitalists today. You can now hope to raise A-Series funds from retail investors. Small players on stock exchange rings have also begun to look beyond run-of-the-mill stocks for new investment options. How can one achieve a win-win for entrepreneurs and financiers alike?
Marketing Metrics provide great answers. A steady stream of returning customers is a confirmatory sign that an enterprise is likely to succeed. Diligent investors will look for independent and primary data on this aspect before putting cash on the table.
Sensitivity Analysis on a business model also provides invaluable clues. The absence of evaluated options, unstated assumptions, and rank optimism are prime pitfalls that put off veterans of an angel-investing club. It is always better to wait for a later round of funding in such cases.
The track record of a promoter team should also count heavily in favor of A-Series funding. Domain expertise, convivial team functioning, and depth of key human resources are key factors that favor financial participation in Alphabet Rounds.
Life in the A-Series ring is always a gamble. Neither the capitalist nor the entrepreneur should have such a crippling stake in a venture that utter ruin awaits the slightest setback. That is why it is vital to keep tight reins on excessive ambition and unbridled greed.
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