- Persuade & Raise
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- ♞ Minimum Investment Amounts
Should you have a minimum investment amount?
Increasingly, I see founders with a minimum investment amount in their deck. Historically, founders used to try to raise as much capital as possible from as many sources as possible. More recently, however, as more “fundraising advice” is shared on the internet, founders are starting to become “smarter” about how they raise through numerous techniques.
The logic behind minimum investment amounts is:
Needing to raise from fewer investors
Cleaner cap table
Easier investor relations
Despite these benefits, I firmly believe that you should NOT have investor minimums in your deck. Here is why…
This can only harm you - If you are raising $2M and set a minimum of $100k for an investment. If you pitch someone whose target investment is $500k, then they will always put in around $500k. If you meet someone whose target is $50k they won’t even engage with you after reading the deck. By having no minimum you’ll still raise the same amount from the investor looking to put in $500k but you lose the potential $50k investment.
Angel investor value - Some investors who will put in $5-10k at pre-seed or $50-100k at the seed stage might be able to bring unique value to your business. It may be a lawyer who can save you significant legal fees, or an engineer who can help you develop your product. By setting minimums, you are pushing them away.
Network effects - Many of the investors putting in small checks have strong networks, as they are likely professionals. This means they might bring other friends who will put in small checks or could be future customers. By pushing them away, you lose those networks.
Do you accept small checks? |
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