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Raising the $$$

June 20, 2011

As a startup we want to get things done like yesterday with a very to no budget, want to have the best of the things in the world like some celebrity spokesperson talking about us etc. For all these things one has to have enough capital – I agree somethings can be done without the $$ and somethings need real $$.

In order for us to grow we started to reaching out to potential investors and we saw some very positive reaction – that this is a proven business model and it would definitely work in the niche that we are targeting. Raising $$ is complicated – you are selling an idea based on the potential and there are regulations by SEC that also limit whom you can approach for raising funds. This was the first time I heard the concept “accredited investor” – a person whose net worth is $1M apart from the existing home and is in a position to bear the brunt of his/her investment getting wiped out. I totally can understand that startups are risky business – 95% go bust and investors should have the stomach to digest failures. But come on $1M net worth, this means we are eliminating a majority of the total population and if my friends were in that category I do not have to struggle around trying to raise the $. Luckily there are certain provisions for startups which are not trying to raise a whole lot of money – these are 504 & 505 sections which permit startups which are looking for seed money (at least that is what my lawyers told me).

 

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