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Starting a Business

Is there a form or preferred format for creating an equity proposal to a potential investor?

Guest Writer
Entrepreneur, Business Planner and Angel Investor
min read
Opinions expressed by Entrepreneur contributors are their own.
Don't worry about form or format. Worry about valuation. To calculate your valuation, divide the money you're asking for from investors by the percentage you're offering to the investors in return.

Does it hold up? Is it a good deal for them? That's what matters.

For example, if you offer half of the company for $250,000, you're saying that your business is worth $500,000 total. Is it? Does it have a track record? Management team? Defensible product or technology?

If you have a good deal to offer, investors will be interested.

And if they are interested, they will want to see your business plan. That's where you make real commitments. The plan should include a lot more than you can put into a three-page document, such as projected income, cash flow, balance sheet, use of funds, stock positions and so on.

Tim

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