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to Raise Start Up Money

Entrepreneurs have to do a lot of exaggerating to get their business of the ground as far as lying through their teeth in order to get the financing they need. They exaggerate the success of their business when talking to startup investors and also exaggerate the market potential of their products to find distribution partners. Funding your business without exaggerating isn't easy, but there's a clear line between optimistic exaggeration and outright fabrication.

The following guidelines will help entrepreneurs to get the startup money without spinning a web of lies.

Financial projections should provide root to verifiable assumptions
Great investment player like Venture capital firms and angel investors typically want to see financial projections that shoot up like a hockey stick. Entrepreneurs may feel compelled to exaggerate projections to look like their businesses can reach a billion dollars of market value in a few years. There's no point in just fabricating a set of projections that aren't based on reality. The best way to build a set of realistic projections is to start with business drivers which can fully discuss with investors.

Paychecks should increase your business growth.

In business it is very difficult task for entrepreneurs to convince talented employees to join the team and stay on the team before their company is profitable or stable. As a startup the entrepreneuris faced with a choice: Pay the employees a market salary and take a bet that the business can grow to justify the salary, or share risk with the employees by paying a below-market salary, plus equity incentives. Many entrepreneurs who have great experience always share that it makes more sense to share risk with the employees until the business has funding or until the product line gets market traction.

It often puts the entrepreneur in the precarious position of having to recruit employees by exaggerating how likely the prospects of venture funding are, how developed the company's strategy is, or how popular the company's products are.

Get your clients to compete to be first
Exaggerating the stability or size of the enterprise to secure the first client is the most common thing to do. Even if the product is not ready, then also a similar approach to raise money for the business by getting investors and business partners, who can provide financial support to compete to be first. There's a certain prestige in being part of the first group of investors, partners or customers to help launch a business. There's less need to exaggerate if the expectation is set that the product is still being tested among early adopters.

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