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Funding Your Business: Working With Investors

Specialty Food Association

For early stage startups, funding from friends and family is among the popular ways to raise capital, said Bob Burke of Natural Products, during Thursday’s webinar “Funding Your Business: Working With Investors,” part of SFA’s Maker Prep webinar series.

When approaching them for funds, he suggested being “brutally honest, almost to the point of talking them out of investing in you, about the reality that the odds are very high that they’ll never see their money again."

An entrepreneur should also make sure that their potential investor can afford to lose the money and that an investment won’t interrupt other major financial goals such as a college education, new home, or retirement. Those seeking funds should also be conservative in their valuation.

“Resist the temptation to go out with a bold valuation with your friends and family,” Burke said. “Chances are your mom, dad, siblings, and close friends aren’t going to push back when you say your pre-revenue startup is worth 5 million or 7 million or more, out on the edges of reality. Be conservative, be generous in a way. Of course you don’t want to give away your company in the seed round but they’re taking on the most risk so being sober and humble in your valualtion is a good thing.”

View the full recording here.

Related: What to Know About Product Placement in Film, TV; Funding Your Business: The First Key Steps.