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| NEN: How much does the entrepreneur have to invest? His savings? His house? And what about after getting Angel funds - can the entrepreneur start taking a salary? |
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 We have seen situations where everything goes well, but the entrepreneurs have put in a market salary for themselves in their business plans. That's a downside; the Angels are not very happy.
I think entrepreneurs need to be ready for boot strapping -they need to be ready to put skin in the game.
We look for entrepreneurs who have said that their spouses are working, or they have family businesses that can hold them up, or they have savings that they can help out with.
We are assuming, of course, that the entrepreneur owns the majority of the company, so whatever he may invests, in terms of cash and forgone salary is his investment in the company, and will benefit him in the end.
NEN: When can an entrepreneur start taking a salary and why?
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 In all the deals I have invested, the entrepreneurs have gone through enormous salary sacrifices. Some of them have not taken money for a couple of years; they have lived on their savings, because they have believed so much in their idea. That shows a commitment and discipline which I would expect.
I think when the VC funds come in, then yes, please take a salary commensurate with a company of that size and your position in that company. But in the Angel funding stage, it's all about getting to those milestones as quickly as possible, so the VC funds will come in. You have got to make the money work.
So I would expect that the entrepreneurs would live on the absolutely minimum, enough to get by. And there is no question of 'I need to get my holidays, I need to do this and I need to that'. That puts you off, because your money is not being used for the right purpose.
NEN: How important is it to invest one's time and money before going to an Angel? And how much should the entrepreneur accomplish?
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 At our last deal screening session, all the Angels were very keen to look at the entrepreneur more than the idea, wanting to see the amount of passion, commitment: are you still in your job or have you given that up? How much bootstrapping have you done, so what's your skin in the game? It's an important indicator of commitment. |
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