It’s Important to Know Where the Startup Will Spend Your Money!

You may be very much excited to find an awesome startup that you would love to invest in. But wait, a hasty decision may become the reason for failed investment.

A due diligence is required before you invest money in a startup whereby you investigate the business model, founders’ background and market. But one most important aspect majority of the first time investors miss is researching the use of their funds!

Well, it’s a must to research the use of your funds; as an investor, you need to understand what, why, and how the startup intends to spend the money. Having a good idea of what to do in this section would give you a better sense when testing the entrepreneur’s vision.

Review the salaries and see how much the founder intends to pay himself/herself. You also need to have a fair knowledge of average salaries, i.e. for a seed round, the absolute maximum salary should be $150,000 (depending on the amount raised and the experience of course).

Moreover, understand if the funds that the startup is raising would be enough to accomplish important milestones that could help the company to either become profitable or to raise additional rounds of financing.

You may also be interested in knowing how to review the legal documents before investing in a startup.

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