capital is a term used to refer to the mo...
capital is a term used to refer to the money offered by investors or other
money lending institutions to startup companies or small business that show
great potential for long-term growth. Angel investors are individuals with high
net worth who provide venture capital to Startup Companies at an early stage,
and in return, they get an equity ownership interest. They often choose to
invest in startup companies for various reasons, and MetaCarta checked several
of their boxes.
with, MetaCarta had an exceptional management team. Considering that MetaCarta
is a tech company, potential investors would feel that they are betting on the
right horse if the founders are tech-savvy individuals with excellent
managerial skills. Dough had a strong engineering background and some
entrepreneurial and managerial skills. It made a lot of sense why he got the
Vice President position. Erick is almost a jack of all trades; he excels in
many areas especially at computer science and a related mathematics. He worked
as a research assistant at Yale in both mathematics and computer science
department where his primary duties were writing algorithms and using computer
programming for fractal geometry simulation. His credentials earned him chief
scientist position. John possessed a degree in physics and had good managerial
skills which he inherited from his father who was CEO in multiple businesses.
He also had god leadership skills being a team director of a student led
competition team at Yale. The Company was also built on his idea; this made him
earn the CEO position.
reason is that the founding team understood well the technology they were
selling. The founders were a bunch of confident lads that believed no other
company would do a better job than meraCarta. The founders inspired confidence
and confidence in your product is a critical factor that investors want to see.
Investors want to know what it exactly that they are financing.
a high potential return on investment which was another contributing reason why
it was able to acquire investment capital. The company sprung at the perfect
time when most people wanted a piece of the pie of internet-based businesses.
MetaCarta was primarily built as a geographic search engine; this made the
company easily raise its first investment capital of $100,000 from its
investors. Another contributing factor was the grant the company received from
DARPA. The money not only gave the company the lifeline desperately needed but
also raised flags to potential investors of a diamond in the dirt that had not
been found. The company proved that it was not clutching at straws but could
genuinely realize profits.
should not take the Sevin Rosen offer. Accepting the proposal would not be
making a business decision, but it would translate to making a compromise as
the founders would be forced to give majority shares to the investors. Taking
the deal would mean giving up too much control of the company over a short
period even before liquidation starts to apply. This action is not splitting
the baby but giving up the baby, and it doesn’t require the wisdom of Solomon
to realize that. Accepting this deal would mean more money for the founders but
at what cost? Any founder should always keep in mind the vision they had of
what their company would grow to become, giving up control of the company is
letting the majority shareholders steer it in any direction they see fit.
successful company dilutes itself by raising more money, this will make its
valuation go up, and in most cases, this is considered far more important than
ownership. But this should be done moderately. Giving away big chunks of the
company at an early stage is not wise. Sevin Rosen dictated the valuation by
proposing the $6.5 pre-money valuation and expecting majority shares in return.
MetaCarta should consider renegotiating to give Sevin Rosen smaller equity or
the current offer might as well be a bear hug.
MetaCarta should propose that Sevin Rosen to reduce the amount of money
that it is willing to invest until it reaches the amount that matches its
aspirations. MetaCarta Company should accept an amount that is adequate for it
to run smoothly but not too much to give Sevin Rosen the majority shares.
As an angel
investor, I would be worried about the new offer that MetaCarta is being
offered as dilution of the company would result in the reduction in the value
of my shares. The only logical thing to do is to approach MetaCarta with a more
suitable offer that is more tailored to their needs and interest and in the
process eliminate Sevin Resin who are currently a threat to my investment.
Considering that MetaCarta is only accepting Sevin Resin’s offer because there
is no other offer will be available on the table anytime soon, they will gladly
jump on any lifeboat I will throw their way. My proposal should enable me to
get a good deal regarding securing more equity in the company.