In this case, I am talking about early-stage investors and the sins that they sometimes commit when they decide to back a start-up company. I spend a lot of time engaged with such companies – and much of that time is spent working to set right things that were set in place when the first round of angel funding occurred. What follows is a partial list of ’sins’ and a few suggestions that might both mitigate their impact and improve the investors’ prospects.
CEO Compensation: I regularly come across pre-revenue companies that are paying the CEO at levels that would only be prudent if the company was generating a run-rate in the twenty to thirty million ranges. As a result, lots of the investment capital is going out the door in the form of a fat monthly check. CEO compensation should reflect the condition of the company and the unavoidable fact that, in start-up situations, cash is a very rarest of commodities and needs to be conserved.
To read the full, original article click on this link: Angel’s Sins | Find Investors
Author: Dr. Earl R. Smith II