Q:
Please describe the valuation and negotiation process?

A:
It is critical for an entrepreneur seeking capital to assess the value of the company from the perspective of the investor and to appreciate the dynamics of the entrepreneur/investor relationship. This relationship revolves around a trade-off. Funds for growth are exchanged for a share of ownership. The entrepreneur will be asked to give up a large share of ownership of the company, possibly a majority stake. The investor seeks to value the venture to provide a return on investment commensurate with the risk taken. Entrepreneurs seek to raise as much money as they can while giving up as little equity ownership as possible. Investors strive to maximize their return on investment by putting in as little money as possible for the largest share of ownership. Through the negotiation process, the two parties come to an agreement. Entrepreneurs understand that excess funding costs them equity. Investors must leave company founders with enough ownership to provide incentive to make the business succeed. To balance their individual goals, both parties should agree on one mutual goal - to grow a successful enterprise.

Q:
Please describe the fund raising and communication process?

A:
Most often, the first step in dealing with investors is to forward them a copy of the executive summary. And, because investors have to deal with so many business plans, the plan must immediately grab the reader's attention. The executive summary will either entice investors to read the entire proposal or convince them not to invest further time.

Apple Tree Investments will discreetly forward an executive summary and confidentiality agreement to its pre-qualified and pre-targeted investors who would be interested in the entrepreneurs' transaction. Once interest is determined and the confidentiality agreement is executed, then a business plan/confidential information document will be forwarded.

If the plan is of interest, the entrepreneur will be contacted (in this case via a communication process managed by Apple Tree Investments.com) for the first of what will generally be several meetings, and the venture capitalist may begin the due diligence process. Since venture firms are in the business of making risk investments, one can be certain a thorough analysis of the company's business prospects, management team, industry, and financial forecasts will precede any investment.