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Startup Lawyer

3 Ways To Succeed In Online Business

By Angel Investing, Startup Lawyer, Startups

online business ownership conceptThere are three primary methods for succeeding as an e-commerce business owner. Of course, there are pros and cons to each. And, depending upon the assets you have, risk tolerance, and other personal factors, perhaps one or two of these options aren’t the right path for you.

1. Startup Founder

The most popular method is to found or co-found an online venture. To succeed, it requires years of dedication and lots of sweat equity. The money available in the early years will come out of your own pocket or through the small amount of revenue the company generates as you ramp up.

Because your labor is the primary driving force behind the startup, it takes less money to get it up and going. However, bootstrapping as a founder has a high failure rate too.

2. Acquisition

If you have some money saved up or can get access to it from other sources, you may decide to buy an online business that’s already profitable and continue to grow it as the new owner. This is a proven method. And I’ve created a course that shows U.S. entrepreneurs how to buy an online business that’s already successful. This is a popular option for those who leave a white collar job and want to own a business instead of becoming an employee again.

Of course, a downside to this option is that it does require money to invest on the front end to make the purchase — your assets and/or other people’s money (OPM). If you’re broke and don’t have friends/family willing to invest in the acquisition, it’s probably better to stick to the first method and found your own business and grow it by bootstrapping.

3. Angel Investing

If you qualify as an accredited investor, you may want to consider the third option of becoming part owner of one or more startups as an angel investor. With this method, you’re essentially placing calculated bets on founders/co-founders and their ventures with the expectation that there will be a profitable payoff down the road when the startup gets acquired or goes public in an initial public offering (IPO).

As an angel investor, it’s unlikely that you’ll have control of the company’s direction. In fact, it may be a strictly passive investment or one where you provide advice when asked for by a founder.

You may invest directly as an angel. However, many newbies choose to invest as a limited partner in an angel syndicate where a more experienced investor is the syndicate lead. A good place to learn more about these types of investments is AngelList.

Although the payoff can be huge if you’re lucky enough to invest in an online startup that becomes a decacorn ($10 billion+ valuation), understand that’s not the normal outcome. For this reason, many angel investors spread their money across multiple startups with the expectation that out of every 10 startups selected, 6-7 will fail within 3 years, 2-3 will break even, and 1 might generate a return on investment (ROI) that exceeds the losses from others by being acquired or going public.

Is Your Startup A Ticking Time Bomb?

By Angel Investing, Business Lawyer, Startup Lawyer

I get it. You’re swamped.

And there are so many fires to put out you don’t know when you’ll have time to actually focus on building your business. Or get sleep for that matter. Time for another Red Bull.

Your startup is getting traction now…and you wonder if it’s time to pitch angel investors. You certainly could do with a bigger team to ramp this baby up.

And if you don’t raise capital soon, your burn rate will shut you down. Loans from friends and family aren’t the answer at this point.

Now you’re also worried about what will be uncovered during due diligence by potential investors. Will you end up with no funding but more uncovered problems to solve?

It’s time to step back and take a breather. So that you can come up with a plan that makes sense.

First, talk with an experienced startup lawyer. Someone who understands tech startups as a founder, attorney, and angel investor himself.

Because he’ll be able to help you with some quick fixes so you can put your best foot forward when you raise capital. And avoid doing something illegal (e.g. violating securities laws) when you fundraise.

Yes, being a founder sucks sometimes. And there’s still alot of hard work to be done. But with a little help, you can do this.