How to Attract Major Investors

Keep Control

Don't be too eager to sign away the company in the hopes of getting that investment. It's your vision, your company. Not to mention, things can change in a start-up overnight. You need to retain enough equity to make the necessary decisions to keep on track. You may also need to keep some of the equity to lure the most qualified employees. According to Bhatti, it's standard practice in Silicon Valley to set aside 20% equity for employees. That strategy helped them recruit engineers with years of experience building search engines. Still, says Bhatti, "at the end of the day, the VCs will own 50% of the company. We're lucky, we have the right VCs working with us."

Timing Is Everything

Once you've written up the business plan and put together a list of investors you want to go after, take a hard look and see if you are indeed in a position to be attractive to investors. Stern says he often tells entrepreneurs to come back "when you've created some value that we all can reward you as an entrepreneur for. Build a prototype. Hire an A+ rock CTO. Put your own money into the company. Get a key strategic partner that is locked in. Get your first 100 users on the Internet and glean some data from their use ... anything that shows some progress and shows your commitment to an endeavor."

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