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Element 33. Manageable Capital Requirements > Relevance—Why Add This Element?

Relevance—Why Add This Element?

Manageable Capital Requirements represents the impact of the capital markets’ willingness to embrace your enterprise. Among other things, large-scale capitalization requires verification that the product or service will be compelling, that no ambush will be awaiting the launch, and that management is certain to stay the course and win. There may also be pressure to move the capitalization process off-shore, where tax benefits can be exploited. This pressure can work in your favor; the market offshore could be more compliant with your requirements than the domestic market.

Dr. Market’s Observation:

On the low end, other problems can loom. It can be difficult to find small levels of capital commitment if the investors feel that the launch will not be followed by a dramatic upward swing in valuation that would sustain attractive later-round financing. At this tender early moment, plan on seeking what you require to reach break even and anticipate the challenges you will face in attracting that sum of money. If you will not be requiring any capital from investors (other than your family), award yourself a 10.



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