Now that you finished the first section, the introduction, let's take a look at the next section involving the capital, you're going to be required to finance your startup. Plus the questions investors are going to ask you as they consider should we invest in your new enterprise. A reminder, the method we're going to use will apply to any sized business, regardless of the source of financing. We're going to follow it path, one step at a time. So you don't get lost along the way. You've got an idea.

Probably got yourself and a few other people ready to begin and a plan. And then the numbers in that plan are what we're really needing to do the valuation. That's why you've got to do a financial forecast. You can't just wing it. Why do you need a business plan? So you can answer all those questions today Take a look at one of the episodes of shark tank and listen carefully.

They ask a lot of numbers questions, and always make their decision to invest based on real numbers. The purpose of the numbers is to help you tell your story in numbers, you're not producing a forecast of the outcome, but rather something that's possible plausible, reasonable, to be able to be expected by an investor. That's why we call it a story. You're focusing on the investor not on how to operate the business as you go through preparing that plan. And those numbers and numbers have a sole purpose to get the funding to launch and grow. Where to begin.

Start with the capital required. That's the starting point. We're going to begin with Right now when you've got that one answered, you can then follow with answering what portion of the company should that investor get? And snippet one, we went through those financial statements and the balance the balance sheet, you will fill in the missing number which is capital required. That part's done. The lower right hand corner filled in will balance the balance sheet.

All the other financial statements will feed that answer. That's what you need from them. Let's look at a quick example. This company plan to raise $6 million newco said we are worth a value of $12 million rising to 350 million dollars at the point of liquidity in year five, it will take $6.3 million of capital from venture investors to get us there. That's what you're after with those numbers. How much capital Do you need to get there?

Then we can go on. We can then say, Okay, here's what portion you're going to get percentage. For the money you're going to put in, in that case $6.3 million. focusing on getting the money so that liquidity event can occur becomes a multiple task. They're linked together. The exit strategy or liquidity event is the end point.

The dream the gold medal is the initial public offering. That means your large your growth You're highly successful and greatly sought after. It's alright to sell your business before that, instead of going public, you'll get less money for it typically, but there's nothing wrong with it. There have been marvelous successes of that being done very, very well. If you're small, you can often buy out the investors and if you were important to an industry batteries or self driving cars, you can license technology and live off royalties, but then initial public offering. That's the focus.

That's the gold medal. That's the one everyone wants. Simple example of the mesh investor thinking right now is important for you to figure out, restart. So let's rethink some of the examine. Start over Now let's go through a simple venture investor thinking process. What will I get my return in the future on my $4 million investment?

What value today Do I need to get that future investment that return that I require? 4 million today worth 20% of the company value that $200 million generates 40 million return on 410 X. I like that. That's my rule of thumb. That's what I'm after. That's the multiple I'm going to use for your investment. Let's look at seven detailed steps to get to that answer.

Sir walk along the path together.