When seeking funding, should an entrepreneur commit to any milestones (more than one milestone) and what usually happens when milestones are not met?


Typically, establishing milestones and the credibility you can accomplish them is what enables an investment. People want to know what you are going to accomplish with their money. I find it's usefule to report your progress toward milestones and as well as any new information that would be useful in suggesting that new milestones may be more important than those on the current plan (pivots, new strategy pending, etc). I always assume you want your current investors to be future investors and that you should treat them the way you would wish to be treated in their shoes. On one hand its' seriously not OK to offer milesstones you have no intention of working to hit. On the otherhand, it's not OK to continue to work toward milestones you have learned will lead nowhere. Be forthcoming in what you want to achieve and put investors on notice that learning may change the milestones.

Answered 9 years ago

Before you create milestones you need to do the following:
1. Conduct a survey of your user base or customers and be able to validate what you are building
2. Once you do the research it will help shape what the customer wants
3. Based on what the customers wants map out what are the features then prioritize based on releases.
4. Based on the releases you can speak to investors about what their capital will be used for and what you plan on achieving.
5. Obviously you will change course but investors want to know you have thought through it.
6. Communication is key once you have investors.

Answered 9 years ago

You should establish mutually agreed upon milestones. The investor has a right to expect a minimum degree of performance in return for the risk they are taking.

When milestones are not met, the terms relationship has to be redefined. Poor communication will not only destroy this relationship, but it is likely to sabotage any future investor relationships as well, since a negative reputation will be following you.

Answered 9 years ago

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