One of our gems that we invested in through ADI (an incubator we owned and managed) was a company called BCODE led by an amazing 32 year old entrepreneur called Michael Mak.
He presented at our BSI investor forum - to a room packed with HnI and VCs and there was effectively a bidding war to invest in this amazing company with patented technology led by an energetic smart actuary.
Together with our small fund , we partnered with a number of VCs and high net workers individuals and raised $5m in a mixture of debt and equity.
https://www.afr.com/companies/the-pitch-and-the-deal-20060921-kabbt
A few years later, Michael was found dead in a hotel room and the business went into liquidation .
http://www.mega-nerd.com/erikd/Blog/michael_mak.html
The loans made by the shareholders were unsecured - and the sphere holders loans were lost!
The lesson - ensure your biggest assets (your key people are protected through an insurance policy - so your business can still survive.
Is your business protected?
An easy way to have secured the investment would have been :-
- A key man insurance policy taken out by the investors ( minimal annual outlay)
- A loan document secured by that policy (cost $399 and $99 per year)
Comment below and I will send you details of how this can be done for your business
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