Workshop B: Risk-adequate return
This workshop builds on your understanding of the deep dive on return as well as your thorough work in part 1) and 2) of the Finance Map. It revolves around the question: What is a risk-adequate, “fair” return for an investment in your company? This is of course connected to your ideas around repayment structures and timing – and should at the end feel fair and adequate for yourself and the company and also be realizable in the context of your business plan.
The workshop template narrows down on this question from two sides:
- What type of limited return fits your finance needs and preferences?
- What level of return feels risk-adequate and “fair” to you?
→ What type of return “limitation” fits your finance needs and preferences?
As discussed in the deep dive, there are very different paths to ensuring that there can be a limit to the return for the investors.
Looking at the projections and needs that you have worked out in 1) and 2), think about what type of return “limitation” would be the most appropriate path for your company? This should also take into consideration your risk profile and potential for paying back investors.
→ What return height feels risk-adequate for your company situation and finance need?
For answering this question, it can be helpful to take on different perspectives:
- What feels fair, adequate to you for the situation your company is currently in?
- What is realistic for the company’s potential (e.g. what can realistically be paid back, also taking into consideration where the money for the return will stem from)? What is the maximum amount the company can realistically repay in the foreseeable future?
- Taking the perspective of investors, what would be adequate for the risk they are taking, also considering market conditions?
- What conditions are available on the market?
If you have opted for more open/ variable approaches, maybe try to get numbers that still feel right and also think about which formula, holding periods, processes or milestones would work well for you.
Determining a range that would work for you can be a good first step to approach your investors.