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The importance of protecting your investment in your business

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

https://www.businesswire.com/news/home/20091028005433/en/bCODE-Launches-World’s-Largest-Mobile-Couponing-Redemption

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 :-

  1. A key man insurance policy taken out by the investors ( minimal annual outlay)
  2. 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 

Posted on June 10, 2020

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