Should your startup be seeking funding?
- Kellie O Hara
- Mar 6, 2024
- 1 min read
Q: Should your startup be seeking funding, and if yes, are you properly prepared?
A: It really depends on what your longterm goal is, scalability of your product, and the type of investment you seek.
Take Venture Capital for example:
VC investment is for scaling (when you already have some traction in engaged users/customers/revenue).
VC is not for validating/fixing problems etc. 🙈
It also depends on how many are on the CAP table and dilution etc...
VC main objective is the ROI to their LP's through an exit.
Limited Partners (LP) - provide the funds to the VC
Venture Capital (VC) - manage and deploy allocated funds to the portfolio
Some alternative Funding Options:
Bootstrapping: It's best to begin with a bootstrapped mentality/strategy, focused on customer discovery/acquisition. This leads you from a point of strength and more bargaining power RE giving equity to the VC. Maintaining control and iterating quickly.
Additional bootstrapping funding: sources like personal savings, loans, or crowdfunding.
Grants: Highlight government grants or incubator programs that can provide non-dilutive funding for specific industries or research purposes.
💡Not every startup wants to exit (it's not always necessary to exit to be reasonably successful without giving away part of your company).
💡Not every startup is VC back-able/scalable.
💡You must match the right VC with your startup, there is no "one size fits all".
There are many additional variables to consider.
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