Startups - The Founders Dilemma

It was a memorable party to celebrate the win of a large contract; the team had worked hard and were jubilant.

After the celebrations the Founder had to work on the investments needed to deliver the new project.

It was a bootstrapped business and everyone had worked hard and sacrificed to reach the current position, the Founder had made substantial personal investments to make the business a reality and now was hard pressed to find more personal funds for the new project.

The Founder worked with the CFO late into the night as they tried many permutations and combinations, but the financial ratios did not qualify them for any form of funding and their book value of assets they had invested in was much less than the market value after depreciation.

Their business was profitable but had not created enough profits to plough back into expansion, it was a services business which was working capital intensive.
The founders dilemma was balancing profitability versus growth, the founder had missed something in the financial plan; though profitable there was no funds available for growth.

The founder realized to grow the business there was a need for bringing in new investors. The Founder realized it was time to call in the experts and engaged a Financial consultant.

The Financial consultant delivered the valuation and cash flow projection for the business and a was able to market the business to a number of enthusiastic investors.

After many meetings and discussions and revised legal contracts the Founder was able to raise more than the required capital for the growth of the business.
The Founder on the advice of the Financial consultant retained a controlling holding in the business and carefully spread the investment among a number of investors so that the risk of a hostile takeover was contained.

The Business was now set on the road to growth and the Founder's vision was on track, the Founders decision to bring in the Financial Consultant had paid rich dividends.

As a Founder be prepared to bring in experts when you are in Dilemma, the sooner you bring in the Experts the better for your Business.

All the Best.