Want to Raise Capital? Perhaps Skip the VC & Go Retail Instead?
Sven Milder ??
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Founders raise capital from investors to grow their businesses. The industry news portals and blogs want us founders to believe that angels or VC’s are the go-to options.
Most of the time It goes something like this:
“When you kick off your business, you approach angels”
“When you grow your business, you connect with VCs”
In today’s newsletter, I want to teach you a more contrarian approach that I believe you should consider to increase your success dramatically.
So you close FAST, SMART and yes have an exit.
Our todays topics.
?? Limited?invitation to the launch of my new GetFunded program for early-stage founders. Guaranteed Success. Led by Me. Scroll Down for more info.
It’s my goal that by the end of today's newsletter, you will be able to make your own informed decision.
For the non-readers, listen to the full newsletter on FoundersTribe.
????Why do founders start a business in the first place and what are their goals?
It sounds like an obvious question, but drop your phone at this moment and ask yourself: Why am I a founder?
Your answer will likely be:
Does this cover it? Am I right? No?
Oh yeah, money.
Founders start businesses because they want to unlock the corporate world and become financially independent with the purpose of living life to the fullest. No limitations.
And if it's not just money, then it's very likely a combination of money and one of your former answers.
Now stick with me for a moment, because we will get into it...
???Why accepting venture capital may set you up for failure?
To understand why accepting venture capital may set you up for failure, you need to understand the VC model first.
Raising from VCs is a potential vehicle for massive business growth as long as you fit the bill.
But it does come with loads of governance, killer terms, and high expectations of growth, hence the lofty valuations that are set for early-stage businesses that easily exceed millions in the early stage.
But what if you don’t match the speed of growth?
But what if you don’t perform?
???What if your business doesn’t have traction?
Of course, we all want a massive exit, but more often than not, it means:
Option 1:?Your business needs to close its doors.
Option 2:?Your business gets acquired for an amount that's not big enough to pay you and your co-founders a fair share.
This means that your time, effort, and energy have not paid off. Now, don’t get me wrong; that risk is always there.
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But there could be a better way if you want to keep all options open.
???Why retail investors are (in my opinion) a better alternative for founders.
A retail investor, a business angel, is an individual with substantial additional income. Often a successful (former) entrepreneur or an ultra-high earner who has built wealth and wants to increase it by investing in businesses and, where possible, even mentor them.
To understand?why retail investors may work out perfectly for early-stage businesses, let's go through some points together:
Before jumping to my final conclusion, let's touch on one other topic.
???All money is similar, but we categorize it into 3 types of capital:
???What Investor should you work with? How to structure your raise?
Raising capital from investors can be a game changer?to grow your business. But selecting the right type of investors can be the difference to make or break your business.
???The point I am making today.
Venture capital is great, but leverage it only when your business is profitable or reaching profitability. Then it will give you the capital against your terms. Ready to catapult.
In your early stage of business. Let's say up to US$ 2 million, work with angels only, allowing you to leverage smart capital.
As the future (VC) value of your business has not yet been proven, you’ll be able to keep options open to sell the business if you want against a 3-8x multiple, instead of closing it down and still make tons of money
You can accept smaller tickets representing smart and social capital giving you lots of options
Skip the VC For as Long You Can. You’ll find in business angels and investors an army of advisors that can catapult your business. So bring them on your Cap Table. You’ll likely get faster traction and trust as you close and have access faster
Angels can cash out, whenever they want, by selling their shares within the group of 20-30 angels
If you wonder how to structure a round like this, keep an eye on next week's newsletter where I will share all about SPV aka Special Purpose Vehicle.
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?OFFER???Limited Invitation For only 20 Early Stage Founders.
As you guys know I'm bullish about funding, acquisitions and venture flips.
Normally I work just one-on-one with founders to help them raise and close.
I wanted to create a program specially for Early Stage Founders wanting to raise?less than $1.000.000 in the coming 90 days.
I have created the first version of the DeeDee Get Funded Group Program.
A 8 week group program hosted by myself, my team and our proven strategies with access to our network of 20.000 investors with a die hard guarantee and payment options that every Founder should be able to afford.
Watch the video :?https://offer.pitch-house.com/getfunded-os
Keep an eye on Wednesday special offer.
Thanks for your attention.
Cheers -!- Sven
3 Ways to FAST TRACK Your Business Growth:
1.?GetFundedFormula Workshop:? Under 7 hours you discover all you need to know how to raise capital under 9- Days. FoundersTribe Price: Just $67
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企业家和 Ambient Systems 创始人
1 年Isn't 'retail' just angel investing or crowdfunding?
?Bridging The GAP between INNOVATORS & INVESTORS in Africa|?Connecting Africa Startups To Global Opportunities ? Accelerating Global Trade and investment in Africa ?AI Governace and Regulation.
1 年In my opinion,we need more diversity and alternative in startup funding
Founder @ Formatif, Venture Builder Studio | Venture Deals | Human-Centered AI Speaker | Ex-VC
1 年Agree, excellent insights! ?? Many founders believe that raising VC capital is essential for early startup growth but this just gives away equity at an early stage. By exploring alternative funding options such as retail investors or venture builder incubators, startups get enough to secure funds for initial execution, focus on customer validation, and gain early traction. This ultimately strengthens their bargaining power for future fundraising rounds as they prepare to scale and go to market.
$100B+ -> WORLDS LARGEST exec/investor media + network (Newsletter -> sf-gac.com & sf-gn.com ????) in progress -> SFGN videos/podcast posted DAILY ...PLUS 1:1 CEO Consulting, Exec Coaching & Optional Investor Prep
1 年Most founders should not do VC - great article ??
Money Abroad | Fractional Head of Product | 6k read my money newsletter: moneyabroad.co
1 年Angel groups are underrated. Look forward to learning more about SPV structure!