Whether you’re a startup founder in search of funding or an investor looking to support promising companies, there are many ways for startups and other high-growth businesses to access capital. But navigating this landscape requires thoughtful consideration of perks and pitfalls, including the impact on startup equity and growth potential.
The decisions of when to raise and how much to seek are intertwined, and can have a significant impact on your startup’s future trajectory. It’s important to take time to think through these decisions, and seek advice from experienced advisors, mentors or potential investors, as needed.
Startups often raise money to scale their business, and the right amount of funding can help them achieve value-enhancing milestones while positioning themselves for the next round of funding or for profitability. A good rule of thumb is to target a base amount that provides 12-18 months of runway, which will allow you to reach key milestones and position your startup for future success.
There are a number of options available to startups seeking startup funding, including venture capital, private equity and debt financing. When pitching to investors, it’s important to highlight your unique value proposition and demonstrate how you’ll make money. It’s also essential to clearly communicate your financial forecasts and the specific amount you’re seeking, as well as how the funds will be used.