Understanding Capital Options
Not every business should raise venture capital, and not every raise should look the same. A brief tour of the landscape and how to think about the shape of your own round.
The shape of the round matters as much as the size
Amount, structure, dilution, governance rights, and investor composition together define what capital will feel like inside the company for the next several years. A round optimised only for headline valuation frequently produces the most difficult subsequent chapter.
Equity, debt, structured, and strategic
Equity buys runway and partnership; debt buys time without dilution but adds obligation; structured capital sits between; strategic capital brings relationships and constraints in equal measure. Each has a moment in a company's life when it is exactly right, and moments when it is exactly wrong.
Choose the investor, not the term sheet
Terms will be renegotiated many times over the life of the business. The relationship, once formed, is durable. Choose the person you would want on the phone during a difficult quarter; the paperwork will follow.
“Choose the person you would want on the phone during a difficult quarter; the paperwork will follow.”
You may also find helpful