As an entrepreneur, you may desire a high level of involvement in the new startup that will commercialize your technology. Take the time to stop and ask yourself if you are ready to accept private capital investment from outside investors.
The following list was prepared by a venture capital investor as items for an entrepreneur to bear in mind with respect to equity investments.
Most considerations on this list also apply to angel investments, as well as those from family and friends. Ask yourself if you are prepared to:
If you conclude that you are willing to accept investment from and work with a private investor, you can move to the next key issue.
Consider what types of financing and how much financing you have access to based on your track record and your collective personal assets (including those of family, friends and contacts).
Ask yourself the following:
After contemplating these questions and determining whether or not you’re ready to move to the next stage of developing your business, you’ll have a better sense of what kind of financing is appropriate for you.
If you have established your startup is not ready to accept outside capital investment or is unable to access investor networks, a “bootstrapping” strategy may work for you.
If you are ready to accept outside investment and believe you will be able to access sufficient financing from private investors, develop a long-term financing strategy for your business that plans for equity investment and the use of debt to start and scale your business.
Thinking of raising money? We’ve created a free online course to help you get investment-ready. Check out Introduction to Investment Readiness and learn useful tips, tactics and strategies to prepare for your seed fundraising round.