early - stage B2B software company’s BEST capital options Three questions to determine your Capital options are plentiful — but which option is best for you? It’s often thoughtful questions that lead to productive solutions. 3 And in the case of entrepreneurs raising capital, it's no different. For founders hoping to scale their companies, ponder these questions on how to optimize your search for the next best source of capital. THREE Ask yourself these questions >> 1 How Much Capital do I need to reach the next milestone that creates value in my company? The prominence of venture capital has had a significant impact on startup culture and is synonymous with ‘fundraising’ for many startup founders. E ntrepreneurs , when studying the fundraising process, often look exclusively at venture as the only way to fund their company. Often, because the process can be long, they look to take more capital than their company really needs. Venture funds can also prefer to give larger checks to fewer companies, further driving the tendency to take larger capital amounts. While every company’s financial situation is different, it’s important that founders give consideration to the business goals served by the fundraise. When evaluating your company’s capital options, first take an honest look at the health of your company, including your product - market fit, identify your next significant milestone, and determine the amount of capital it will take to get there. That assessment should prompt founders to carefully determine their company’s next meaningful milestone that new capital will support. Be cautious to not over - simplify your capital goals. Is the need for new product features that will increase market share – or do you need to fuel sales and marketing with the product offering you have? What will add true value to your company – and what is the best way to fund that goal? Oftentimes, founders will perceive the next milestone to be purely the hiring of talent to fuel sales or product development. There’s an assumption that if a company hires talent, the revenue will follow. But are you ready? Founders must consider what will be the drivers of revenue creation and conduct smaller - scale experiments to determine if assumptions are true. Without that understanding, you’ll be chasing ill - fitted capital, and spending a lot of money to learn while your company is may be getting diluted in the process. 2 What Capital Sources match my business dynamics? As noted, many founders default to seeking venture capital regardless of their capital needs and business goals. Understanding the full landscape of capital products and investor types before beginning the raise process will help you target your efforts appropriately. If your goal is to scale your company quickly to become an acquisition target, or to IPO, venture capital funding might be a good source of meaningful capital. However, there are other capital options, including venture debt, grants, private equity, and bank loans to consider Some capital options can be available more quickly, are non - dilutive, and may be more suitable for your company’s growth trajectory. An honest assessment of where your business is and its vision for the future not only allows for better capital planning, but in the long run will save you time and money. Assess the reality of your capital and growth needs, evaluate available tools, and rank them by priority. Perhaps venture capital is perfect – or perhaps a tool like revenue - based financing may be a better fit for now. 3 Identifying your ultimate vision is also a driver in what capital you pursue. Why did you start your company? What was the dream? If you are determined to create the next Facebook — do not deny yourself the opportunity to chase that vision. Creating a unicorn company will likely require multiple significant funding rounds over time, with venture capital providing some portion of that. But being smart about capital is critical for the long haul. Each round secured adds complexity to your leadership efforts, your cap table, and your company. Alternatively, would you be happy to build a $20 or $100 million company that is solving a real problem, employs an amazing team of individuals who share your vision, and that serves a need in your community? For some entrepreneurs, that is a fantastic outcome. Is that true for you? Regardless of your aspirations, there are multiple capital options available. Not all capital is the same and a clear vision for your company should drive all capital decisions. Venture is terrific for large pools of capital to build out your technical platform, or launch new markets – both capital - intensive, transformative moves. Alternative funding options, such as revenue - based financing can be good supplements to venture, bridges between rounds, or alternatives when smaller needs exist, such as growing sales and marketing. will I be happy with? At the end of the day, what take action ! It’s time to Novel Capital is here for revenue - focused entrepreneurs like you. Our fair, flexible, and simple growth capital options will allow you to seize the market opportunity in front of you. We are here to provide capital, boost your operations, and provide tactical sales support. We got it all covered – and more. Want to learn more? Visit us at novelcapital.com to learn more and schedule time with our team!