Three questions to determine your early-stage B2B software company’s BEST capital options Capital options are plentiful— but which option is best for you? It’s often thoughtful questions that lead to productive solutions. 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. 3 Ask yourself these THREE 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 Be cautious to not over-simplify your had a significant impact on startup capital goals. Is the need for new culture and is synonymous with product features that will increase ‘fundraising’ for many startup founders. market share – or do you need to fuel Entrepreneurs, when studying the sales and marketing with the product fundraising process, often look offering you have? What will add true exclusively at venture as the only way to value to your company – and what is the fund their company. Often, because the best way to fund that goal? process can be long, they look to take more capital than their company really Oftentimes, founders will perceive the needs. Venture funds can also prefer to next milestone to be purely the hiring of give larger checks to fewer companies, talent to fuel sales or product further driving the tendency to take development. There’s an assumption larger capital amounts. that if a company hires talent, the revenue will follow. But are you ready? While every company’s financial situation is different, it’s important that Founders must consider what will be the founders give consideration to the drivers of revenue creation and conduct business goals served by the fundraise. smaller-scale experiments to determine When evaluating your company’s capital if assumptions are true. Without that options, first take an honest look at the understanding, you’ll be chasing ill-fitted health of your company, including your capital, and spending a lot of money to product-market fit, identify your next learn while your company is may be significant milestone, and determine the getting diluted in the process. 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. 2 What Capital Sources match my business dynamics? As noted, many founders default to Some capital options can be available seeking venture capital regardless of more quickly, are non-dilutive, and their capital needs and business may be more suitable for your goals. Understanding the full company’s growth trajectory. landscape of capital products and investor types before beginning the An honest assessment of where your raise process will help you target your business is and its vision for the efforts appropriately. future not only allows for better capital planning, but in the long run If your goal is to scale your company will save you time and money. quickly to become an acquisition target, or to IPO, venture capital Assess the reality of your capital and funding might be a good source of growth needs, evaluate available meaningful capital. tools, and rank them by priority. Perhaps venture capital is perfect – However, there are other capital or perhaps a tool like revenue-based options, including venture debt, financing may be a better fit for now. grants, private equity, and bank loans to consider. 3 At the end of the day, what will I be happy with? Identifying your ultimate vision is also Regardless of your aspirations, there a driver in what capital you pursue. are multiple capital options available. Why did you start your company? Not all capital is the same and a clear What was the dream? vision for your company should drive all capital decisions. If you are determined to create the next Facebook — do not deny yourself Venture is terrific for large pools of the opportunity to chase that vision. capital to build out your technical Creating a unicorn company will likely platform, or launch new markets – require multiple significant funding both capital-intensive, transformative rounds over time, with venture capital moves. providing some portion of that. But being smart about capital is critical Alternative funding options, such as for the long haul. Each round secured revenue-based financing can be good adds complexity to your leadership supplements to venture, bridges efforts, your cap table, and your between rounds, or alternatives when company. smaller needs exist, such as growing sales and marketing. 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? It’s time to take action! 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!