Financing discussions for early-stage software, technology and app companies typically focus on the sexiest and most elusive source of funding: venture capital. But the truth is VC is not the only, nor the best option, for early stage businesses. There are emerging sources of capital that may make more sense for your business.
At Lighter Capital we spend a lot of time talking to early stage tech entrepreneurs about what kind of funding makes the most sense for them. With the proliferation of cloud-hosting platforms, the funding pinch points have changed considerably. Before, Series A VC rounds were considered critical for developing and launching products. But today most companies are launching minimum viable products after seed rounds or simply bootstrapping. As a result moving from launch and initial traction to growth has become the most challenging part of the funding question.
Making the right funding choices at this stage affects the future trajectory of your company, how much control you will have over your business, and ultimately how much value you will extract from it.
What’s important between launch and sustainable growth is making sure you are aware of all the funding options and figure out what is right for you. Start with your long-term goals for the business and work backwards through the funding road map to determine what sources of capital are best at what points of development.
What do you want the business to look like in 1, 5 or 10 years? (Is your motto “go big or go home” or “built to last”?)
Who do you want as partners owning and controlling the business with you? (Who makes the big decisions, the co-founders or the investors?)
What do you want your role to be? (Will co-founders run the business for the long haul, or bring in “professional” management before long?)
How much capital do you need to grab the opportunity in front of you?
What are you willing to give up for that capital?
And finally, what forms of financing fit your goals at each stage of company development?
These are only some of the questions that help shape your company’s long-term plan financing roadmap. If you are interested to learn more Lighter Capital is hosting a special webinar, Funding Options for App Companies on April 29th 10am PDT / 1pm EDT. From startup through the $10M revenue milestone, we’ll discuss the different available funding options their pros, cons, costs, and their impact on your business.