Raising Capital
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One of the hardest parts about bringing an idea to life is funding its development. There is a popular narrative about raising capital from investors to fuel progress and for some companies, raising capital is a necessary step but not a mandatory step for all companies.
Here is a collection of insights and resources to help you navigate that decision.
Let’s dive in.
What Does Raising Capital Mean?
Let’s define what raising capital means.
Rising capital is the act of convincing investors to contribute their capital, reputation and time with a view to build a valuable business and realise that value.
Realising value means receiving more capital back than was invested. This expectation is central to investors committing capital to a company. There are a range of challenges to navigate when raising capital including high risk perception, lack of market validation, changing market trends, investor alignment and time to profitability (to name a few).
These challenges require resilience, strategic planning and effective communication at all stages of a company lifecycle.
Why Should You Focus on Raising Capital?
Most companies require capital to start. The act of successfully raising capital is the result of creating and refining a high conviction growth story in light of limited evidence.
While capital is often required at the start or at some point in a companies life, it’s important to understand the different types of investors (for example angel, venture capital and private equity), their incentives and the type of capital they invest.
Many entrepreneurs also elect to build cash-flow businesses that invest profit and/or use debt to grow their business.
They most important reason to focus on the topic of raising capital is that you may need to raise capital one day and it’s important to understand that capital is never free, it always comes with conditions.
Learning about those conditions, and how capital raising deals are structured will help you make the right decisions about when, how much and what kind of capital you should raise.
Best Raising Capital Books
Venture Deals by Brad Feld and Jason Mendelson
The Art of Startup Fundraising by Alejandro Cremandes
Angel: How to Invest in Technology Startups by Jason Calacanis
My Raising Capital Articles
This is a complete list of articles I have written on raising capital. Enjoy!
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