Raising Capital

in ,

A couple thoughts on raising money.

  1. Venture Capital financing is only done out of desperation. There’s simply no other way to get $1 million plus investments if you’re a private company.
  2. Venture Debt.  Basically this is when an entrepreneur uses equity to back a loan from a venture firm. If the loan can’t be paid, it turns to equity. Often, if the loan is paid, there’s an option for the investor to transfer a portion (or all) of the loan into equity.

This is a great deal for the VC. If things go bad they can use equity (ownership of the company) as a backup. If things go well they own equity in an early-stage, high-value company.

Too often what's good for the VC is bad for the entrepreneur.