Tuesday, September 29, 2015

Base Source of Funding on Company Intention and Goals

Base Source of Funding on Company Intention and Goals

By: Ed Cox, CEO of everyStory, Wednesday, September 23, 2015 

The stages of funding, it is said over and over, go as follows: friends and family, then angels, then venture capitalists. It’s a familiar framework to any entrepreneur trying to launch a startup.

However, should every entrepreneur trying to raise money assume that oft-repeated path is actually the best path? Absolutely not. Entrepreneurs should not determine their companies’ sources of funding based on tradition or assumptions. Rather they should base them on the intention and goals of those companies.

In fact, entrepreneurs should stop thinking of funding in “stages” altogether. What’s listed above are funding “avenues” that should be considered simultaneously – and could also be pursued simultaneously. In a world of rapidly developing crowdfunding sources, the way to raise money has expanded well beyond those customary staples.

As the CEO of everyStory, an early-stage tech company, I’ve faced the challenge of determining how best to fund it. Fortunately, I already had previous experience with fundraising and M&A, so I understood that a linear perspective was not the only playbook to choose from.

When deciding which channel to pursue, ignore your company’s stage of development and instead ask yourself "What type of investor would like my product the most?”

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