ask the money guy | vc viewpoint | your money | ECON
Similar options are available in the United Arab Emirates through platforms such as Aflamnah and Eureeca. This option can be risky, as many investors with equity on your books can quickly bog down your corporate operations.
2. Life and debt
Seven ways to fund your startup on the sly By Zach Ferres
California might be known for the Gold Rush of 1849, but a newfound thirst for riches has swept across the globe. Modern-day prospectors are more interested in finding a mother lode of venture capital dollars than they are in panning for shiny rocks. VC fever is upon us, as evidenced by the recent mind-boggling US$68 billion valuation of unicorn startup Uber. The ride-hailing app’s staggering valuation made it the most valuable startup in the world, ahead of powerhouses such as Airbnb, Snap Inc. and SpaceX. Capitalizing on the free flow of VC investment in 2016, Uber took in $3.5 billion from Saudi investors, added a $2 billion leveraged loan, and acquired a Chinese rival in a $35 billion mega-merger. The streets of Silicon Valley, it seems, are paved with VC gold. But that hasn’t always been the case. In the lean times of the Great Recession (circa 2007) the idea of venture capital investment for startups didn’t
Entrepreneur march 2017
have the same luster- bootstrapping was the name of the funding game. Founders spent time selling rather than pitching investors for big checks. I remember hitting my dad up for help covering my car payments so I could make payroll. We maxed credit cards and waited for that next customer payment to come in the mail. The VC gold rush dramatically changed the narrative, but this flood of funding has been a blessing and a curse. Lessons from the pre-boom era are worth resurrecting. The shiny gleam of easy VC funding blinds many companies to reality. You might not qualify for or necessarily want this sort of investment. Depending on the company you’ve created, the stage of your growth and your goals, you might not even attract any VC interest. Fortunately, there are other funding options:
1. The wisdom of crowds
Crowdsourcing has moved beyond tips for finding the best restaurants. The JOBS Act of 2015 threw open the floodgates of equity crowdfunding in the US Crowdfunding platforms such as SeedInvest, Indiegogo and Fundable have lowered entry barriers for people interested in funding small businesses. Seed funding is similar to VC, but with fewer catches. This option typically comes from an angel investor or someone in your personal network.
3. Reaping what you sow
Seed funding is similar to VC, but with fewer catches. This option typically comes from an angel investor or someone in your personal
www.eureeca.com | www.grants.gov
Put your credit card away
Debt is a four-letter word, but that doesn’t mean you should strike it from your vocabulary. One powerful advantage of debt is that it can allow you to maintain your equity. If your business is still in the bar napkin phase, taking out loans against your personal credit or business assets might make sense. If your business is beyond that initial startup phase, there are new options available such as venture debt. Unlike a regular loan, venture debt comes in exchange for rights to purchase equity. It can be particularly useful for startups that don’t yet have positive cash flow or assets to serve as collateral. Venture debt can help lengthen your runway and give you the time you need to fully flesh out your plans.
Published on Mar 5, 2017
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