Are you struggling to understand what is the correct way to source Startup Capital for your venture, here are some thoughts to considers.
When we look at funding solutions for startups there are several options which exist and they include; Friends and Family, Angel Investors, and Venture Capital.
Friends and Family
Typically, early financing for startups comes from the founders investing their own monies into their ventures and then utilizing their networks of friends and family to augment their capital injections. Typically, friends and family investments consist of investments between $10,000 and $100,000. The family and friendship bond which exists between the founder and the investor in this type of funding simplifies the due diligence and structured process of raising money through more the traditional institutional means, but with this type of funding there are many draw backs including future conflicts with family and friends. Furthermore, this type of funding typically lacks strategic investors which is very important when structuring the growth building blocks of your venture.
Angel Investors
Angel Investors consist typically of wealthy private investors who are interested in investing in small businesses or ideas in exchange for equity in the company. These types of investors are typically hands off and are on the most part patient investors, very similar to friends and family type investors. The shortfall when it comes to angel investors is that they typically are not strategic and don’t provide much value to the entrepreneur other than providing small amounts of capital to the business and taking large equity positions in the business based on low valuation multiples.
Venture Capital
Venture Capital is a more structured process when raising capital for your business. You are typically dealing with very experienced investors who not only have the capital means to invest in your business but also provide very strategic resources to help you continue to fund and grow your business. We would define this type of capital as “Smart Money”. When you partner with the right kind of VC firm, you are not only gaining access to capital if they like your business but you are also becoming partners with their team that will help you move your business forward properly and strategically. They are aligned with your vision and are very motivated to help you succeed.
Contact Us to Discuss Your Startup Capital Requirements
If you’re an entrepreneur and seeking Startup Capital for your tech business we would be interested in hearing from you. We are a Toronto based family office which provides strategic venture capital and advisory services to assist innovative companies fuel growth and drive shareholder value. Our main focus is; EV, AI, Autonomous Systems, IOT and Clean Tech, but we are always looking for the next great idea.
