CARTOONS BY CHRIS BRITT

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to receive another cash injection. In exchange for the money, a venture capitalist will work to gain control by joining your company’s board of directors and injecting direct operational oversight where needed. For startups, venture capitalists may opt to start with small investments to see what you will do with it. Like angel investors, they will establish benchmarks and provide timelines to be met in order to be eligible for more funding. ADVANTAGES Large pool of funds. Venture capitalists invest larger amounts than you can secure from an angel, commercial lenders or government lenders. Rapid growth of your company. Since the venture capital firm maximizes its return on investment when your company is sold or goes public, they will push for scaling your business quickly to meet these goals. Experience. Venture capital firms have significant experience and connections to get your business moving in the right direction. They are invested in your success so they can open doors that otherwise would be closed. Shared risk. Since the venture capital firm is an owner in the company, it shares the risk associated with growing your company. Multiple investor options. There are venture capital firms for every stage of a business so you may be able to get financial assistance from different kinds of firms, such as those specializing in startup businesses or developed companies looking to grow. 32
DISADVANTAGES Give up control. The venture capital firm becomes part owner and has a large investment in your success. In exchange for funding, you are giving up ownership in the company. Decision making. Because of their significant investment, these investors will want some managerial control when it comes to decision making for the company. IPO decision. Since the venture capitalist doesn’t make money until their shares are worth something, you may run the risk of an early sale to a competitor or a premature IPO offering. Proprietary information. You will be giving access to every part of your company when pitching venture capital firms. Understand going in that you are sharing your business model and secrets. VENTURE CAPITAL EXAMPLE Juno Therapeutics is developing new technologies to genetically re-engineer patients to fight cancerous tumors with their own white blood cells. The company raised $264.5 million in several rounds of financing from venture capital firms. The company, which brings together three of the world’s largest cancer centers – Fred Hutchinson Cancer Research Center, Memorial Sloan-Kettering Cancer Center and Seattle Children’s Research Institute – went public in December 2014, not long after this infusion of venture capital. 33
Page 1 and 2: CARTOONS BY CHRIS BRITT
Page 3 and 4: STARTUP WISDOM 27 Strategies for Ra
Page 5 and 6: CONTENTS Bootstrapping. ...........
Page 7 and 8: - INTRODUCTION - As an entrepreneur
Page 9 and 10: - BOOTSTRAPPING - Bootstrapping is
Page 11 and 12: - CREDIT UNIONS - While banks may b
Page 13 and 14: - REWARD CROWDFUNDING - Crowdfundin
Page 15 and 16: Momentum. The more backing and inve
Page 17 and 18: - EQUITY CROWDFUNDING - Congress pa
Page 19 and 20: DISADVANTAGES Resource intensive. A
Page 21 and 22: - PEER-TO-PEER LENDING - There are
Page 23 and 24: DISADVANTAGES The money isn’t gua
Page 25 and 26: - COMMUNITY SOURCED CAPITAL - The c
Page 27 and 28: - PREPAID SALES - With prepaid sale
Page 29 and 30: - ANGEL INVESTORS - A century ago,
Page 31 and 32: DISADVANTAGES Investor expectations
Page 33: - VENTURE CAPITAL - Venture capital
Page 37 and 38: - LOCAL INVESTMENT OPPORTUNITY - NE
Page 39 and 40: DISADVANTAGES Private transactions
Page 41 and 42: - FACTORING - If your company has r
Page 43 and 44: - HOME EQUITY - This type of loan a
Page 45 and 46: DISADVANTAGES Loss of assets. If yo
Page 47 and 48: - PARTNERSHIPS - Partnerships lever
Page 49 and 50: PARTNERSHIPS EXAMPLE Jacob and Sylv
Page 51 and 52: - SMALL BUSINESS ADMINISTRATION - L
Page 53 and 54: DISADVANTAGES Time consuming. On av
Page 55 and 56: - MICROLOANS - In the banking indus
Page 57 and 58: - RETIREMENT ACCOUNTS - If you’re
Page 59 and 60: - LIFE INSURANCE - Life Insurance c
Page 61 and 62: LIFE INSURANCE EXAMPLE Home economi
Page 63 and 64: - VENDOR FINANCING - If your compan
Page 65 and 66: - LEASING - Equipment can suck up c
Page 67 and 68: - GRANTS - A grant is money that is
Page 69 and 70: - BUSINESS PLAN COMPETITIONS - If y
Page 71 and 72: BUSINESS PLAN COMPETITION EXAMPLE E
Page 73 and 74: - “FARMER’S” MARKETS - These
Page 75 and 76: FARMER’S MARKET EXAMPLE CB’s Nu
Page 77 and 78: - LEMONADE STAND - Don’t laugh. S
Page 79 and 80: DISADVANTAGES Bad weather. One thin
Page 81 and 82: - MICROENTERPRISE DEVELOPMENT - Des
Page 83 and 84: - INDIVIDUAL DEVELOPMENT ACCOUNTS -
Page 85 and 86:
Not available everywhere. IDAs aren
Page 87 and 88:
- SHARK TANK - Okay, so we made fun
Page 89 and 90:
DISADVANTAGES Be prepared. The shar
Page 91 and 92:
- THE LOTTERY - Sure you could play
Page 93 and 94:
AUTHORS AND ARTIST Maury Forman is
Page 96:
Startup Wisdom Reviews . . . If you
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