I am at a hybrid stage of my start up. I have seeded everything personally to this point. We have a MVP, and we are within a week or 2 of going live. I have already secured several market entry points. I was offered 7 figures for equity in company last week and I have a follow up with them soon. While it sounds great I am having my reservations, and thinking of taking this to market without their money. I am not sure if I need them. The software is made, I have entry into the market, I have users ready in place. Yes with their money I will be able to go regionally or nationally very quickly, however I am not sure if that is the best option. Should I follow my gut, or am I stupid for not taking the funding and accelerating the company faster?
If you are having doubts about taking the money then don't do it. The reality is that as an investor, a day will come when you are succeeding and there is room for a lot of growth - you are there now. If you think you don't need them, either raise the amount or lower their stake to were it is as cheap of funding to you as possible.
If your recent sales are enough to generate a longer burn term while you go out and get more sales... then definitely don't take their offer.
There is nothing wrong with declining investment requests. I'm sure this won't be the last; either from your own pursuit or their own interest.
Best of Luck,
Humberto Valle
#thevirtualcoach
Answered 9 years ago
As an entrepreneur who has traversed similar situations I understand your feelings around whether one should take funding or delay until later.
The good part as I understand you are at a point where the startup is ready to launch an MVP, identified market entry segments. But then again, it is too early to predict how the market will receive your MVP/Product, how difficult it would be to get customers, convert and grow.
Whatever your product/service is, it seems to have garnered interest enough to get a decent seed that can prove valuable to stay in business & especially grow.
If you are sure to begin making revenue that will keep the company afloat or have enough of your own funds to continue bootstrapping, then go for it. If that isn't the case it might be worthwhile exploring the investment for strategic reasons too besides growth. Investors that are vested, will also help make introductions, forge partnerships and promote your company. You will also be able to attract good talent once you have backing from investors.
Good luck with the MVP and as you explore these critical decisions.
cheers
Answered 9 years ago
Obviously the implied valuation comes into play here. The fact that you are hesitating says to me that the valuation doesn't blow you away. If you are able to go to market and establish revenue traction (or rapid growth of some other valuable metric --- I'm personally a revenue zealot) then you will likely improve your valuation later and can raise by attracting investors to your actual success instead of your possible success. Of course, hindsight will be 20/20 in this situation and if you end up not having an easy go of it you'll be tempted to question yourself. This is all part of the process and we have all gone through it. No matter what you do you'll likely be tempted to wonder about the other option. Personally, I think you want to limit the extent to which you are diluting your position in the company. If you don't need the money I think you should stick to your guns. You can bootstrap and live off your operating revenue.
Naturally this makes a ton of assumptions based only on your description. Like all experts here I'd be glad to do a call with you to go deeper.
Answered 9 years ago
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