Chasing customers not investors; raising from VCs vs alternative funding routes

For founders seeking the best alternatives to VC

Hello folks! I’m Esme, the founder of Considered Capital. This is the 16th issue of The Considered Club - a bi-weekly newsletter for founders seeking the best alternatives to VC. The most clicked post from last week’s issue was the Royal London Grant. If you’re fundraising in the next 6-12 months, consider joining our Funding School to get unrestricted access to all our funding resources and help.

Should you raise from VCs?

I’ve coached 300+ founders all exploring different funding routes. But if you read TechCrunch and other startup media you would think there was only one way to fund your business. Raise Venture Capital, and lot of it. Glamorising VC in this way has created a generation of founders blindly trying to raise from VCs without understanding what other funding options exist.

Venture capital is typically for businesses that can grow and scale fast and where this rapid scale is crucial for success. The vast majority of businesses therefore are not venture backable but we’ve still got founders chasing VC money instead of focusing on building profitable, sustainable businesses.

Taking money from VCs might seem like the best path to success but it won’t help you if your business cannot grow and scale very fast. And if you take that money, your investors business model becomes yours.

Instead, when you look at raising money consider what other funding alternatives exist first. Think through the implications of each of your choices and what might work for the stage you are at. This could look like:

• not raising money right now

• taking in some form of debt or debt-like capital

• raising from angels

• raising from the crowd

• taking in grants

If you take VC money you will be pushed to scale fast and ultimately exit the business at some stage so that VCs can return capital to their investors. But if you already have a business with solid traction, good revenue and repeat customers, a cheaper and faster option could be a debt- like instrument such as Revenue Based Funding.

Don’t obsess over competitors raising money and instead take the time to develop, evolve, and grow into an enduring, profitable business that will give you the power to decide what funding, or combination of funding options you want to pursue.

If you’ve enjoyed todays’ post I’d recommend reading this post by Elizabeth Yin where she explores how to evaluate your funding options.

Subscribe for more posts like this where we dive deep into all the best alternatives to VC.

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MONEY

Grants & Competitions

The Awesome Foundation | awards $1000 grants every month in 13 countries

Farming Futures R&D Fund | apply for a share of up to £12.5 million for projects working to reduce farm emissions

The Giant Prize | receive 5m DKK plus additional support for Danish seed-stage climate startups

Accelerators

Greentech Europe | 12 week programme with expert advice, network support and an online self paced investment readiness curriculum

Headstream | receive a $40,000 non-dilutive stipend to support participation in a five-month virtual accelerator program

Blue BioValue | tailor made programme dedicated to bringing ocean-based, sustainable solutions to a new, blue bioeconomy

Gov Start | a free six month programme to help technology startups in the UK and Germany transform the public sector

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Community Spotlight

Meet some of our wonderful Funding School graduates!

Rebekah Clark is the founder of Happy Marlo and is on a mission to empower children emotionally, one breath, tap, and sound bath at a time. Rebekah is a brilliant founder, who graduated last year and is now committed to building for the long term.

‘We hear lots about unicorns but I subscribe to the idea of building sustainable, slower growth but longer term successful business known as a Zebra.’

Listen in her own words.

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Thanks for reading as always! See you after the Easter holidays!

Esme

Founder, Considered Capital

Want more? Connect on LinkedIn.

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