Thursday, June 20, 2013

Use Your Own Funds or Others?

One question that many technology-based start-ups and more traditional new small businesses face is where to get the money to start and fund the business for its first year. High growth businesses like technology and biotech have more funding options because rapid growth appeals to investors. Traditional businesses with slower growth trajectories or whose owners will treat them as lifestyle businesses do not generally appeal to investors but may appeal to a smaller, closer group of those who know the owner.

From the NYT: a company founder

If your goal is to build the most profitable business you can, you may not want to raise capital from outside investors. If your goal is to dominate a market or niche or expand internationally, external investors can provide the necessary capital and even the expertise to help you achieve your goals for your company. (Just make sure that, as you raise capital, you keep percentages and structure in mind or your company could end up not being yours anymore!)

A good article on the subject appeared in the New York Times small business section. To hear from myriad viewpoints, check out the article: Self-Finance or Raise Money? A Quandary for Start-ups.

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