Startups are struggling to get funding, even unicorns are feeling the pinch with limited capital and no exit strategy.
Equity rounds aren’t the only way for a company to raise money; alternative and other non-dilutive financing options exist. When focused on growth and with clear ROI from capital deployment, debt may be the best fit.
Finding the right source of capital for your business is much more than securing financing — it’s about finding the right partner that fits with both your vision and roadmap.
1. Think about the size and shape of your space.
2. Consider the amount of light that is available in the area you want to decorate.
3. Determine what kind of furniture pieces would work best for your space, taking into account
Does this match my needs?
Before asking for financing, create a business plan that outlines how and why you’ll use it. Consider whether your needs are for capital to fund growth or daily operations – this should influence the amount of money sought and type of funding partner chosen.
Develop a strategy that aligns with your financial structure and get started.
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Fit your projected utilization of the loan to its repayment terms.
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Matching operational financing requirements with expansion funding needs.
It’s understandable to hope for a one-and-done financing process that sets the next round far down the line, but that may be costlier than you realize in the long run.
Hope for a one-time financing process, but remember it could cost more in the long term than expected.
Ensure your repayment term is sufficiently long to deploy the capital and reap returns; otherwise, you could be paying back the loan with only principal.
Securing funding to enter a new market? Plan ahead: expanding your sales team is essential for success, but the ramp up period can take months. Secure the cash flow required to repay the loan beforehand.
If you don’t have enough time between ramping up and repaying, you’ll be paying back the loan before your new salesperson can generate revenue that shows a return on your investment.
Keep in mind that financing operations instead of growth may limit the amount you can deploy for working capital.
You secured $200K in financing, but the payments of your MCA loan and a minimum cash covenant of $100K limit you to deploying only half.
With $100,000 of your financing in a cash account, only half the loan is available to drive operations. This means you won’t meet your growth target and will pay double what was planned for in terms of cost of capital.
Is this the right amount for me at this time?
Weigh the amount of capital necessary to accomplish your short-term goals against what you can realistically obtain. If the funding won’t make a significant impact, it may not be worth pursuing.
