Money, like everything else of value, comes at a price. For entrepreneurs, knowing how and when to raise capital is a tricky problem that comes with risks. As the founder and CEO of Runway Growth Capital, I have worked with hundreds of startups and have seen the wide range of funding options available. It is a complex world, and making the wrong move can be fatal.
There’s no one-size-fits-all solution, and the quest for money can be like walking a tightrope: one wrong step can be fatal.
During the later stages of a startup, entrepreneurs face a minefield of funding options. However, not all of them are suitable for every business. Unfortunately, I have seen too many brilliant and hard-working entrepreneurs end up with too little funding because they did not understand their options.
This list includes nearly 50 technology and healthcare companies with 18 IPOs and 14 trade sales. Through these experiences, I have witnessed how different forms of financing can impact companies at various stages of their life cycle.
Funding a late-stage startup
As your startup progresses through the initial stages of development and is ready to scale, you have reached the late-stage or growth-stage. By this point, you have a proven business model and solid foundation, and have moved beyond product development and market validation. Congratulations, this is a tremendous achievement that makes your business an attractive opportunity for investors.
However, as you continue on your journey, the funding models that worked for you in the seed or early stages of your business may not be the best option for financing additional growth. The disparity in what different forms of financing can mean has profound implications for founders, yet too little is known about them.
