Questions

I need funding for a working business to aid growth. It is already profitable. What is the best way to gain investment or a silent partner VC?

3answers

It really depends on the nature of your business. Revenue can actually be a deterrent to early stage venture investors if the revenue isn't growing at a fast-enough pace. So your rate of growth will either open or close opportunities to you.

If your business is not yet growing fast enough and your revenue is predictable, your profit margin and personal credit rating is good enough, I'd suggest looking into debt options to increase the rate of growth and top-line.

It's hard to tell based on the lack of detail in your question whether selling equity to a group of individuals or a VC makes sense but a good VC is never ever a silent partner.

If you book a call, I'm happy to dive into your business and let you know what I think your best options are. I help a lot of people on Clarity with fundraising advice.


Answered 10 years ago

The only thing a VC (or any other investor, for that matter) cares about is whether they can make their required return.

The way they come to this conclusion depends on 2 things. First the current valuation of the business. And the future valuation at their time of exit.

Current valuation seem simple in theory but often times is the biggest area of contention. This is where being post revenue or post profit can be a problem because often times this creates an enterprise value in the mind of the entrepreneur that is untenable for future investment.

Future valuation is a little more tricky. You have to convince the investor that the company is viable and that it can scale to the point where they can make their return.

I would be happy to discuss this further.


Answered 10 years ago

I agree with Tom.


Answered 10 years ago

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