Investor Dilemmas: Crucial Capital

Capital is crucial. Should a founder self-fund or get financial capital from an investor or investors? There are several key points to consider when making this huge decision. Where the investor is getting the capital, how well the founder can access the investor, whether the investor can add some sort of value to the company, and of course, the potential risks associated with taking capital from a particular investor. A founder could avoid these questions of course, if they were to self-fund. Maybe they could start smaller and grow their business, however, this is not always an option as even starting “small” in some industries is very costly. If the funding is just not there or the founder has huge costly plans then an investor or investors could be the solution.

It is highly probable that with my entrepreneurial venture into the fire safety industry that I will need to obtain financial capital from somewhere. The most appealing form of investor to me is an angel investor. The benefits of going this route appeal to me more than going the way of a venture capital as I prefer to keep control out of the investor’s hands as much as possible minus some equity offering. Angel investors can also provide founders with advice and consulting services. They may also be able to provide some human capital which would be very beneficial in this industry. These investors also may have customer lead and contacts in addition to industry knowledge and skills. These benefits alone answer to the question of added value. According to Forbes, angel investors can be found beyond being referred by someone, there are several websites and programs that help founders connect with an angel investor.

Founders should do plenty of research and weigh the benefits and risks of taking capital from an investor. They should have in mind what taking that money could potentially effect within their business. Will they have to give up control, wealth, or both?

Newlands, M. (2017, March 14). 10 Ways to Find Investors For Your Startup. Retrieved from https://www.forbes.com/sites/mnewlands/2015/07/06/10-way-to-find-investors-for-your-startup/#2c67b52f2a13

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

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I think a founder should research first about his area of business, then think about the other investors. But I believe if a founder really wants an investor than there should be a pretty much balanced between the control of the company and the investment.