Insights

The founder's dilemma - start-up finance

It's been a hectic couple of months with the impending launch of GrowthFunders, our own crowdfunding platform and I have also been working with a start up team who have just completed the 12 week Searchcamp accelerator programme.  

Now, accelerator programmes and equity crowdfunding platforms are made for each other, I'll expand on this view in a later blog post. Back to the story, I met the team members during week 3 of the programme and could feel their desire to succeed.

I knew then that it was going to be an interesting few weeks watching their plan unfold and for me to advise and act as a sounding board.

What is an accelerator programme?

For those of you who are not familiar with an "accelerator programme", it's where you start off with a business idea and you develop it into a fully functioning product or service at a rapid pace. From idea to operations in 12 weeks.  There are tools and techniques to work through in order to progress and you hear references to phrases such as:

You can visualise the energy and intensity that gets expended over the 12 week period. Following this, at the end of the programme, the teams present their plans, showcase their operations and pitch for investment - you can imagine the pressure.  

I know what they are going through having completed the Chicago Booth/Oxford University Global Launch Pad London 2012 programme and that only lasted 5 days!

Valuation and funding: it's a fine balance

The founders dilemma is that they need start-up funding to scale the business and the timing to raise equity finance is a fine balance. The team may be under pressure but needs:

  • the right finance at
  • the right price and at
  • the right time

Do you bootstrap a little longer and grow the membership base and then secure the next round of funding at a better valuation or go now when the valuation is lower?  

The founders can see the potential and will most likely place a higher valuation on the business which might deter an investor, business angel or VC from making an offer...it's a fine balance.  

But if they don't get the funding, they'll never have the chance to grow the business and statistics prove that most do not get that next injection of funding to grow and thus, unfortunately fail.

Have a plan A, B and C - just in case!

My advice is to look at the "bigger picture" and not to get too hung up on valuation at this stage, try to get the right investor/s (can you connect with them?) and get the business growing. 

Would you like to learn more about entrepreneurship and crowdfunding? Download our free entrepreneurs guide to equity crowdfunding ebook below.

Start to raise investment for your company today

Driving Growth.
Creating Value.
Delivering Impact.

Backed by

Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.