Money, like everything else of value, comes at a price, and knowing how and when to raise capital in a way that guarantees the future security of a business can be a tricky problem for entrepreneurs. 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.
Entrepreneurs navigating the later stages of a startup face a minefield of funding options, and not all of them are suitable for their business. I’ve seen too many brilliant and hard-working entrepreneurs end up with too little, so it’s critical to understand the different financing options available to you.
As the founder and CEO of Runway Growth Capital, I’ve had the pleasure of working with hundreds of startups (large and small) and witnessing the wide range of funding options available to founders. This list includes nearly 50 technology and healthcare companies with 18 IPOs and 14 trade sales. Through all these experiences, I’ve seen how impactful different forms of financing can be for companies at various stages of their life cycle.
Funding a late-stage startup
The disparity in what different forms of financing can mean has profound implications for founders, yet too little is known about them.
Typically, late-stage or growth-stage startups are companies that have already progressed through the initial stages of development and are now looking to scale. If you’ve reached this stage, you’ll have a proven business model and a solid foundation and will have moved beyond the point of product development and market validation. Congratulations! This is a tremendous achievement and makes your business an attractive opportunity for investors.
However, now that you’ve gotten further along in your journey, the funding models that may have been suitable for raising capital at the seed or early stages of your business may no longer 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.