4 tips to find the funding that fits your business • TechCrunch

are the facts Roshan: Startups are increasingly finding it difficult to get funding, and even unicorns seem to be around the corner, and many lack both funding and a clear exit.

But equity rounds aren’t the only way for a company to raise money—alternatives and other non-dilutive financing options are often overlooked. When you are focused on growth and can see a clear return on the capital you have deployed, debt settlement may be the right solution.

Not all capital providers are created equal, so seeking financing is not just about that making safety Capital. It’s important to find the right funding source that fits both your business and your roadmap.

Here are four things to consider:

Does this suit my needs?

It’s easy to take for granted, but financing starts with a business plan. Don’t look for a budget until you have a clear plan for how to use it. For example, do you need capital to finance growth or for your day-to-day operations? The answer should affect not only the amount of capital you seek, but also the type of financing partner you seek.

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Start with a specific plan and make sure it aligns with your financing structure:

  • Match the repayment terms to your expected use of the debt.
  • Balance working capital needs with growth capital needs.

It’s understandable to hope for a one-time funding process to get the next round off the ground, but it may be more expensive in the long run than you think.

Your repayment term should be long enough for you to deploy capital And See returns. If not, you may end up paying off the loan principal.

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For example, say you guarantee funding to enter a new market. You plan to expand your sales team to support this move and develop the cash flow necessary to repay the loan. The problem is that new hires take months to ramp up.

If there is not enough delta between the start of the increase and the start of the repayment, you will pay back the loan before your new seller can earn money, allowing you to see a return on investment on the amount you borrowed.

Another thing to keep in mind: If you’re financing operations rather than growth, the working capital required may limit how much you can leverage.

Let’s say you fund your own advertising and plan to spend $200,000 over the next four months. But the MCA loan payments you’ve secured to finance those expenses go into your income, and the loan is limited to a $100,000 minimum cash commitment. Result? You have funded $200,000 but can only use half of it.

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With $100,000 of your funds held in a checking account, only half of the loan will be used to drive operations, which means you will likely fall short of your growth goal. Worse, since you can only use half of the loan, your cost of capital is effectively double what you had planned for.

Is this amount right for me at this time?

The second consideration is balancing the amount of capital you need to meet your short-term goals against what you can reasonably expect to secure. If the amount of funding you can get isn’t enough to move the needle, it may not be worth the effort.

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