Why should I take venture funding if my startup is already making money?

Ben Narasin / November, 2017

Description

Ben Narasin, Partner at Canvas Ventures explains in which situations you would want to raise money even though you’re cash flow positive.

Video transcript:

Why should I take venture funding if my startup is already making money?

It’s not uncommon to have startups that are doing well where they are making money. They might be either having positive cash flow or just high revenue growth or even be profitable. Each of those is a slightly different thing. The reason one would take venture at that point is when that capital allows you to accelerate the business in a way that you wouldn’t otherwise be able to do.

As an example, the classic version of a land grab. You’re getting into a market that is you’re succeeding, others are starting to be interested in it and starting to do it as well, and you want to take over more of that market more rapidly. You wouldn’t want to pioneer a market and then end up coming in second or third place because somebody else came in after you, better funded and took over.

Other times it’s because it just enables you to do things you can’t do without the capital. That could be hiring, which also feeds growth. It could be developing not just the sales team, that’s hiring, but the support infrastructure. It could be making sure things are as scalable as you want. In essence, that money just allows you to go faster or grow better.

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  • Ben Narasin
  • November, 2017
  • 1:09
  • Funding

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