Thursday, July 1, 2021

Reflections on non-dilutive investment

I have many friends who build companies. Most of them need money. I haven't entirely mapped out the spectrum, but there are clearly multiple combinations of entrepreneur type and investment type that define a winning or losing business model. 

For example, I know people who grew up wealthy, have innate access to informal and professional investors, and have direct access to good guidance. A holiday meal might include sage advice from a seasoned business executive or an offer to make introductions. 

I never had this. Rather, for many years I lived on the other side, with no access to information or individuals beyond whatever I might find and create myself. I read dozens of books on the topic. I attempted to create companies with no input beyond whatever I found in those books. And through trial and error, I built a particular understanding about how you build a vision, then translate that vision into a physical business with a great team that makes great things.  I frequently meet with and try to help other aspiring entrepreneurs who are also starting from zero.

Along the way I've met many people somewhere in the middle. Frequently these individuals have a strong technical skill. They get really good at creating software or designing products, and through hard work, eventually get access to opportunities. Maybe their product line get's deep investment from the parent company then spun out. Maybe they meet a combination of other investors and engineers and just happen to stumble into a new position. This has happened to me too, where I had network of talent and a body of IP, when someone else had the capital and a need.

More recently, though, I've begun to think about building investment capital without giving too much away. Kickstarter, for example, has helped many people launch a business. IndieGoGo has done the same. Now with the rise of platforms such as Shopify and tools like Hubspot, I wonder to what extent do those platforms remain necessary? Are there other ways to assemble non-dilutive capital to launch a company? I suspect there are, but what is offered in exchange? What is the threshold of this model? And how exactly would you do it? I'm not sure, but no doubt, the answers are out there.