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Tag: Raising Money

  • Here’s What 3 VC Heavyweights Suggest Founders Do to Get Funded Now

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    Capturing the attention of investors, particularly in the venture capital community, may be harder than ever. Closing a funding round is even more challenging. So how can founders raise VC funding in the current environment? Reid Hoffman, Stacy Brown-Philpot, and Aileen Lee have a few suggestions.

    Hoffman is the founder of LinkedIn and chairman of venture capital firm Village Global. Philpot is the former CEO of TaskRabbit and founder of Cherryrock Capital. And Lee is founder of seed investment firm Cowboy Ventures — and the person who coined the term “unicorn” for startups. The trio gathered recently at the 2025 Masters of Scale Summit to discuss the current funding environment and how companies can stand out when they’re trying to fundraise. Here are their tips.

    Demonstrate a Plan to Scale

    “Series A, the bar has moved,” said Brown-Philpot. “The honest truth is you showing up with 6,000 customers is not enough. You have to show me the potential of how do I get to 60,000 and 600,000, and on what pace can you do that? Before, there was always the assumption that the next round would take care of that. That’s gone now. You have to demonstrate that sooner, a lot sooner.”

    Have a Product Ready

    For new startups, Lee added, if you don’t have a product ready to show, don’t bother knocking on VC investor doors.

    “A lot of times people needed money at seed to build the product,” she said. “Now there are so many tools to help you build the product, if you come and you haven’t actually tried to build something yourself and you haven’t actually … shown your ingenuity and your hustle to do more with less, you’re already taking yourself off the field.”

    Be Realistic

    Founders who are in talks with investors also need to take a more realistic approach to funding, the investors said. The current environment is not one in which overreaching earns rewards. And how you negotiate with these early investors is often viewed as an indicator of your company’s long-term success.

    Know where you are in your startup’s evolution. And don’t go into negotiations with hard demands.

    “Sometimes … requests, even if you’re a hot deal, are negative signals,” said Hoffman. “Your lack of realism here implies you’re not going to be successful.”

    Learn to Recognize a No

    Hoffman adds that founders should learn to recognize a no, because sometimes they’re not as clear as you think, with statements from VCs like “call me back on the next round.”

    “If you’re not hearing a yes, it’s a no,” he said.

    Don’t Raise Too Much Funding

    Raising too much money can actually be a bad thing, says Lee. Oversized early rounds make a business less capital efficient — and that can make it harder to raise the next round of VC funding.

    “I think we have a lot of Icarus companies right now,” she said. “They’re flying pretty close to the sun.”

    Yes, You Need to Show How You’re Using AI

    VCs want to see founders who know how to use AI tools to help them grow. It’s a way for startups to fill labor gaps in essential roles that aren’t glamorous. (And if you can upskill your workforce to make them qualified to direct that AI, all the better.)

    “AI is being pulled into actually a lot of industries that are not considered sexy industries because they can’t find the talent,” said Lee.

    While all of this might be intimidating, the panel agreed that this is the right time to start a company. It’s an era of disruption, which is when entrepreneurs have an advantage and an opportunity to get ahead of older businesses.

    “When we’re in these times of disruption, which obviously we are now, that means that the old power structures are no longer as firm or as strong,” said Hoffman. “The rules are shifting. So that’s when the opportunities are there, and that’s to lean in.”

    The final deadline for the 2026 Inc. Regionals Awards is Friday, December 12, at 11:59 p.m. PT. Apply now.

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    Chris Morris

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  • Why Mark Cuban Says You Shouldn’t Take Money from a Shark Like Him

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    Over the course of 15 seasons, the Sharks on ABC’s Shark Tank have invested more than $200 million in the companies that have pitched them. But Mark Cuban, who sat on that investor panel almost every season before leaving the show earlier this year, says the smartest founders focus on sweat equity, rather than hunting for investors.

    Speaking at the Clover x Shark Tank Summit in Las Vegas Monday, Cuban listed the strengths of starting a business without any sort of external capital.

    “The only reason I’m a billionaire is because I started off bootstrapping,” he told Inc.’s editor-in-chief Mike Hofman. “So many people get caught up [thinking] ‘I have to raise money.’ No, you have to get customers. And if you’re able to get customers, you’re able to grow your business. And if you’re able to grow your business, even if it’s slower, then you’re able to own your business.”

    Few people can truly say they own their own business, Mark Cuban said. There’s a romanticism that goes with attracting outside investors—but that’s not always the best direction for the company.

    “I think we have the Silicon Valley ethos too much,” he said. “We’re got to raise money first.” A smarter move, he says, is to build the business first.

    By focusing on that, you avoid putting yourself in the position of having to decide between the lesser of several potentially bad funding offers that might require you to give up a significant ownership stake. The more you’re able to build the company organically, the better your position will be when the time to raise money finally arrives.

    “If you come on Shark Tank and you have $100,000 in sales, Kevin’s going to make you an offer that says, ‘I want 75 percent of the company and a 97 percent royalty.’ And Lori’s going to jump in and say, ‘Oh, that’s crazy, I’ll take 60 percent of your company, but only a 2 percent royalty.’ You don’t want to be in that position … The longer you can hold out before you raise money, the richer you are going to be,” said Cuban.

    When the time does come to raise money, he said, there’s nothing wrong with avoiding venture capital or even Shark Tank Sharks if you can get it in other ways, whether that’s crowdfunding, grants, or some other nontraditional means.

    Any chance you have to get nondilutive funding is one you should take, he said. However, as you accept that money, think about how you’re going to pay those people back.

    “Whatever source of funding you get—investors, equity, crowdfunding, whatever—remember, it is an obligation,” said Cuban. “Raising money is not an accomplishment, it’s an obligation.”

    That’s a lesson Mark Cuban learned personally right before the turn of the century.

    He and his partner Todd Wagner started a company called Broadcast.com, which he says was the first streaming company. It IPO’d in 1998 and immediately set a record for first-day growth.

    The stock opened at $18 per share and spiked within seconds to $72. It closed on that first day at $63.75.

    “I was freaked out in two ways,” he said. “One: Shoot, I’m rich! Two: Somebody paid $72 for our stock and now it’s $63. We need to get to work and make sure she makes money.”

    The way to do that, he says, is to focus not on sales, but cashflow. The topline is the least important number. Focus on things like margins and keeping costs low.

    “The #1 trap that startup entrepreneurs fall into: They’ve just got to get to $1 million in sales,” he said. “That’s the stupidest number in the history of stupid numbers. Tell me you want to get to $1 million in cash and you started with a lot less, and I’m like you’re my kind of entrepreneur.”

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    Chris Morris

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  • Free Webinar | May 18: 7 Ways to Raise Money to Launch Your Business | Entrepreneur

    Free Webinar | May 18: 7 Ways to Raise Money to Launch Your Business | Entrepreneur

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    Crowdfunding, equity financing, grants, or debt financing? Which do you choose to raise money for your business?

    Join our webinar, Bianca B. King, Entrepreneur & Marketing Strategist, teaches you 7 methods that you can use to raise money to launch their companies, including the advantages and disadvantages of each type of funding.

    7 Financing Options

    Equity Financing:

    Debt Financing:

    • Small Business Loans

    • Peer-to-Peer Lending

    Alternative Financing:

    Register now to secure your seat!

    About the Speaker:

    Bianca B. King is an entrepreneur and professional matchmaker on a mission to help women accelerate their success. As the CEO & Founder of the exclusive collective Pretty Damn Ambitious™, Bianca matches high-acheiving women with premier vetted and verified coaches so they can finally amplify their ambitions and achieve the personal growth and professional success they desire. Bianca is also the President and Creative Director of Seven5 Seven3 Marketing Group, a digital marketing agency that has served hundreds of entrepreneurs since 2008.

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    Entrepreneur Staff

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  • How to Choose the Right Debt Provider for Your Business

    How to Choose the Right Debt Provider for Your Business

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    Opinions expressed by Entrepreneur contributors are their own.

    When founders think of raising debt, they often imagine going to a bank. In my three years advising companies on debt financing options, I frequently remind founders that banks are certainly an option — but not the only one. Founders exploring debt should familiarize themselves with all of the options in the market, from traditional asset-based loans to more innovative venture debt and revenue-based financing solutions.

    These various lenders don’t just have distinctive structures and terms for their capital, they also each have a particular set of criteria to qualify for a loan. By acquainting yourself with the entire market upfront, you can focus on the lenders that suit your business the best, maximize the number of term sheets you receive and spend less time chasing dead ends.

    Related: Why Founders Should Embrace Debt Alongside Equity

    Banks

    Banks themselves come in various shapes and sizes. When it comes to business loans, you have your regional community banks, large multinational banks and specialized venture debt banks. Sometimes one large bank may roll up all of these divisions under one roof, providing a range of options from revolving lines of credit, term loans, warehouse lines and more.

    Oftentimes these banks have access to the cheapest available capital and therefore can offer you the lowest interest rate. But bear in mind that while this is usually the cheapest option, banks also have a high bar to qualify for their capital. They may include covenants or other performance requirements to ensure the business continues to meet their benchmarks throughout the duration of the loan.

    For many small businesses, taking a loan from a local community bank can be a simple low-cost option. But be aware that they may have minimum asset or cash flow requirements to qualify or even ask for a personal guarantee.

    Venture debt banks, on the other hand, specialize in VC-backed cash-burning businesses that show huge growth potential. Oftentimes, getting a loan from one of these banks requires several rounds of equity from brand-name venture capital funds, providing up to 25-35% of your most recent equity raise amount.

    Eventually, once your business is generating several millions of dollars in cash flow, an even wider spectrum of bank options opens up including some of the largest multinational banks.

    Venture debt funds

    More traditional venture debt offerings are very similar to those one would find at a bank. A three- to four-term loan structure is standard, though generally, rates are more expensive than banks with the flipside of a greater quantum of capital.

    Similarly, venture debt funds look for VC-backed companies or at least some form of institutional backing, rapid growth and high LTV/CAC. More bespoke options do exist as well, oftentimes branded as growth debt rather than venture debt, since they can provide capital to angel-backed or even fully bootstrapped businesses.

    Both of these options typically come at a cost of capital in the teens with interest-only periods and can be quite creative in structure. Founders should be aware that for both venture debt banks and funds, loan packages often come with warrants — effectively an option to purchase shares of the company in the future at a fixed price. Meaning, a small amount of dilution should be expected, though some lenders in this space pride themselves on being fully non-dilutive.

    Related: When is the Best Time to Raise Venture Debt – Here’s the Key

    Revenue-based financing (RBF)

    An increasingly popular non-dilutive financing solution for early-stage companies is technically not debt. Revenue-based financing functions more akin to a cash advance. Capital injections are repaid as a percentage of monthly revenues, as opposed to a fixed principal repayment schedule.

    If you’re looking for the fastest path to receiving capital, revenue-based financing is the solution. Many firms that use API integrations to your accounting and commerce data are able to aggregate that data through their underwriting systems and offer terms in 24-48 hours.

    While this capital tends to be on the more expensive side, speed and flexibility make up for it. Unlike other lenders, RBF facilities usually don’t require collateral or impose restrictive covenants that may limit your ability to grow.

    In terms of qualifying for an RBF, monthly revenue minimums can be as low as $10K with at least six months of operating history. The crucial requirement is to show evidence of recurring revenue. This usually means SaaS revenue with low churn, but can also be applied to most subscription-style businesses or even transactional ecommerce businesses that show a strong history of sticky customers.

    Non-bank cash flow lending

    Traditional private credit funds lend to established companies that have several years of traction under their belts. They generally are EBITDA or cash flow positive, some starting at as low as $3M annual EBITDA while others require $10M+. Businesses can be founder or sponsor-owned, and range from fast-growing later-stage tech companies to more traditional businesses and even turnaround financing for distressed situations.

    Use of capital covers a huge spectrum from funding leveraged buyouts or asset purchases to growth capital. Funding structures run the gamut, from senior secured to mezzanine debt (below senior lenders but above equity-holders) or even preferred equity in the capital stack. Rates are typically higher than banks from single digits to mid-teens, with three- to five-year terms. Closing fees and exit fees are common, as are covenants, and loan sizes are derived either holistically on the business fundamentals or as a function of cash flow.

    Non-bank asset-based lending (ABL)

    An ABL facility allows borrowers to use an asset as collateral for a line of credit or term loan. The asset can be as liquid as accounts receivable and inventory or as illiquid as real estate or a specific piece of equipment. Some of these loans can be secured with just one asset. For instance, a company needs a new warehouse and gets ABL financing for that, or it could be a combination like A/R and inventory.

    Asset-based lenders will often focus on a specific industry and require a minimum amount of whichever asset(s) they specialize in (accounts receivable, inventory, capital equipment, real estate or even intellectual property). Those assets can be held on the books as collateral or in some cases purchased outright at a discount (receivables factoring, for example).

    Unlike the other debt facilities covered, ABLs normally carve out a specific asset rather than taking a security interest on the entire company. This lowers the risk for borrowers and provides some flexibility to stack on additional debt, provided they can cover it. The advance rate (the amount of cash you get up-front) is usually between 50% and 90% of the value of the pledged assets.

    Related: The Old-School Solution to Cash Flow Problems Hiding in Your Receivables

    Questions to ask yourself

    As you consider which debt provider to approach, you need to think about the characteristics of the funding vehicle that will unlock the long-term potential of your business — while covering your short-term cash flow needs. Don’t forget that each lender has its own unique criteria. Fundraising without a clear plan of action can become a huge time suck for founders, pulling them away from operating the business. By strategizing upfront and learning the market, you can ensure that you only spend valuable time with lenders that can provide a real offer.

    Once the term sheets are in hand, you can now leverage them and pick the terms that are best for you. I’ll discuss that in my next article.

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    Tim Makhauri

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