1min read Make Room for the Investor in the Business Model
Some investments merit an equity position. This is because the company is on a fast track for growth in a highly desirable industry. There are many startups that are not. In reviewing business models, there’s a cost set aside for sales, marketing, and product development, but rarely does one see the cost of funding. In fact, most business models don’t even take funding into consideration which is one factor why so many entrepreneurs spend an inordinate amount of time raising funding. There’s simply no room for the investor in the business model.
The equity raise is giving way to the revenue-based funding investment. Investors are looking for revenue streams and attaching them to them. The implication to the entrepreneur is that they have to develop business models that take into account the cost of funding. When was the last time you saw funding as a line item in a startup business plan?
More and more the world is moving to a pay-for-performance and pay-for-use. Funding will go to entrepreneurs who perform and entrepreneurs will pay for the use of money along the way, and not just at the end of the rainbow.
I recommend you start making room for the investor in your business model as that will be the primary way you’ll be able to engage funding.
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Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group
