It’s important for hi tech startups to be really clear about their strategic objectives when raising capital. Money shouldn’t be the only goal.
All too often, entrepreneurs are overly concerned about trying to close the best deal where they can get the most cash and give away as little equity as possible.
Instead, they should be looking for investors and partners who can provide more than just financial resources to actually help the business succeed.
Paul Graham sums it up perfectly in ‘How to Start a Startup‘:
Financially, a startup is like a pass/fail course. The way to get rich from a startup is to maximize the company’s chances of succeeding, not to maximize the amount of stock you retain. So if you can trade stock for something that improves your odds, it’s probably a smart move.
Getting a suitable investor is one of the most significant decisions for any startup, especially in the initial stages. It could literally make or break the company, so take your time to do your research, talk to as many potential investors as possible and think strategically when choosing which offer to accept.