Tag Archives: Verge Fund

Identify Specialty Before Looking for Investors

Posted on by
Holly Bradshaw Eakes

Holly Bradshaw Eakes, Principal, The Holly Company Business Consultants

The greatest challenge an entrepreneur may face is finding capital to launch a business, especially when the business idea is related to high-cost startup such as that found in the technology sector. For an entrepreneur with realistic plans for rapid business growth and the potential to scale to larger markets, trading partial ownership for capital may be the only option.

Venture capitalists currently fund about one out of every thousand startups. With the odds stacked against obtaining equity capital, an entrepreneur must identify the investors most likely to invest in his business. Determining which source to pursue depends largely on industry focus, business stage and the amount of money needed. A handful of equity investors have offices in New Mexico and actively pursue investments in the state.

Continue reading →

Consider Strategy Before Seeking Equity

Posted on by
Tom Stephenson

Tom Stephenson, Managing General Partner, Verge Fund

Once an entrepreneur decides that equity capital is the best way to finance his business, the next questions are how much and when should it be raised? One approach is to determine from the business plan how much cash shortfall is projected early on and raise that amount. But raising money in multiple rounds is often a better choice, allowing the entrepreneur to retain a greater portion of ownership.

If a business plan calls for $3 million in total financing to achieve profitability in three years, a startup raising that money all at once will give up a large portion of the company — perhaps as much as 75 percent. New companies are high risk; if investors put in less at the beginning, they will be willing to bet more money on a promising venture later, taking fewer subsequent shares of the business in the process. Continue reading →