When you're just starting out in your own business, the venture-funding scene can be quite confusing. So many sources of capital -- but who are they, and when should you hit them up?
Eric Partaker, a CEO, coach and business writer, has produced a handy chart to help you understand the roles and functions of different funding partners.
This is pretty much commodity information, but Eric has summarized it very well. And he's helpfully added "red flags" to watch for at each level.
Keep in mind that only 1% of startups will ever qualify for professional funding. And that every percent you give away early on could cost you BIG in the event of a successful exit.
Angels can be amazing first funding partners -- they're usually experienced entrepreneurs with lots of useful advice. But the longer you can grow your business with your own team and your own funds before you call for help, the less equity you will generally have to give up.
One other caveat: Some entrepreneurs go looking for venture capital too soon -- when they clearly sh0uld be starting with risk-taking angels. The VCs will judge you for that, and remember. So make sure you understand this chart before you start dialing for dollars.
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