Cover Your Equity
One of the toughest trade-offs for any young com¬pany is to balance the need for startup and growth capital with preservation of equity. Molding on to as much as you can for as long as you can is generally good advice for entrepreneurs. As was evident in Ex¬hibit 13.6, the earlier the capital enters, regardless of the source, the more costly it is. Creative bootstrap¬ping strategies can be great preservers of equity, as long as such parsimony does not slow the venture's progress so much that the opportunity weakens or disappears.
Three central issues should be considered when beginning to think about obtaining risk capital:
1. Does the venture need outside equity capital?
2. Do the founders want outside equity capital? and