For many young entrepreneurs, launching a startup is pretty straightforward. Make a snazzy business plan, secure as much funding as you can from investors and hit the ground running. However, acquiring startup capital is no easy task and if you do, you and your business are often at the mercy of your investors and advisory boards. More often than not, these entrepreneurs find themselves running businesses that while successful and profitable, have strayed far from their original visions.
But who said that’s the only way to go? It’s certainly the quicker way, you’ll have funds to make all the appropriate moves early in your business’ inception, but the more funding your receive, the more control you lose. If you go in without much investor funding, it will definitely take you longer to gain some ground, but it’s the best way to build and run your business according to your vision and goals.
Cannabis is a relatively new industry, with most dominant players being only a few years old. So while there are plenty of investors willing to throw their hats into the cannabis industry, few have the experience and insight to help a cannabis startup navigate the industry. Ultimately, deciding whether or not to seek investor funding is a major decision that will have far reaching consequences for your business. So before you do, consider this:
Are you raising capital just to stay afloat or to expand? Similar to how you shouldn’t take a loan to fund a wedding or an expensive car, money from investors should ideally be used to expand and create more opportunities for earning. If you are using funds from investors to stay afloat, you are opening yourself up to major headaches in the near future. Additionally, you should consider how much control you want over the business.
Once you receive investor funding, the business isn’t solely yours. New ideas and opportunities will have to be discussed and agreed upon by all owners before any action. If you have too many investors, it will lead to conflicts over which creative direction to take, and you may find yourself at the helm of a company you don’t recognize. If you don’t go for investor funding, you will have complete control over the business, allowing you to make creative choices free from investor pressure.
These issues connected the implications of investor funding may not be so new to established companies like VIVO Cannabis Inc. (TSX.V: VIVO) (OTCQX: VVCIF) and startups would be well advised to learn from those who have been there before them.
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