RAISING CASH: Having the economic bandwidth to seize the moment when your window is open is critical
Next we asked about raising money. How and when should you approach this as a young brand?
JON SEBASTIANI, KRAVE: The hardest part is when to raise your first amount of capital. Of course, every entrepreneur should bootstrap for as long as he or she can, but trends today move in and out so fast and the competition is so fierce, and there are all kinds of second adopters ready to pounce on the next trend that raising capital early and having the economic bandwidth to seize the moment when your window is open is critical.
Private equity investors are reaching downstream earlier and earlier in a company’s life cycle. Five years ago if you weren’t generating $20m in revenue, no one was going to take your phone call. Today, if you are in that $2m- $5m window you have a variety of options to raise capital and I would encourage folks to do that, have the courage to spend that money.
DAVID CZINN, Fruigees: We’ve tried to bootstrap as much as possible, but we’re probably going to have to raise more money soon to fund our rapid growth. You never know when a large retailer is going to come to you and want to put you in a large amount of stores and you’re going need that working capital ready along with the capital for marketing, demos, coupons – all that stuff is very expensive.
It’s important to have a long term plan – we see so many entrepreneurs that don’t have a strong understanding of their finances.