Innovating Structure: How Funding Your Business Can Become the First Nail in its Coffin

Originally published on June 20, 2017.
For most entrepreneurs and small business leaders, innovation and disruptive thinking is built into the DNA of their new company’s products or services. Especially in the tech industry, the ability to innovate is an absolute necessity: if you want to be successful in such a highly competitive industry, you have to bring something new to the table.
So why do so few entrepreneurs approach the challenge of funding their new business with the intent to innovate?
For most entrepreneurs, methodologies of building a company are determined exclusively by a set pattern of behavior that’s existed for years. Companies need money to function, so you start off with a friends and family round or a small loan to get enough traction for VCs to be interested in an Angel round. Give up some equity and get enough traction for an A-round. Lather, rinse, repeat.
For some companies, the traditional investment model works fine. For others, it doesn’t: in fact, here at LaunchByte, our multi-exit leadership team has seen dozens of promising startups fail thanks to problems that got their start as a result of this fundraising strategy. Problems like founders’ visions competing with partners who own equity and difficulties achieving scale while maintaining quality can prove to be unseen icebergs that sink even the most impressive early businesses.
The fact is, just because startups need resources doesn’t mean they need to exchange equity for capital.
That understanding is the backbone of our reverse angel model for helping early stage companies: we provide the developers, designers, legal team, or any other resources companies need to achieve their milestones directly. Companies get to hold on to more of their capital in this critical early stage while simultaneously avoiding the problems that managing capital can create at this stage.
The result is more exciting new companies actually succeeding, and doing it faster than they thought possible. For our team, those results are the ones that get us excited to come into work every week: showing people how to solve the problems they don’t even know exist that allow them to accomplish their dreams.
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If you’ve tried out the reverse angel model, or have heard of any other ways to disrupt traditional business funding, we’d love to hear about them! Reach out to us at hello@launchbyte.io with your thoughts.
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