State funds, private equity, venture capital, and institutional lending all have their role in the lifecycle of a high tech startup, but angel capital is crucial for first-time entrepreneurs. Angel investors provide more than just cash; they bring years of expertise as both founders of businesses and as seasoned investors.
Unless you have fixed costs, you don't need any capital to create a prototype. Ideally, your co-founders, with sweat equity, can create the product themselves.
Sweat equity is the most valuable equity there is. Know your business and industry better than anyone else in the world. Love what you do or don't do it.
Sweat equity is the most valuable equity there is.
I'm struck by the fact that by and large equity capital doesn't play a big role in new financing; it's either bonds or internal financing but not really equity. And therefore, it's not clear that anything which improves the equity markets has really much to do with the productivity of the economy as a whole.
Techstars is truly global; you'll see us continue to expand all our programs worldwide, including accelerators, our venture capital, as well as the UP Global programs including Startup Weekend, Startup Next, Startup Digest, etc.
In order to help small businesses gain access to the credit and capital they need to run their business successfully, Congress must adopt policies that support functional capital markets without imposing undue restrictions on providers of debt and equity capital.
Obviously, consideration of costs is key, including opportunity costs. Of course capital isn't free. It's easy to figure out your cost of borrowing, but theorists went bonkers on the cost of equity capital. They say that if you're generating a 100% return on capital, then you shouldn't invest in something that generates an 80% return on capital. It's crazy.
Most entrepreneurs think capital is the biggest problem they have - but it's not. You can have all the capital you want, but if the market fit and ability to adjust are not present, your startup will likely not succeed.
Most startup entrepreneurs unnecessarily spend half their time and give up half their equity in search of funding from angel investors and venture capitalists. Tens of millions of dollars are available to them for free from partners who not only don't want their equity, they don't even want to be paid back.
I've probably done more venture capital deals and expansion financings than I have done private equity deals. But both are the same. Private equity companies have also built jobs.
Hedge funds, private equity and venture capital funds have played an important role in providing liquidity to our financial system and improving the efficiency of capital markets. But as their role has grown, so have the risks they pose.
You have to have a work ethic. It is always 24/7. It is a lot of sweat equity, and it is a little bit of Lady Luck.
Sweat, sweat, sweat! Work and sweat, cry and sweat, pray and sweat!
For a long time, I've ranted against naming your startup community 'Silicon Whatever.' Instead, I believe every startup community already has a name. The Boulder startup community is called Boulder. The L.A. startup community is called L.A. The Washington D.C. startup community is called Washington D.C.