Growth Equity Explained: When to Raise Money for Your Business

Growth equity explained for founders and small business owners, including how raising money really works and when it makes sense to raise or wait. Melanie Nabar, Principal at Volition Capital, walks Armando through what happens when a company takes outside money. In this episode: Growth equity sits between seed capital and a buyout, so you keep running your company and put new capital on the balance sheet for things like hiring, a new product, or an acquisition. Preferred equity holders get paid before founders, so a company that raises 500 million and later sells for 400 million can leave the founders with nothing. The founders who use capital well measure every dollar and test small first, like hiring five sales reps before hiring 50. A board meeting gives you a regular step back, and a good board watches what buyers pay, since a second product could move your value from 7 times ARR to 10 times ARR. Volition usually invests once a company reaches about 4 million in revenue or ARR, and Melanie says to wait if you plan to pass the business to your kids or don't yet know how you'd use the money. Guest: Melanie Nabar, Principal, Volition Capital Chapters 00:00 Meet Melanie Nabar of Volition Capital 05:25 Stages of capital from seed to buyout 07:40 Taking money off the table as a founder 13:24 How preferred equity pays out 16:25 Where successful companies spend capital 18:45 Go-to-market for B2B and B2C 26:47 How investors help beyond the money 35:29 What a company board is for 40:07 What drives your company's value multiple 48:29 When to raise money and when to wait Episode page: https://webtalk.show/episodes/090-growth-equity-an-insiders-look/ Hosted by Armando J. Perez-Carreno. Learn more at https://perezcarreno.com