Think twice before you surrender equity – There is a better way to drive dynamic growth

Most entrepreneurs need help to build a successful business. Whether it is finding people with the know-how to lay the foundations or accessing investment to get the business moving.

Entrepreneurs are often energised by the creative process. They have a great idea and they can’t wait to take it to market – but then reality bites. They don’t have sufficient funds to get their project off the ground. To really drive growth, they’ll need to hire new people and get them trained. They’ll have to buy in new technology and equipment and pay off their overheads. On top of that, they are likely to need to advertise and/or launch high-quality marketing campaigns.

Historically, if they wanted to grow dynamically, ambitious businesses would look to sign up with high-end advertising or marketing agencies.

They might opt for a range of different specialist agencies to deliver different aspects of what they were looking for, or they might choose one ‘all-rounder’ agency capable of delivering everything they needed. Whatever the choice, it will need an investment. Added to that there are likely to be creative costs and other overheads to navigate. Most start-ups will not have that money and will need to raise funds for it.

At this point, they will often reach out to investors to help. While setting up such an investment can be time consuming, resource-intensive and expensive, for some small businesses, it can initially seem attractive. They’ll receive a significant sum into their account; a valuation; and a sense of being supported by an expert third party.

Unfortunately, this investment will often come at the cost of releasing some of the business as equity. And from the entrepreneur’s perspective, that can bring a raft of additional drawbacks.

Sharing ownership of the business with an external investor will mean decision-making processes take longer. The entrepreneur’s overall share in the company will get smaller; there will be extra pressure to deliver results that shareholders anticipate, and that extra capital will most likely not be accompanied by additional knowhow.

In the past, this was often the only viable way fast-growing small businesses could get the money they needed to survive and thrive. For many businesses, there was nothing else out there apart from the unwieldy and resource-sapping process of applying for a bank loan, or using credit cards or help from family and friends.

Another Way

Fortunately, however, alternative funding options are available today that don’t require owners giving part of their business away. A new approach has emerged which uses a combination of capital and expertise to unlock entrepreneurial growth.

Rather than having to surrender equity, the start-up can tap into the expertise of a partner that invests in digital marketing budgets to accelerate revenue growth and then take a percentage of revenues generated.

This approach that can be up and running faster than venture capital investment. It adds know-how and eliminates risk.  It is a more sustainable approach to sales growth. At DRVE, we have two programmes, the fully-managed Velocity, and the co-managed FastForward that effectively fund growth for customers without requiring them to surrender equity in their businesses.

That should give any entrepreneur or start-up business food for thought. If the company is profitable and has a positive cash flow, there is little limit to its potential – just as long as it has the right help and guidance. In other words, entrepreneurs don’t have to give up full control of their organisation to build a successful enterprise.

“A Bold New Vision for Business Growth” – The DRVE Story
Top Tips to Accelerate E-commerce Start-up Growth