What Do You Do When Cash Investors Say No? Try This to Find Investors Faster

 

Stop Wasting Time Chasing Cash Investors Too Soon 

Finding cash investors can be a challenging task. A 2020 survey by Fundable found that 30% of startups seeking funding are unable to secure any capital, and only 1% of startups ever raise over $1 million in a seed round. Additionally, cash investors typically require substantial returns on their investments, often in the range of 20% or more.

Equity Compensation - Find Investors Faster

Many tech giants rely heavily on the sweat equity of their founders to get started. Think of the early days of Apple or Google. Founders Steve Jobs and Steve Wozniak, or Larry Page and Sergey Brin, spent countless hours developing their unicorns. This sweat equity was the foundation that attracted the cash investors needed for massive scaling. 

Deciding to pursue "sweat equity" instead of cash investors is a big decision for founders, a balancing act that can shape the trajectory of an emerging business. One forged in relentless labor and work, the other can pay for growth.

Sweat Equity, is Time Better Than Money? 

Sweat equity refers to an arrangement where a founder or advisor receives equity in exchange for the value contributed to a business through work, time, networking, and introductions. These type of founders are typically hoping they will be paid well once money is raised or they will cash-in when you reach a liquidity event. Benefits of buying resources with sweat equity include:

• Sweat equity is a way to attract talent that the company cannot currently afford.
• Advisors contributing sweat equity often brings valuable expertise and networks.
• Those contributing sweat equity share your risk of the business failure or success.
• Allows startups to conserve limited cash resources.   
• Can enhance credibility and help attract cash investors.

Message Opportunities@miamiventurecapitalfund.com if you are interested in exchanging your time for equity in businesses.

Is Cash Still King?

Cash investment involves providing monetary capital to a business in exchange for equity or other financial returns. This can come from various sources, including venture capitalists, angel investors, or individual investors. They give you money, and in return, they get a share of your company. Financial Investors typically expect to make them a lot more money than they invested. Benefits include:

• Cash pays the bills. You cannot use sweat equity to make your credit card payment (yet...)  
• Provides essential funding for long-term growth and expansion.   
• Requires founders to meet investor expectations.

Message Invest@miamiventurecapitalfund.com if you are interested in pursuing high returns while supporting entrepreneurs by investing cash into unlisted businesses, Invest@miamiventurecapitalfund.com

My Thoughts 

• Cash investors that also invest sweat equity are the best because they have skin in the game and are taking responsibility for helping you reach milestones/goals.
• Sweat equity investors are easier to find, but typically harder to keep than cash investors. I plan on writing more about this in the future if there is enough interest about this topic.
• Theoretically you have an unlimited piggy bank of equity, but you better protect your cap table and valuation to avoid down rounds. Hockey stick growth for your investors is expected, anything else can kill future funding rounds
• Consider advisory shares, unit appreciation rights, or warrants vs. units/shares as sweat equity compensation. Consider selling SAFE notes vs. actual equity to cash investors. Giving up too much equity early can dilute the ownership and lead to loss of control over business decisions.
• Both involve risk. Sweat equity risks time and effort, while cash investment risks financial capital.
• Sweat equity valuations are often somewhat subjective, whereas cash investment valuations are typically more structured.   

Are you a cash investor that wants to invest sweat equity into a early-stage businesses with huge upside potential? Message Info@miamiventurecapitalfund.com for more information.

Want More?  

We are looking for advisors, active/passive investors, and businesses interested in pursuing high returns while supporting entrepreneurs, Invest@miamiventurecapitalfund.com

Please message Opportunities@miamiventurecapitalfund.com if you are interested in promoting your business to to our 100+ portfolio companies and our growing community of over 30,000 executives, entrepreneurs, investors, lenders, founders, venture capitalists, investment bankers, wealth managers, and physicians

Are you looking for funding or interested in boosting the value of your company? Email us information about your business, Funding@miamiventurecapitalfund.com

Sources and AI Assistance 

gemini.google.com

openai.com/chatgpt
deepseek.com

Disclaimer

All information in this and any of my posts are subject to change and may not currently be accurate. In addition, some of the labels and names are used for test-marketing purposes. Contact me directly if you want the most recent and accurate information about any of the content in any of my posts. This is also used for entertainment, informational, and discussion purposes. This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service. We are not offering any legal, investment, tax, or medical advice.

Remember this. Whoever sows sparingly will also reap sparingly, and whoever sows

2 Corinthians 9:6