Echelon

For many startups, venture capital (VC) is a desirable funding source if they want to scale big quickly. VC firms set aside considerable amounts to finance startups intending to get high returns.

Why would any new business refuse such investments, which they don’t have to pay back like a loan? Venture capitalists dangle business and institutional knowledge and a vast network of employees and other investors in front of startups striving to get through the first few years in a field where limited funds could mean failure. The offer is just too hard to pass.

Too good to be true

While you don’t have to pay back what capital VCs give you, VC firms are still likely to expect a return on their investment, usually in the form of an acquisition or an IPO.

Also read: The evolution of early-stage investing and fundraising in SEA

VCs may want equity in your startup, which means you will have to give up part of the ownership. In some cases, venture capitalists eventually take up more shares than the founder, meaning they have greater control over the business they didn’t even start. VC is a potential fundraising option, but it’s not for everyone, particularly for founders who are not planning to exit their companies no matter what.

Funding options to choose from

The good news is that Singapore’s robust startup ecosystem provides founders with many fundraising options other than VCs. The rise of syndicates, venture debts, and marketplaces could free founders from the risks of leaving their businesses in the hands of venture capitalists.

Also read: Echelon: A founder’s approach to fundraising at different stages

Questions might snowball on you as we discuss other means than traditional VC funding; only experts can help you understand the answers.

Expert insights on alternative funding

At Echelon Asia Summit 2022, a panel discussion will be held about “Alternatives to fundraising from VCs – The growth of syndicates, venture debt, and marketplaces.” Moderated by Vanessa Ho, Co-Founder and Head Director of Relations at NUS Alumni Ventures, the session will feature Milan Reinartz (Ascend Angels), Martin Tang (Genesis Alternative Ventures), and Daanyal Shah (Fundnel). They will answer essential questions that founders should ponder to secure the best funding source.

Why raising funds from VCs might not be the best option?
How do syndicates and venture debt work?
How should founders assess when to use alternative funding means?
What are the available alternatives, and what are their advantages?
How can alternative funding sources complement your VC round?
How have other companies successfully raised funds from alternative sources?

The risk of failure for startups is high during the first few years, but understanding the answers to these vital questions will help you avoid the traps and retain control of your business.

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Echelon Asia Summit 2022 (October 27-28) returns after a three-year hiatus. It aims to gather the most influential decision-makers and industry leaders from the Southeast Asia tech and startup ecosystem.

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