Every billion-dollar business has to start somewhere. In today’s world of unicorns, that “somewhere” has increasingly been in the boardrooms of venture capital (VC) organizations. VC funding provides early stage companies with investment, in exchange for an equity share in the company. As Payal Kadakia, a 2015 award winner, explains: “Venture capital put fuel on the fire needed to get into all markets and help achieve our dream.”
But VC is not the only way to go. According to a survey of 500 Entrepreneur Of The Year award winners, 55% launched and built their companies largely with loans, retained earnings and other sources of self-funding. They may have been unready or unwilling to hand over equity — and thus a degree of control — to investors whose values and strategic direction may not have aligned with their own.
Planning for bigger things
Whatever the initial funding strategy, there still needs to be a strong plan for turning investment into growth and returns.
Strategizing and developing a roadmap for growth means more than just pouring fresh funds into core business functions. Indeed, too much money too soon can also be distracting. Ben Cohen, co-founder of Ben & Jerry’s and a 1991 award winner, says: “It’s important not to have enough money when you start. If you have a lot of capital, you can easily end up wasting it because you have to spend it.”
Thorough planning can help map out key priorities and focus areas. But when moving and growing fast, the last thing a leader needs is to have to worry about micromanaging every decision. And that’s why, as 2013 winner Daniel Lubetzky, CEO of KIND, explains, “Culture becomes the biggest asset and tool that you have to rely on.”
With the right corporate culture, your people will be aligned and able to work together to solve challenges. This is something 2011 winner Jessica Herrin, CEO of Stella & Dot, finds vital. “We’ve only grown because of a collective commitment to our vision,” she says, “and it’s our people that will help us continue to grow.”