Capital Strategy: The Equity War

THE BRUTAL REALITY: EQUITY IS THE MOST EXPENSIVE DEBT

Taking VC money isn't "winning"; it's selling pieces of your soul to people who have the power to fire you.

The Conflict: You want the big check to "go fast."

The Truth: A $10M check comes with a 100x growth expectation. If you hit "only" 5x, you are a failure to them.

The Fix: Raise capital only when you have a proven "Money Machine." Use other people's money to scale, not to find a business model.

1. BOOTSTRAPPING VS. VENTURE

Bootstrapping gives you freedom. Venture gives you speed. If you take the money, you are on a treadmill that only goes faster. Understand the "Liquidation Preference"—the bank gets paid first, and you get what's left.

2. THE CAP TABLE FORTRESS

Every % you give away today is worth millions tomorrow. Protect your "Cap Table" like a fortress. Don't give equity to "advisors" who only give you 1 hour of advice. Save it for the warriors in the trenches.

SMART WORDS

DILUTION

The "Shrinkage." The reduction in your ownership percentage when new shares are issued to investors.

TERM SHEET

The "Rules of Engagement." The document that outlines the terms under which an investor will give you capital.

LIQUIDATION PREFERENCE

The "First in Line." A clause that ensures investors get their money back (or more) before founders get a cent during a sale.

TACTICAL DIRECTIVES

1. The Dilution Map: Model what your ownership looks like after 3 rounds of funding. Are you still the boss?

2. The No-Return Point: Define the exact revenue target where you no longer need outside capital.

3. Clean the Table: If you have "dead weight" on your cap table (ex-founders/consultants), explore a buy-back strategy now.