An example of domination vs partnership in capital raising

You need to raise capital for your start up business. You go via the bank and they set up a line of credit/loan at 12%. You then work your arse off to make the payments plus the interest, while starting a business. Your relationship with the bank is zero, unless you do not meet the payments. Actually they like it if you are late (not too late), because they charge you an extra fee. If you don’t make your payments then the relationship with the bank becomes aggressive. The only investment they have in you and your company is for a monetary return. Otherwise they really couldn’t care less. Heck, you might even be doing something not quite legal.

This is a fear based dominator relationship. There is an illusion that the bank has the authority. You could go bust, and they could seize assets. But you still come away with your life and your intelligence, knowledge, friends and community. Your pride may be dented, but you will have learned a lot.

Or, you could find a partnership. Not necessarily the formal type signed into legal foreverness, but where a partner is invested in your success. They provide capital. They may charge interest or not. Often not. They want your business to succeed, so they will do what they can to support this. They walk with you, vs stand in the distance holding a stick. They put their money into the pot because they believe in you and your business. You have both done your due diligence. You are able to set the terms of their ability to influence. But, because you have formed a partnering relationship, this person is someone you trust and respect. (Unless you have gone for the money without also going for the quality of the relationship, which is a really bad move.)

As crowdfunding platforms are demonstrating, there are many ways to raise capital. The best ones have a partnering mutuality. The wins can be in many forms, not just money. Some people love to invest in anothers success. Some people like to contribute to what they believe is a great business doing good things. Some people want the relationships. Some people want to be able to contribute their skills. For many the bonus is an ROI in dollars. But it’s a bonus, not the central reason why they invest.

Businesses as Unusual seek different ways to raise capital because it makes good sense.

 

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