It Takes Money to Make Money: Your Investment Model--Why Raising Less Money Is Better--Seriously! - Harvard Business Review

It Takes Money to Make Money: Your Investment Model--Why Raising Less Money Is Better--Seriously! - Harvard Business Review: "It Takes Money to Make Money: Your Investment Model--Why Raising Less Money Is Better--Seriously!"

For most people who launch new ventures, it takes some up-front cash to open shop, and getting that cash is rarely easy. Investors worry about risk. Will the new venture make it in spite of the long odds? What is the potential return on their investment? As an entrepreneur, you are trying to figure out how to get started with as little investment as possible. Developing an investment model is a real challenge for most new ventures. But some companies--like Skype and Europe's Go airline, featured here--have built investment models that enabled them to generate surprising, even stunning, results on very modest investments. How can you do the same? In this chapter, the authors illustrate why leaner is generally better. They also look at some of the trade-offs involved in taking capital from external investors. This chapter was originally published as Chapter 7 of "Getting to Plan B: Breaking Through to a Better Business Model."