Insights from the Capital Compass Panel
Funding isn’t the milestone—it’s the escalator. The wrong capital creates constraints that can weigh down otherwise viable businesses. Startups have plenty of risk; don’t let misunderstanding capital options be one of them.
Our recent Capital Compass panel brought together experts from venture capital, banking, and crowdfunding who shared critical insights to help founders make strategic funding decisions. Here are five key takeaways to help you choose capital that serves your vision, not the other way around.
1. Understand the Constraints Each Capital Type Creates
“Understanding how different forms of capital behave—because of their sources of capital and what is required of them—is going to directly translate into what it requires of you. And so, before you raise it, make sure you understand it—and that it’s consistent with who you are, how you want to build your company, and who you want to build your company with.” — Andrew Goldner, Co-Founder & CEO at GrowthX
Different capital sources come with different expectations. Venture capital typically demands rapid scaling and larger exits, while traditional financing offers steadier growth paths with different oversight requirements. Before pursuing any funding, understand how these requirements align with your business model and vision.
2. Question the Venture Capital Default
Our panel emphasized that venture capital isn’t the only or always the best path for all startups. Bryant Tirrill from Pinnacle Financial Partners highlighted how traditional financing options provide structured growth alternatives without the same dilution concerns as equity financing.
For many successful companies, bank loans, revenue financing, or angel investment provide better alignment with their growth trajectory and founder objectives. Consider your business fundamentals and long-term goals before following the VC path.
3. Investors Invest in Resilient Teams
“We gotta believe in the team, that’s a big part [of it]. We do invest in companies that are pre-revenue, and so there are some metrics there that are obviously based on quite a bit of projections. So, I have to believe in you. And something that I look for in founders is—whether InvestTN commits or not—I want to feel that you are going to make it work regardless.” — Avery McConkey, Capital Associate at LaunchTN
Even before revenue, investors make decisions based on the team’s demonstrated ability to execute, adapt, and persist. Your preparation, knowledge, and resilience matter more than perfect projections. Show evidence of your team’s capability to navigate challenges and execute your vision.
4. Consider the Strategic Advantage of Community Rounds
“A community round could be $100,000 or several million dollars, depending on the size of your community. Your community could be your customers, your classmates in school, or people in your neighborhood. And so, building a community can look very different … It depends on your approach as a founder and what you’re trying to get out of the capital that you’re raising.” — Read Ezell, Director of Fundraising at WeFunder
Community rounds offer a unique advantage: they align your capital sources with your customer base and advocates. Unlike traditional funding that separates investors from customers, platforms like WeFunder allow supporters to invest with as little as $100, creating both funding and a network of committed stakeholders.
5. Master Cash Flow Management First
“One of the biggest lessons I learned firsthand as a founder is how critical cash flow management is … It’s huge. I heard founders talk about it a ton, but I didn’t feel the pain until I experienced it myself.” — Haley Zapolski, NEC’s Expert in Residence for Capital
Even well-funded startups can fail due to poor cash management. Before seeking outside capital, master the fundamentals of cash flow planning. Understanding your cash conversion cycle is essential to determining which type of funding best matches your business rhythm.
The Strategic Approach to Capital
The best founders don’t chase capital—they choose it strategically as a tool that serves their vision, not the other way around. An escalator moves you upward along a fixed path—similarly, funding propels your business while simultaneously defining your direction. What kind of business are you building, and what type of capital will help you get there on your terms?
Consider these questions before your next funding move:
- Which funding constraints can your business model tolerate, and which would undermine it?
- Beyond money, what additional value (connections, expertise, customer access) must your capital source provide?
- How does your funding approach align with your long-term ownership and exit goals?
Ready to find the right funding escalator for your business?
Schedule a consultation with Trea, our Membership Advisor, to discuss your specific business model and funding needs. The Nashville Entrepreneur Center connects founders to experts who’ve navigated these decisions successfully and can help you assess which capital options align with your vision.
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