Benjamin Edgar On Raising Capital For Start-ups
The following article is an extract from an interview recorded with Benjamin Edgar, serial entrepreneur and quintessential polymath, whose ongoing projects range from industry disruptors th-oughts and Boxed Water to his abstract namesake brand, “BENJAMIN EDGAR, object company”.
Drawing on personal experience as well as his work in venture capital, Benjamin outlines for us his approach to raising capital and the inherent risks involved below.
As our conversation with Benjamin extended from an initial interaction via the th-oughts platform, it seemed fitting to feature his answer in Q&A format.
You work in venture capital with Wakestream Ventures so you are clearly familiar with funding and raising finance. Are all your current ventures self-funded or did you raise capital?
Boxed Water certainly has had additional investment – I’m a minority owner in that one. The beverage industry is a very expensive industry to participate in. I was able to get it on to the shelves with my own money and partially because I think that that is a great signal to investors that you’re willing to feel the pain of that and to believe in your vision. With that said, I could not support much more scale myself so there was a time and a place [to seek investment].
The Object Company, th-oughts and some of the other stuff I’m working on, hopefully for next year, are all self-funded. The Object Company, for example, would never make sense to bring an investor in on – maybe I would do a licensing deal or something like that. th-oughts though, with some of the new stuff I’m tinkering with, which maybe we can talk about next year, would potentially require outside capital or it would be very foolish of me to go too deep on my own on that one – you know, there’s a reason for raising capital. So right now, I would say the more abstract companies are certainly all self-funded.
When looking at funding for th-oughts, for example, do you have a leaning towards debt or equity finance?
I am fundamentally pro on equity because if you can find an investor that believes in you and you believe in them and there’s a mutual trust – they’re willing to weather those ups and downs, the losses that come with starting something that’s new or different. The danger with debt is that it can be very difficult to raise it without personal collateral, if we’re talking about traditional banking debt, for example. It can also have some pretty serious impacts on your life down the road should the project not work out and that creates undue stress and can lead to making unwise decisions when things are going poorly because you start thinking about your future, maybe your kids or your home or your wife whilst with equity financing, it’s very, very unfortunate and should never be taken lightly that an investor could potentially lose their money but if they know what they’re signing up for, you’re not winning when the business loses and they’re not winning. It’s a shared unfortunate thing that occurs but you get a fresh slate afterwards so that’s how I would look at that.
The only time I would think debt financing is something to explore is if let’s say you needed £5k - £10k after you’ve proven some traction on maybe like a small t-shirt company or a small app that you’re building or something – some credit cards are not the best-case scenario but I have multiple friends who’ve started businesses on credit cards and are now very successful.
You can also do the friends and family route – I’d be very careful with that one; I think that there’s a lot of danger around that. I’m actually hoping that we see more crowd financing via debt or equity. We’re seeing some of that here in the United State where you’re spreading it so thin, you know, you’re getting $500 investments from 1000 people – they don’t really care if they lose that, they like participating. I think that could be a really incredible way to get things rolling. And it’s marketing which is awesome.
You can listen to the full interview below.