In a groundbreaking perspective shared by Hebron Sher of Zevo, startup founders are encouraged to rethink traditional funding routes by skipping venture capitalists (VCs) and directly approaching limited partners (LPs), family offices, and high-net-worth individuals. This approach, detailed in a recent Crunchbase News article, suggests a more efficient path to securing capital, especially in the early stages of a startup’s journey.
Sher argues that VCs often come with stringent terms and high expectations that may not align with a founder’s vision or timeline. By targeting LPs—the investors who typically back VC funds—founders can gain access to capital without the intermediary, potentially fostering more flexible agreements and personalized support.
One key advantage highlighted is the ability to build direct relationships with investors who have significant resources and industry connections. These relationships can offer not just funding but also mentorship and strategic guidance, which are crucial for early-stage companies navigating competitive markets.
Additionally, Sher points out that LPs and family offices often have a longer-term investment horizon compared to VCs, who may push for quick exits. This can allow founders to focus on sustainable growth rather than short-term gains, aligning better with their core mission and long-term goals.
The approach also opens doors to a wider pool of investors, including high-net-worth individuals who are increasingly interested in direct startup investments. This democratization of funding could empower founders to negotiate better terms and retain more control over their ventures.
For founders considering this route, Sher’s insights serve as a call to action to explore alternative funding sources and challenge the status quo of startup financing. By going straight to the source, entrepreneurs may find themselves better positioned to build lasting, impactful businesses.
Alfred Lee
