Choosing the Right Investment for your Brand

Seeking funding to grow your DTC business? What’s the right type of investment for your business?

Fundraising and navigating potential exits can be time-consuming, stressful, and confusing for founders.

98% of companies and a quarter of the US economy are controlled by private markets. (PitchBook Data)

There can be significant differences between private equity and venture capital when raising and exiting startups. In addition, there are far more opportunities for fundraising and exits than in the past.

Additionally, different capital sources are playing a larger role, and the various players are shifting how long and at what stage they desire involvement.

4 Investment Strategies Demystified

1. Private Equity

Private equity (PE) investors generally focus on companies in later stages of growth. These companies usually have established revenue streams and proven market demand. PE firms prioritize predictability and lower risk, favoring solid returns over high risk. Instead of participating in seed funding, PE often serves as a founder’s endgame or a key exit strategy. Think of PE as the “final chapter” in a startup’s journey—a way to cash out once the business has reached maturity.

2. Venture Capital

Venture capital (VC) firms invest at earlier stages and accept greater risk, often with smaller stakes than PE. VC firms spread their investments across many companies, like diversifying your stock portfolio to balance risk. While VC typically participates in earlier stages, the market is shifting. As competition increases, more VCs are also moving upstream to participate in early-stage funding rounds. They seek fast-growing startups with disruptive potential, aiming for high returns over a shorter period.

3. Angel Investors and Incubators

If you’re in the very early stages, consider angel investors or incubators. Angels are often individuals with deep industry knowledge and a personal interest in helping new entrepreneurs. Unlike PE or VC, angels often base their investments on potential rather than proven financial performance. Incubators can offer additional resources like office space, mentorship, and guidance to help fledgling startups refine their models. Both types of investors are essentially “betting on you” – your vision, grit, and potential.

4. Family Offices

Family offices represent a unique investor type, often prioritizing patient capital and long-term growth. While they might seek cash flow in the short term, they are usually more flexible with timelines. Family offices increasingly contribute to early-stage funding, giving startups access to wealth that’s patient and long-viewed. This strategy is particularly useful for founders looking for stable growth without pressure for a quick exit.

For the most efficient and effective fundraising process, be sure to define the –