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Advertising: Shall a startup seek funding (services-for-stock deals) directly from service providers, instead of or in addition to seeking cash from VCs?
CS
CS
Chris Sacchinelli, Managing Partner | Swaave Holdings, LLC answered:

In order to answer this successfully, more scope is needed on your business, industry, and services you're seeking to be rendered.

When you look at if from the VC side of things, we're giving you (the founder) cash as a way to "buy" the factors of production that you would need in order to successful pursue your business goals...(along with other valuable advice and guidance)

As a founder, you should be looking at a number of different value perspectives when you attack this situation:

Is the equity your giving up for the services cheaper, or more expansive than the equity you'd give up for the cash to "buy" the services...?
Who would make a better long-term strategic partner? Who compliments your business better when looking at your strategic roadmap for the next five years? Who is more incentivized to take action in helping you along your journey?
Are you going to be opening yourself up to any systemic risks?

At my firm, we actually invest in the business that other startups tend to trade "equity for services" with, as a strategy we employ to help amplify our net capital impact, when syndicating value across our portfolio :)

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