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Why your startup should focus on creative capital instead of venture capital

Posted by Neha De

December 13, 2021

The capital market for startups is more attractive than ever before. Even with a record breaking number of venture capital deals being reported, there are several new methods of financing startup activity that are maturing. One such method is creative capital. 

In this model of financing, it is designers and design companies that typically invest in early-stage startups and help them develop and launch their products and services from scratch, usually in return for equity.

Depending on the industry, creative capital can be defined as a mix of strategic assets that may include target consumer data and insights; visualizations of experiences, products, services and the like; naming, future product roadmaps; branding and communication systems; product design and engineering prototypes; preliminary development cost projections; network partner introductions and sourcing; IP identification and development; digital content, platforms and the like; and advisory expertise for investors. Most of these assets are typically developed to combine with business introduction and planning purposes, eventually helping organizations bring their ideas to fruition.

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Creative capital incorporates the design and development assets that bring innovative and resourceful ideas to life. Venture capital, on the other hand, comprises operational and financial assets invested in a fresh, untested business idea or enterprise. 

Venture capital typically comes once the investor has completed rigorous evaluation and due diligence of the idea. However, when creative capital precedes venture capital, it helps speed up this evaluation and analysis of a business concept, often accelerating product deployment, reducing the startup owner’s equity dilution and improving valuations. 

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Neha De
Neha De

Neha De is a writer and editor with more than 13 years of experience. She has worked on a variety of genres and platforms, including books, magazine articles, blog posts and website copy. She is passionate about producing clear and concise content that is engaging and informative. In her spare time, Neha enjoys dancing, running and spending time with her family.

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