When Raising Capital, Bigger Checks Are Not Always Better [video]

Metal briefcase full of cash

For lots of smaller businesses, bootstrapping and micro-VC might be a better option

Many entrepreneurs are unclear about the right path to take when raising money for their new business idea, and due to the attention given to venture capital-fueled success stories in the news, many ambitious entrepreneurs set their sights on becoming the next Evan Spiegel (or Snap) without enough thought about what is the right path for them.

And when it comes to capitalizing your business, venture capital is often not the best route to take.

Venture capital can be great for the company that is looking to build the next rocketship of growth — think of companies like Snap or Lyft. But for lots of smaller businesses, bootstrapping and micro-VC might be a better option.

The cost of starting a company is pretty low — often less than a million dollars. So the initial investment from an angel should take you a long way to building traction.

Kauffman Fellow Samir Kaji sees this all the time in his role as a senior managing director at First Republic Bank. He is also an expert on micro-VCs. Click play to hear his advice for founders thinking about their options.

Jeff HarbachEntrepreneur LogoThe following story was a guest column by Kauffman Fellows CEO Jeff Harbach in Entrepreneur. Jeff Harbach (Class 16) is President and CEO of Kauffman Fellows. Jeff has been an entrepreneur and investor since 2002, and was Executive Director of the Central Texas Angel Network (CTAN), based out of Austin, TX, from 2011–2013, where he served his fellowship. He has led multiple startups, including two 7-Eleven stores, a luxury furniture store and interior design firm, and a private country club golf network. He was also an angel investor himself with the Vegas Valley Angels. Jeff holds a BS from Brigham Young University and an MBA from the University of Texas, Austin. jharbach@kfp.org