Depth of pockets
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In the general framework for mapping resources proposed by Benoit F Leleux the following points are made with respect to depth of pockets:
- Financing resource differ in their ability to fund large projects and/or repeated rounds of financing
- Some will explicitly limit their contribution to a one-shot deal
- Some will want to aim for multiple rounds
- Repeated rounds of financing have the following advantages:
- Lowers the Cost of money by only raising what is required at a certain stage
- A venture capitalist can be critical to a growth company by providing:
- Access to technology
- Management
- Distribution channels
- Alternative sources of finance may be more appropriate at later stages, because
- Resources and the costs of financing would be less valuable to the firm
