Read Time: 4.5 minutes
The Frustration of Capital Confusion
Let me be honest...
Years ago, I sat in a boardroom with a founder who had just closed a $10M round… and was visibly frustrated. Not because the check hadn’t cleared—but because she had given up more equity than she wanted, lost a board seat, and now had a private equity partner pushing an aggressive timeline that didn’t fit her vision.
That moment stuck with me (and it should for you too!)
It’s the reason I get passionate when leaders ask me about capital strategy. Because whether you're raising your first major round or evaluating non-dilutive options to fund your next phase of growth, the choice you make now sets the tone for what scaling looks like later.
The truth? Most leaders are brilliant operators but inexperienced capital strategists—and that’s exactly what this week’s framework is here to fix.
Let's get into it!
A Smarter Way to Choose Your Capital
Venture debt and private equity aren’t just financial instruments—they’re strategic decisions. Done right, they can unlock explosive growth. Done wrong, they can cost you control, clarity, and culture.
So how do you decide?
Enter the Capital Structure Planning Framework—a 3-factor model adapted from research by Gompers, Kaplan & Mukharlyamov (2022) that evaluates capital options across:
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Control – How much autonomy are you willing to give up?
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Cost – What's the real price of capital—repayments or dilution?
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Strategic Help – Do you need capital only, or capital + guidance?
This framework isn’t about spreadsheets—it’s about alignment. When used correctly, it highlights the capital path that scales your business without compromising your leadership intent.
Real World Example: The Dilution Dilemma
A client recently came to me after raising two equity rounds. They had great traction, strong ARR, and now needed capital to expand into two new markets. The problem?
They were down to 22% ownership.
Worse, their investors wanted a slower ramp than the founder envisioned.
Using our framework, we did a quick comparison:
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Venture capital would add cash, but further erode control.
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Private equity could help operationally—but came with pressure and board seats.
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Venture debt, however, fit perfectly.
With predictable cash flow and a clear growth plan, venture debt gave them the runway to expand without giving up another percentage point of equity.
Three quarters later, they’re hitting their targets—and still calling the shots.
Real Strategies. Real Results.
This week’s message is simple:
Growth capital should serve your strategy—not steer it.
Too often, leaders chase funding without clarity. But the most successful founders and executives I work with? They ask a different question: What kind of capital supports the business I want to build?
Use the 3-factor Capital Structure Scorecard to evaluate your options:
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If you value control, explore venture debt.
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If you need more than money, consider strategic PE.
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If you're unsure, score your options before you sign.
And if you want help? That’s exactly why I built the programs below.
Let’s scale—intentionally.
That's all for this week...
Sam Palazzolo
P.S. - There are two ways I can assist your Scaling Strategy:
[VIDEO] Watch The Sales & Marketing Acceleration Briefing—a 30-minute strategic session where I cover how AI + capital strategy can compress your sales cycle and scale revenue faster. Here's the link: https://share.descript.com/view/tWhAJ1kmsRC
[COMMUNITY + COURSE] Apply to the next CEO Catalyst Cohort—my flagship executive coaching experience for leaders who want to lead better, grow faster, and make smarter decisions at scale. Here's the link: https://www.sampalazzolo.com/ceo-catalyst
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