Financing a startup 101

Financing a startup 101

Financing a startup is one of the most challenging aspects of starting a new business. When it comes down to it, you have to navigate venture capital firms, angel investors, and weigh the value of equity in losing control of your own company. Many startups fail because in the early stages of the business they did not have sufficient funds in the development stages. Others fail shortly after launch even though they have an amazing product, but they ran out of funds to market the company and get the critical mass needed to maintain operations. It’s painful to hear about this because there are simple solutions to getting Startup Financing and Business Credit to help turn your Startup into an adult. We have 3 questions that we would recommend to any Startup before seeking funding from outside sources.

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1) How much money do you really NEED to get your startup off the ground? There is no doubt that he is shaking his head at the almost absurdity of this question; however, you would be surprised what you will discover about your business when you look at how lean you can actually run the business in the beginning. Many companies believe they need a huge storefront, high-end furniture, and a full staff the day they open their doors. For most, this is a good 5-year goal, but at first you may be able to do what Apple did and start with an idea and a handful of talented employees. If you haven’t read Re-Work, it wouldn’t be a bad idea to take a look at it, as there are many principles that can save startups a bit of a headache in the long run.

2) Are you willing to become an employee of your own company? This may also seem like an odd question, but when you decide to work with a venture capital firm, in many cases, you will be liable to investors in ways that you had not originally anticipated. There are stories from Silicon Valley to Dubai that start with a keen entrepreneur and end with burnout. “employee-owner” that he is forced to take his startup in a new direction due to the influence of his investors. Entrepreneurs beware.

3) What will happen within the first 90 days after you get the funds you need. There are companies that have a minimum financing guarantee of $ 50,000 that ensures that qualified companies can have access to the financing they need; however, it is incredibly important that you have a clear vision of what your priorities will be after receiving funds. It sounds very simple, but many times companies finance themselves without a prioritized list of needs; And after obtaining more than enough funds, they find themselves without the essentials that they should have acquired from day one.

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