Funding? – As The Next Step For Your Idea or Startup
Funding is a critical component for an Entrepreneur, when it comes to launching an idea into a successful startup, however with the tools and technologies we have around us these days, it is possible to launch an idea and grow it in to a profitable business before going after funding right at the start.
Why do Entrepreneurs go after funding?
Entrepreneurs look for funding because they have a validated idea but no money to hire talent that can build a prototype or the product itself, or they are operational and want to expand their business from local to national, or from national to international. They want to improve the processes hence need funding towards technology up gradation, hire talent, get their product or service patented.
What after having got the funding?
Whilst getting funded has always been a big challenge to overcome, once funded, going about deploying those funds to optimum use is the next big challenge, to ensure there is a match with expected returns, and at the same time handling investor relations. Having investors on board your startup also means that you comply with their terms, which may sometimes contradict with your way of doing things. It is arguable, because the investors think that you have got your idea to successful business up to this point, and now you want to take it higher for which you need their help, hence they know and have a few tricks up their sleeve which you have to then follow, but it may also be the case were in you already have all the tricks you need up your sleeve, all you want is the funding from your investors.
Funding for Commercial v/s Social causes!
Commercial Ideas or businesses or for-profit ideas and businesses do stand a chance of getting funded in comparison to ideas or businesses that are driven by social causes. For Social Entrepreneurs it is important to focus on the long term goals and vision with their idea, and not on funding, as a majority of VC’s and Angel money is reserved for commercial ideas and businesses. But now VC’s and Angel groups have begun to recognise the area of Social Entrepreneurship, and have begun raising small funds towards this end. Hence the funding scenario for Social Entrepreneurs is still very small, and for one to show interest to the idea or prospective co-founders or business partners only to an extent if funding is going to be the result of that association, does not lead anywhere.
Timing for Funding?
One of the most important factor to remember when looking for funding is timing. Is the timing right? – in terms of have we gained enough experience with the market and customers that we are dealing with, are fully aware of the happenings in our industry, do we know our competition well, has our product or service been validated by the market, do the revenue and profit numbers justify that validation, are we having a real growth plan at this point that needs supportive funding and are we capable of handling those funds and ensure that growth or growth momentum. These are the questions every Entrepreneur must have reasonable answers for.
Entrepreneurs and funding!
More often we find Entrepreneurs with either commercial or social solutions, running after funding, without having looked upon any of the above questions. They have a singular focus, which is getting funded, that will enable them to execute their solutions to the problems that they mean to target. It’s good to have a strong focus, but to reach that goal, a strong focus without a plan is of no help. For Entrepreneurs, funding should not be the only thing, it just is a part of the whole.