Saturday, July 19, 2008

The Funding Flow Chart

Are you an entrepreneur looking for capital? If so, I hope this blog post gives you some level of advice that you will find useful. Raising capital is one of the most difficult things to do as an entrepreneur - but if you follow this basic flow chart - you may be able to make it a little easier.

1. Do you have a working product with a price and a customer?

If yes, continue to next question.

If No, please stop looking for funding and build a product and sell it to a customer. If you need money to build the product, then get a job or dig into your savings and fund the development yourself. If you can't afford it - dump your idea - and find a product you can build. Or find someone who can build the product and figure out how to compensate them (money / equity).

2. Do you have any experience building a company and taking a product to market?

If yes, continue to next question.

If No, then this is your chance to get experience. Find a way to turn one customer into 10, 20, 100 customers. If you don't know how to do that - ask someone who has. Find a mentor to help guide you.

3. Do you still (absolutely) need capital? Even though you are growing revenue and have a clear path to profitability?

If yes, continue to the next question.

If No then, congratulations - you now are in control - and Investors would love to give you money (although I suggest you not take it).

4. Do you want to trade off your freedom, absolute control and ability to run the company the way you want to for a little cash?

If yes, continue to the next question.

If No then, continue the grow the company until you are in a better position to either loan the money or fund growth through profit. (It may take a little longer to grow revenue, but it beats losing control of your company)

5. Do you need the capital to help fund your salary?

If yes, continue to the next question.

If No, then - return to #3.

6. Are you really an entrepreneur?

1 comment:

Anonymous said...

I loved this - DM