Often these days the business columns of the newspapers have a slot dedicated to this dynamic phenomenon called Funding. The sensation around it is jaws dropping.
And surprisingly every pearl in the startup arena aspires to be in this column and all their time energy and efforts are channelized towards accomplishing this.
Speak to any startup, funding is always on their priority list.
Funding has become the chanting mantra of Startups!!!
To follow with these are the Valuations, B-plans, Pitches, Term sheets, Deal Structuring and the list go on.
While all these gaga and extravaganza around, one fundamental parameter needs a definition – The definition of Funding.
What is Funding?
Generally funding is understood as a monetary investment into the Business. In layman’s language there shall be an external party who pours his money into your business.
This is the common understanding of Funding.
But is funding only related to Money?
Having observed successful businesses and their patterns the above definition of Funding is a myth.
So, what exactly Constitutes Funding?
1 . Funding is not always from outside. Funding starts from within the Business. The first Chunk of monitory investment should always flow from the Founding team/Visionary team. Although there are seed funds, where external parties invest at the idea stage, the success rates of those are very minimal.
The founding team which believes in its vision, are the First monetary investments into the Business.
2. To take it further Funding does not stop at infusing money by Founder’s team into the business definition.
Funding by its core definition means investment of dedicated time and Efforts, through market research and effectiveness realistic Strategic Planning.
Who funds the above?
It is the same founding team
At the first instance, the founders should themselves bring in the monetary investments followed with the time and efforts Investment. Mere Money will do nothing.
3. The Third Stage of Funding is where an external party invests into a business. Even here, mere infusing of money will not make a difference. The external party should carry the same vision of that of the founder’s team, walk hand in hand in every aspect of strategies and accomplish the mission.
These are strategic investors they bring into the business money beyond.
The most successful business have adopted these Fundamental steps.
In a nutshell,
Founder’s Money + Founder’s Efforts + Strategic Investors = Funding
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