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6 SECRETS TO STARTUP SUCCESS
CFO in-house to stay on top of the numbers and conduct forwardlooking analyses. But you should always be plugged in to what’s happening with your financial keys. When it comes to early stage financials, you are the worrier-in-chief. Don’t count on anyone else to be lying awake at three in the morning, deciding where to trim costs or find additional capital.
Securing the Right Funding One of the benefits of developing a clear math story and accurately anticipating future cash flows is getting a clear picture of your venture’s capital requirements. In his classic book, Growing a Business, Paul Hawken quotes Abraham Lincoln in making a point about funding. “How long should a man’s legs be?” Lincoln said, “Long enough to reach the ground.” How much money does your startup need? In Hawken’s view, you need enough money to “get to market.”9 But exactly how much money this means is not always clear, and an intense debate has risen over the past decade about the value and wisdom of raising any startup capital at all. On one side is the wellworn bootstrapper’s path, full of proud, gritty, ramen-eating stalwarts, who disdain any form of outside capital. Some proponents of this view believe that early money in the bank causes founding teams to become lazy, to become unfocused and undisciplined, and to lose touch with the market realities. Others cite the importance of retaining maximum control over the venture and one’s equity stake in it, as well as avoiding the risky burden of debt. On the other side are investors and entrepreneurs who advocate for well-capitalized ventures, pointing to evidence that better-funded businesses succeed at higher rates.10 Over the years, I’ve heard several founders who take this view say, “I’d rather own a small slice of a something very successful than a major piece of something that fails.” Based on my experience and research, I take this view as well, believing that your level of passion and preparation, as well as the market demand for your concept, are independent of how you capitalize your business. If you are capable, committed, and prepared as a founder; if you bring a healthy market orientation and have identified real market
American Management Association • www.amanet.org