Funding

To start any business you need financial resources, and you can secure these financial resources in several ways:

• Co-founders invest certain funds for a certain share in the company,
• To apply for a grant and then start the project,
• To include an investor (friends, angel investors, etc.) for a certain equity,
• To make a crowdfunding campaign,
• To present the idea to a corporation and have them be a strategic partner who will invest in exchange for some equity,

There are other various models, but I mentioned the previous ones as the most commonly used methods of securing funds from the beginning.

The biggest mistake that thousands of entrepreneurs make is to implement the fundraising model that is most often used in Silicon Valley… It doesn’t work like that, at least it doesn’t work in every country, and for every business.

Unfortunately, there are countries where you have to come up with a business model that will generate profit from the very beginning of the start-up activation, and that is an entirely different business model than the one where you have to collect funds in various series, a, b, c, etc.

In general, when I talk to younger entrepreneurs who highlight Musk, or Jobs’ experiences, I always tell them not to read anything from them, and not to apply those experiences, because most of the billionaires in the world have not yet made a profit in their companies, and they generated their wealth only because of the increasing price of the shares and the involvement of other investors.

No matter how great, trendy, innovative, and cool this model looks, it is simply not possible to apply it to every startup and in every country.

One of the biggest challenges for any startup is to come up with a strategy, on how to secure funding for their startup, and I suggest spending at least as much time on this part as it takes to come up with the product itself.

If this part is not designed well, then the business model cannot survive the challenges it will obviously have in its life course.

Most often, partnerships between co-founders break down in the financing part. Therefore it is important to devise a document that will regulate the rights and obligations of the current founders, but also of new investors.

This part must be transparent and fair, and it must be clear to everyone why new funds are needed, and what the company is willing to give up for it.
However, as I mentioned at the beginning, the startup must be based on a business model that is sustainable and that can become profitable on its own.

If I had to give advice, I would say the following:

If you want to launch a startup, come up with a business model for which you will have a defined budget for at least 12 months after the product is placed on the market.

This concept will allow you to create a team that will be dedicated to the project, and the chances of surviving the first year will be higher.