Why Do We Need Funding?

Early stage startups tend to focus on growing their business to a stage where they can get funded. They keep discussing what they need to do before they reach this stage and how funding will be raised. A question which they often forget to think about and is as or even more important is why they need funding.

Let’s try to define funding. Funding is raising money to do what they are doing on a bigger and better scale/platform. Now before we start looking for funding, we need to be sure about these 2 things

What we are doing: We need to analyse our business and be very sure that whatever we are doing currently is scalable and efficient. If it is not scalable, putting in money will result in a loss of money. If not efficient, we will end up burning some money till we become efficient.

What we intend to do: We MUST know what exactly we intend to do with the money. Since we should have already worked out what we are doing currently, this becomes easier. We need to  pinpoint things we need to do with the money and the results we expect from them.

Once we have concrete answers to both these questions, funding makes sense for us. Till then, do not waste time simply thinking of funding. Look internally and sort out the business first.