Funding the project

When you are just beginning after having decided to start-up the business, you feel on the upper side of the roller coaster. Last year's savings are there for you to use in the project and ideas flow to your mind like waves to the shore. 'Confidence' defines your state of mind and you are ready to overcome the challenges awaiting ahead of you.

But if you have been here before, most likely you have already found out the importance of funding the project correctly and being wise about expenses. It is not only about getting enough money to start running, but about allocating some resources to fuel upcoming stages in the business development. For  example, let us say that you have invented something great and you are thinking about securing intellectual property rights and building up some prototypes. You need prototypes to show to potential investors and you need to secure IP rights to protect the business. But if you start moving the IP rights wheel, you will soon find out the enormous amount of money it takes to keep it rolling. So, if you can sign confidentiality agreements with potential investors instead, you can wait until public disclosure is necessary before applying for the patent. On the other hand, a patent is a very atractive asset that increases the value and investability of your company. In this situation, you may want to use your money on building prototypes and ensure that the amount of money obtained from the first round is enough to pay for pursuing a patent in your target markets. The same goes when thinking about investing in production facilities or staffing your business: make sure you have money to pay for the operating costs.

Behind the above examples lies a more pragmatic hint: the tighter your budget situation, the tougher investors become. Therefore, in order to get sufficient and timely funding from investors without giving away your project, you need to fund some of tomorrow's expenses with today investors's money. And make sure they get enough profit in doing so!