Saturday, June 11, 2011

Funding Ob-Seth-sion

I had been working on a post about building companies vs. "getting funded." Entrepreneurs sometimes get confused about which is the goal, and which is a side-benefit. They confuse correlation with causation. When I ask "what do you need?" or "what are you working on?"... I often hear about funding.*

Building a company sometimes requires outside funding.** For these, funding is one of many activities that founders need to pursue. But the focus needs to be on fixing what sucks. That is the purpose of your enterprise, not getting funded. It is finding something that needs fixing, and building an enterprise to do that, that results in funding. Not the other way around.

But I don't need to write that post anymore, because Seth Godin did. Right here.
* So I just ask a second question- what will you use the money for? Then we can discuss the many options they might use to obtain those resources.
** This depends on your business model design. Many good companies get built without outside funding. I'd encourage you to prototype several bootstrapped business models for your venture so you understand your options.

1 comment:

Dr Paul Rigterink said...

I anticipate that improved business concepts, improved business processes, and improved training will be necessary for the following types of businesses if one is to help a large number of BOP subsistence farmers living in extreme poverty: grain production, vegetable and fruit production, raising poultry and other small animal such as goats and pigs, and general purpose micro-farms. I have seen very few social engineering companies that have this subsistence farming expertise.
Similarly, I have seen very few social engineering companies that know how to create jobs for a large number of BOP migrant workers living in urban areas other than with micro financing. China did not create all their new jobs using micro financing.