18
Sep
12

Startup-2012

http://www.forbes.com/sites/kevinready/2012/09/18/do-startups-need-funding-anymore/?goback=%2Egde_990_member_165205273

This Kevin Ready post hits on a very interesting subject that comes up when ideas get discussed and the conversation moves to the point of how the financing of a good idea might be accomplished.

I would agree with the perception that funding a web-based startup from day#1 is not as necessary as it once was. A big part of this change is due to the emergence of the cloud as a viable means to provision commercial computing needs. While leasing is a useful tool for small businesses, getting acceptance and reasonable terms that do not bind the founders personally to the risk can be difficult to obtain before the company has significant revenue.

Cloud-based provisioning and the continued evolution of the mobile/remote workforce has made “boot-strapping” a web-based business a realistic strategy for many web business entrepreneurs. Today, there are a number of products and services – from marketing to infrastructure – that allow businesses to operate in a “pay-as-you-go” capacity. While this approach is not always right for more mature businesses, it is essential for the boot-strap startup trying to make progress on its product/service and positioning. With its limited cash-flows and quickly changing objectives, cloud-based provisioning has allowed start-up companies to focus their monies more effectively at sales and marketing of the final product instead of on hardware and software.

Ready makes a point about involving “smart money” and gaining visibility. I think these are both accurate. There are a number of sources for investment monies and they are certainly not all of equal value and pedigree. As well, there are new forms of financing (compared to 10 years ago) like crowd-sourced financing that offer some sorts of businesses a unique alternative to get access to capital.
What seems to be different now (from 10 years ago, for example) is that most worthwhile investors expect even early stage web companies to be able to do more than just show off a “vaporware” slide deck. Investors – even many who call themselves “early-stage” – expect to see some successful efforts by the company to formulate the business plan beyond some slides, some business cards and a marketing study.

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