While many start-ups can get off the ground with little to no external financing, sometimes it can make the difference between success and failure. According to entrepreneur Kevin Ready, there are several good reasons to to raise funds through external entities:
Marketing: Even if you make the best product ever, it doesn’t matter if no one ever sees it or knows about it. A marketing budget can get your product or service visible where it otherwise would not be.
Speed to Market: The time window for your product to be viable is a short one- the longer you take, the more time your competitors have to take market share away.
Visibility: A high profile investor brings credibility and can make people take notice of your product, and you will have more access to talent, advisors, money, etc.
Less Personal Risk: You don’t want to have to drain your bank account getting your business off the ground. External funding lessens the hazard for you and will allow you to take risks without risking your personal finances.
Cushion: More money in the bank means more of a cushion in case of hard times or uncontrollable external factors.
There are many types of financing available- a start-up company must weigh the pros and cons of external financing, evaluate the financing options, and then decide which form is best for its needs.
For the original post, see Do Startups Need Funding Anymore?