Financing Your Big Idea

Someone asked a question on LinkedIn about the best way to finance a new venture. What do you think of my response?

"By far the best way to finance a new venture is by customers paying in advance for your products that may or may not truly exist yet. Each dollar you bring in with this customer-centric finance approach provides more than a dollar of value by also validating your market (In the raise-capital-then-build-product-then-sell-product model there is a much higher risk that you will build something that no one wants to buy.) and creating a group of reference customers to help you sell even more product once you are ready. Recent crowdfunding sites like kickstarter (which is essentially a pre-sales tool) provide this benefit if you are targeting many, smaller customers. If your product is more enterprise in nature, though, you will need to do the selling yourself."

No comments: