4 crucial steps to climb before seeking financing for your startup

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From: Mashable By Eyal Shinar
Recommended by: Mashable


Image: Stephanie Carter/ImageZoo/Corbis

This article is part of DBA, a series on Mashable about running a business that features insights from leaders in entrepreneurship, venture capital and management.

If you've got a hot new product or service, chances are you're wondering at what point you should seek out financing to take your idea to market.

It’s a perpetual challenge faced by all startups. After all, most investors will want to see proof of concept and some traction first — and that's hard when you're just getting started.

So, what comes first, the product or the financing? The revenue or the investment? Investors are essentially taking a chance on the future of your business, not necessarily what you've done so far — but that doesn't mean initial traction isn't important to them.

Having a growing base of paying customers is explicit proof to investors that someone other than your mother actually values your product. It eliminates simple but significant risks that investors really don't like, namely that (1) you have a product, (2) it works and (3) it's worth paying for. This is a major momentum-triggering milestone for any company.

If you can assemble and execute a solid business foundation and generate some initial revenue befor

 

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