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What Could Funding Do And Not Do For Your Business

What Could Funding Do And Not Do For Your Business
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You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Funding is a great way of taking your business to the next level. In the news this week, VividCortex, from Charlottesville, announced that it raised a further $4.5 million in funding.

Why is this such a story?

The only reason they gained this additional funding was because their database performance monitoring products have been successful following initial funding. It goes to show that funding can lead to further funding. Following initial funding and going to market in 2014, the company saw a boost of 750% in revenue.

But funding can’t do everything for you. This guide is going to show you what funding can do and what it can’t do.

It Can’t Make a Reputation

Before you start to celebrate how much money you could raise, take note that it can’t save a broken reputation. Take the Hulk Hogan and Gawker bankruptcy case as an example. Despite Hogan winning $140 million in damages, he still has a negative reputation because of the sex tape that this case was initially over. His brand has been permanently damaged.

On the other hand, the Hillary Clinton email scandal has gone the opposite way. Using funding, that story has largely disappeared from Google. It’s only a matter of time before this lack of transparency hurts her online reputation.

Taking advantage of lots of funding opportunities won’t cover for a lack of quality in your products and services. Startups need to work for the benefit of their customers and nothing else.

Make Your Dreams Come True

The main benefit of funding is that you have the resources to make your dreams come true. One of the main problems experienced with startups is they don’t have what they need to make things work. They have to bootstrap their way to the top, and 50% of them fail within the first five years.

Funding can provide you with the vital resources required to actually bring your idea into the real world.

Learn from the Best

People often forget that you can learn from the people funding you. One of the lessons you can learn from HBO’s Silicon Valley is that you can accept a lesser amount of funding in favor of mentoring. This can give you the expertise and knowledge you need to make some major gains.

It’s easy to think of funding and assume it’s all about the money. It’s not. Many startups have only succeeded because they have had truly talented people backing them up.

The Best Won’t Run Your Company for You

Every mentorship agreement will have different sides to it. What a mentorship agreement never implies is that the mentor will run your company for you. They may be available for weekly meetings, but they are never going to take over the running of your company.

It also shouldn’t be considered as a free pass to fail. The mentor isn’t going to step in with more cash or with their time to save the company if you happen to mess up. They will let it fail if you aren’t capable of turning your organization into a success story.
Keep in mind that funding is an investment in you and your startup idea. If one of those isn’t up to the standards expected, you are certain to fail.

It Can Lead to Attracting Bigger Fish

This is another issue to keep in mind. A first round of funding is not the be all and end all of your startup. The majority of successful startups will use a first round of funding as a Launchpad to acquire more funding.  Later rounds of funding are the ones that count.
Most large venture capital firms won’t even consider you until other investors have already placed their faith in you, which is why you need these smaller rounds of funding before you can get those huge capital injections.


As you can see, funding options like venture capitalists and crowdfunding can do a lot for your company. What it will never do is remove the responsibilities you have. You still have to lead your company, form a great team, and come up with fantastic ideas. The risk of failure is still great, but with outside support you come even closer to accomplishing your goals.

Place funding in perspective and ensure you keep pushing to make your startup as great as it possibly can be. Tell us your stories of applying for funding, and whether you succeeded in your endeavors.