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122 6 SECRETS TO STARTUP SUCCESS

CFO in-house to stay on top of the numbers and conduct forward-
looking analyses. But you should always be plugged in to what’s hap-
pening with your financial keys. When it comes to early stage
financials, you are the worrier-in-chief. Don’t count on anyone else
to be lying awake at three in the morning, deciding where to trim costs
or find additional capital.

Securing the Right Funding

One of the benefits of developing a clear math story and accurately
anticipating future cash flows is getting a clear picture of your ven-
ture’s capital requirements. In his classic book, Growing a Business,
Paul Hawken quotes Abraham Lincoln in making a point about fund-
ing. “How long should a man’s legs be?” Lincoln said, “Long enough
to reach the ground.” How much money does your startup need? In
Hawken’s view, you need enough money to “get to market.”9

But exactly how much money this means is not always clear, and
an intense debate has risen over the past decade about the value and
wisdom of raising any startup capital at all. On one side is the well-
worn bootstrapper’s path, full of proud, gritty, ramen-eating stalwarts,
who disdain any form of outside capital. Some proponents of this view
believe that early money in the bank causes founding teams to become
lazy, to become unfocused and undisciplined, and to lose touch with
the market realities. Others cite the importance of retaining maximum
control over the venture and one’s equity stake in it, as well as avoiding
the risky burden of debt.

On the other side are investors and entrepreneurs who advocate
for well-capitalized ventures, pointing to evidence that better-funded
businesses succeed at higher rates.10 Over the years, I’ve heard several
founders who take this view say, “I’d rather own a small slice of a
something very successful than a major piece of something that fails.”
Based on my experience and research, I take this view as well, believ-
ing that your level of passion and preparation, as well as the market
demand for your concept, are independent of how you capitalize your
business. If you are capable, committed, and prepared as a founder; if
you bring a healthy market orientation and have identified real market

American Management Association • www.amanet.org