Page 200 - 6 Secrets to Startup Success

Staying Power 179

funded and well-funded businesses alike, and they are driven mostly
by factors such as the founder’s preparation, personality, and expertise.
In J.C. Faulkner’s case, the extra funding heightened his ability to focus
and respond intelligently to market forces. “The fact that we had more
money than we needed meant that we could go faster if we wanted,
or we could slow things down,” he said, “depending on what the mar-
kets were doing.”

Bob Tucker, J.C. Faulkner’s attorney, believes that the principle
of ample funding generalizes well to the many business owners with
whom he has worked over the years. “I have advised dozens of differ-
ent businesses to go borrow money,” he says. “If your business plan
indicates you’re going to need a good bit of money down the road, go
right now, even if it costs you more in interest to do so, because you
don’t know what lies between here and there. It’s worth having the
powder in the keg, because the consequence of not borrowing now
may be that your business plan won’t get a chance because of future
developments of some kind.”

COMMIT RESOURCES WISELY

Raising ample funds is one side of the financial equation that will de-
termine the length of your startup runway. The other is your burn
rate, the negative cash flow likely to be created during your launch.
As you build your venture with an eye toward managing risk, pre-
serving flexibility, and staying in the game, your rate of spending will
be a critical lever for extending and stretching your time and cash.

Don’t confuse raising money with the need to spend it. Instill a
disciplined process of managing your commitment of funds and mon-
itoring projected cash levels. The more judiciously you manage ex-
penses, the more you multiply the power and impact of whatever
capital is available.

Mark Williams gives much credit for Modality’s early staying
power to the role of Nancy Owens, who first came on board in a part-
time accounting and finance role but soon became his CFO and chief
administrator. “Nancy, along with great financial advisers around us,
helped us manage cash and operate with a high level of capital effi-

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