Funding handcuffs

Funding Handcuffs

Most people would have to find out the hard way the benefits of an ICO, Kickstarter campaign, Seed Investing, government funding etc but through consulting it is possible to find out from multiple clients what should be kept in mind when searching for money to turn your idea into a company.

*This is a short post, so just a quick insight and with gross generalizations

All in one pot

Kickstarter, ICO and Government funding all sit in one box for this purpose. The first two are crowdfunding, where a product is pitched and if the audience likes it, they pledge some money, the third doesn’t need explaining.

The reason that these are grouped here, are they all suffer from one issue…pivoting is near impossible.
In each case, a product has been purchased so if halfway through the production or coding, it is obvious that there is no market for it or that another product has come on to the market which renders yours obsolete, you still have to deliver.

Yes, pivoting with these types of funding is near impossible. We have seen and heard many stories from founders with these issues, handcuffed to the deadlines, producing things that are not wanted anymore.

What is the solution?

There isn’t really one. Some who are creating software develop 99% of the program and then use these funding methods either as a marketing tool (pure awareness) or to pay everyone after the fact.

For a hardware startup, that means a lot of unpaid prototyping and burning through your savings.

There is no ideal answer. There are a lot of pitfalls with other funding as well. We just thought we would share this one as it seems to be an untalked about problem.

Funding handcuffs

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