From Concept to Wall Street: A Complete Guide to Entrepreneurship and Venture Capital

Part II. Financing the Venture

Obtaining financing from outside sources is one of the most important and longest processes in the life of a venture, lasting until it gains financial independence. The issue of financing is, no doubt, one of the primary problems facing all businesses. In startups, however, which require large amounts of outside capital to develop their products and penetrate the market, and which generally have no revenues for long periods of time, this problem is multiplied and enhanced.

As opposed to mature companies which have “cash cushions” and can withstand periods of lack of funding, many startups go out of business because they lack financing, not because their products have failed. A startup's cash flow depends mainly on ...