It might be interesting to take a closer look to what the financial and organisational base actually considers. Below is the first general information about how to generally fund an organisation or association and which stages are involved. It is a short explanation, but hopefully it makes a bit clear what we are busy to analyse and why we make the difference between seed funding and as we call it “at scale” funding. It are just some thoughts about how to deal with a strategy and why we have to think about both the organisation as well as how to fund it.
The success of an organisation depends on several factors, both internal and external. Some of them can not be considered for the fact that they are unknown, for example inflation, an economic crisis, natural disasters with huge economic consequences or an appreciation of the housing stocks. Other factors have been studied a lot; for example the relationship between the fundament on which a corporation has started and his chance to survive on the world market. This relationship can be seen in diagram 1, in which the risk of starting a corporation is related to the source of investment and the different phases that a company goes through.
The phases that can be distinguished within a starting corporation are the following:
Early phase of the company’s life-cycle, when the entrepreneur has a basic concept of the product and business plan. Generally at the level of research and development, into which the predominant part of financial resources is directed.
This concerns an established or only recently founded company which, however, has not begun commercial sale of its products or services and has no profit. Financing is connected with commercialisation of the product developed in the preceding phase.
In this phase, the company is already producing its product, has established relationships with its partners (trade and financial) and defined its own place on the market. Financing of the company is oriented particularly toward ensuring the company’s operation and covering initial investments that the firm undertook following the start-up phase.
The growth phase of the life-cycle of an existing firm which has prepared a new product representing a significant change in its offer. Financing in this phase is focused on the expansion and growth of the company; it is possible to finance growth of production capacities, development of new products/services or financing of working capital.