logo News
  • Home
  • Management
    Management Show More
    What is the key to management?
    Jun 16, 2025
    Three biographies that every leader should read
    Jun 15, 2025
    How HR airborne troops survive and develop in the enterprise
    Jun 14, 2025
    Who says leaders must be perfect? It is enough to do these four things
    Jun 13, 2025
    11 mistakes managers often make, every sentence hits your vitals!
    Jun 12, 2025
  • Marketing
    Marketing Show More
    Why does Sony set up an internal creative organization?
    Jun 16, 2025
    What Is Event Marketing
    Jun 15, 2025
    What Is Internet Marketing?
    Jun 14, 2025
    Why Is Selling Something Just Constant Repetition?
    Jun 13, 2025
    The Difference And Relationship Between Sales And Marketing
    Jun 12, 2025
  • Entrepreneurship
    Entrepreneurship Show More
    A senior executive's understanding of Bill Gates's secret of success
    Jun 16, 2025
    Eight dangerous motives to avoid for successful entrepreneurship
    Jun 15, 2025
    After listening to these 9 stories, will you continue to start your own business?
    Jun 14, 2025
    Why are you always "poor" when you enter the society?
    Jun 13, 2025
    The principle of getting rich: how to create sustainable income
    Jun 12, 2025
  • Company
    Company Show More
    Berkshire Hathaway Inc.
    Jun 16, 2025
    Volkswagen
    Jun 15, 2025
    Duffy Maritime Group, France
    Jun 14, 2025
    Koch Industries Group
    Jun 12, 2025
    United Health Group
    Jun 11, 2025
  • Entrepreneur
    Entrepreneur Show More
    Jeff Bezos - Founder of Amazon
    Jun 16, 2025
    Sergey Brin, one of the founders of Google
    Jun 15, 2025
    Founder Of Kodak - George Eastman
    Jun 14, 2025
    Conrad Hilton, King Of The World Hotel Industry
    Jun 13, 2025
    Akio Morita, Founder of Sony Corporation
    Jun 12, 2025
Search
Share via
Reading: 5 Guidelines For Financing a Startup
logo logo
  • Home
  • Management
  • Marketing
  • Entrepreneurship
  • Company
  • Entrepreneur
Search
  • Home
  • Management
  • Marketing
  • Entrepreneurship
  • Company
  • Entrepreneur
Home > Entrepreneurship > 5 Guidelines For Financing a Startup
Entrepreneurship

5 Guidelines For Financing a Startup

If you really think your product is a product with potential, should you go looking for financing right away?

Last updated: May 21, 2025

Ryan Holmes, CEO of Hootsuite, talks about these three questions in the context of Hootsuite's history.


Do you remember the Color startup? The photo-sharing app, which promised users the ability to view and share photos with people nearby, was launched after securing $41 million in funding. But less than two years later, the app died because it didn't attract enough users and changed its strategic focus in the middle of the process. It's a classic case of a startup that gets too much funding and rises too quickly.


But what was the problem? If we put Color in today's hot startup environment, would a startup like it, with the ability to raise huge amounts of money, be able to avoid repeating the same mistakes? Let me take the journey of my company's development to illustrate this question.

In the space of six years, we have grown from seven to 700 people and have learnt a lot about the world of financing along the way. While every startup is different, in my opinion there are some common principles for startups to follow - why to raise money, when to raise money and how much to raise. If entrepreneurs can form clear answers to these three questions, they will avoid many pitfalls on the road to entrepreneurship.

 


1,Lean startup
One of the biggest benefits of starting a technology company is that it is relatively inexpensive, from the idea to designing the product and testing it. Often, you don't need to invest too much in infrastructure in order to get an idea off the ground. Because the only problem before you is to turn the idea into a product as quickly as possible, which is not yet mature. After the product has been produced, let some of the users test the product and adjust the direction of your development based on the comments. Of course, in the previous example Color has certainly solved this problem.

Take our experience in 2008 as an example: we released Hootsuite in a low-key way, it was actually the standard minimum viable product, a very simple and basic APP that looked like a hastily cobbled together product designed to enable the management of multiple social media accounts through one platform. In the first week of release, the number of user sign-ups spiked and on seeing this, we decided to appoint a team of engineers specifically to develop the new tool. We are making adjustments based on user feedback, using data to assess exactly which features are critical for users. In fact, it was the only way we knew we did have a certain first mover in the market, and it was at this point that we went looking for financing.

2, Decide whether to raise funding based on the market environment
If you really think that your product is a product with potential, should you immediately go looking for financing? The answer is that you should decide whether you should go for funding based on the market environment at the time. If you are developing a project that no one knows about, you have few real competitors around you, and if your idea does not require too much capital to complete, then you should use as much of your own money as possible to start your business and maximise your assets while avoiding outside interference.


If, on the other hand, your company is committed to rapid growth, the competition is stimulating enough to threaten your position in the market or even to determine whether you stay or go, and you need capital to maintain your current situation, it is time to seek external financing. This is in fact what Hootsuite has chosen to do.


After we launched Hootsuite, we relied on our own funding for a full year, but at that time the market was becoming increasingly competitive and we were moving slowly. Faced with this situation, our immediate priority was to expand our market share as quickly as possible. So, a year after the launch of the product, we secured $1.9 million in Series A funding.

3, Reasonable expenses
Money can certainly change a lot of things, but it's not a panacea. After our first round of funding, subsequent investments followed, and it was because of this money that we were able to hire top engineers to build a world-class product, acquire competitors, put executive talent on our board, and rent offices big enough to accommodate our growing workforce. It was also because of this money that we were able to be the first winners in the market to win.


But in the process, we haven't changed our principles on overheads: we don't waste a penny. So, our office environment is just big enough, it's not as luxurious as you might think. It was a warehouse in Vancouver with second-hand furniture; we didn't spend money on parties to celebrate the success of our funding; and our sales staff travelled on a frugal basis.


As traditional advertising was expensive at the time, we pushed ourselves to find other ways to increase our exposure. One of my greatest hits was at SXSW 2012, when we bought a second-hand bus and dressed it up to look like our icon: an owl! The cost was much less than having a product presentation at the conference. But after the event, our product got a lot of exposure in USA Today and several other newspapers.


TAGGED: Startups, Financing, Assets
Previous Article How To Do Well In Online Community Operation? The Key Points And Techniques Of Community Marketing Operations
Next Article Discover the top five sources of entrepreneurial opportunities

Most Popular

Steve Jobs: The Self-Esteem Of A-List Talent Doesn't Need To Be Pampered By You
Management May 18, 2025
For Entrepreneurs: How To Get Your "Ambition" Right?
Entrepreneurship May 10, 2025
Kering Group
Company May 14, 2025
Five Ways To Start a Business And Say Goodbye To The Low-Cost Era
Entrepreneurship May 14, 2025
Ten Open Secrets You Need To Start a Successful Business
Entrepreneurship Jun 08, 2025
The Difference And Relationship Between Sales And Marketing
Marketing Jun 12, 2025

You Might Also Like

Entrepreneurship

How can you validate your business idea without spending money?

May 02, 2025
Entrepreneurship

A senior executive's understanding of Bill Gates's secret of success

Jun 16, 2025
Entrepreneurship

Eight dangerous motives to avoid for successful entrepreneurship

Jun 15, 2025
Entrepreneurship

After listening to these 9 stories, will you continue to start your own business?

Jun 14, 2025

Copyright © 2025 ikaoo.com. All rights reserved. User Agreement | Privacy Policy