photo credit: Jeff Belmonte

A startup’s model/product usually undergoes a significant change from the point of founding to the point of funding. How the capital flows into a startup is very critical and quite difficult to manage.

Startups can either have too much capital, too little capital, or poorly applied capital – and execution of the startup model in presence of any condition mentioned above can be harmful to the business. Capital investment of a startup determines two crucial things; health of a startup and more importantly, the relationship between a startup and its investors. The concepts of capital discipline and slow capital provide a framework for managing this relationship.  

Capital Discipline – to raise and use capital wisely. Take a lean oriented & customer – focused approach. A minimum-product viable strategy will be ideal to get money and feedback from early adopters. Raise ‘just enough’ capital and try being independent from the time framework since sometimes it may takes years to achieve what your startup model actually aimed for.

Slow Capital – A sense of urgency is important for capital investment but don’t rush to conclusions. This point is particularly beneficial for investors as well-thought investment decisions are precisely what they’re looking for.

Start with small investments and grow with the company.

Capital should be poured into a startup depending on its stage of development.

Capital should be consistent, transparent and disciplined. This is the key for a startup to be successful and to get off on the right foot.

We suggest you read the article at GigaOM for more detail

And that requires a new sort of relationship between startup and investor, one in which the historic friction associated with bringing capital into a startup over time is reduced or eliminated.