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Capital Is Not The Most Important Thing For A Startup

Written by James Conroy
Published: 6/3/2009

A new study finds that underfunded startups can still survive and that a strong management team may not be more important than a good product.

Many potential small business owners don't take the leap because they fear not having the capital to get going, but the good news for entrepreneurs is a new study finds capital may be overrated.

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According to a study from the North Carolina State University, it may not be necessary for technology start-ups to secure a great deal of capital at the onset, but says that a good product may be more important than the management team when looking to secure funding.

David Townsend, co-author of the study and an assistant professor at the university, says that there may be more important things to consider than being underfunded.

"Our research shows that undercapitalization is not a death sentence for start-up ventures," he said. "There are things a venture can do to survive and succeed."

Townsend said these undercapitalized companies need to focus on ways to reduce costs or turn to a barter system in order to improve upon the business.

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