"We statred this venture by relying on our savings, and we worked without paychecks for eight months. Finally, an investor came forward, and we landed a $10 million infusion. But after four months of negotiations - during half of which we were bound to a 'non-shop' term sheet protecting us from talking to other potential investors - the investor bailed.
"We owed nearly $200,000 to our employees and our landlord. I'd spent my savings, my 401K, my two mortgages, and $60,000 on credit. But my co-founders and I rallied. We called everyone we knew. Within a week, we had lined up enough resources (using convertable debt) to breathe. Eventually, thanks to Benchmark Capital and other major investors, we turned that debt into equity.
"What I did learn from all of this? It's true what people say: Cash is king. As one investor told me, you don't really have a business until you turn a profit. We pay much more attention to financials now. A good idea is the base of a successful business. But without proper funding, and idea won't go anywhere."