From 61d304c6a9cd54a3af4866a4aef216d01191050f Mon Sep 17 00:00:00 2001 From: Rob Moffat Date: Fri, 29 Nov 2024 10:14:12 +0000 Subject: [PATCH] Added Funding Risk --- .../Scarcity-Risks/Funding-Risk.md | 48 +- .../generated/risks/posters/funding-risk.adl | 35 + .../generated/risks/posters/funding-risk.svg | 2023 +++++++++++++++++ 3 files changed, 2102 insertions(+), 4 deletions(-) create mode 100644 src/images/generated/risks/posters/funding-risk.adl create mode 100644 static/img/generated/risks/posters/funding-risk.svg diff --git a/docs/risks/Dependency-Risks/Scarcity-Risks/Funding-Risk.md b/docs/risks/Dependency-Risks/Scarcity-Risks/Funding-Risk.md index 85716f89f..affd41ea5 100644 --- a/docs/risks/Dependency-Risks/Scarcity-Risks/Funding-Risk.md +++ b/docs/risks/Dependency-Risks/Scarcity-Risks/Funding-Risk.md @@ -18,12 +18,52 @@ part_of: Scarcity Risk -![Funding Risk](/img/generated/risks/scarcity/funding-risk.svg) +Funding risk is the chance that a person or firm won’t be get access to the money it needs when it needs it. This could lead to cash flow problems or trouble paying its bills. -On a lot of software projects you are "handed down" deadlines from above and told to deliver by a certain date or face the consequences. But sometimes you're given a budget instead, which really just adds another layer of abstraction to the [Schedule Risk](/tags/Schedule-Risk). That is, do I have enough funds to cover the team for as long as I need them? +## Worked Example + +![Funding Risk](/img/generated/risks/posters/funding-risk.svg) + +On a lot of software projects you are "handed down" deadlines from above and told to deliver by a certain date or face the consequences. But sometimes you're given a budget instead, which really just adds another layer of abstraction to the [Schedule Risk](/tags/Schedule-Risk). That is, do I have enough funds to cover the team for as long as I need them? This grants you some leeway as now you have two variables to play with: the _size_ of the team, and _how long_ you can run it for. The larger the team, the shorter the time you can afford to pay for it. -In startup circles, this "amount of time you can afford it" is called the ["Runway"](https://en.wiktionary.org/wiki/runway): you have to get the product to "take-off" (become profitable) before the runway ends. +In startup circles, this "amount of time you can afford it" is called the ["Runway"](https://en.wiktionary.org/wiki/runway): you have to get the product to "take-off" (become profitable) before the runway ends. + +In the above diagram, your startup is constrained in this way and wants to maximise its available runway. Startups often spend a lot of time courting investors in order to get funding and mitigate this type of [Funding Risk](/tags/Funding-Risk). The problem with this is that when the founders' focus changes to raising funds, they can no longer be focused on _building the right product_ (i.e. [Feature Fit Risk](tags/Feature-Fit-Risk)) building it quickly ([Schedule Risk](/tags/Schedule-Risk)) and doing so before the market for the product changes ([Market Risk](/tags/Market-Risk)). + +## Example Threats + +### 1. Threat From the Funder + +**Threat**: The entity supplying the funds changes their mind, creating a funding gap. + +**Threat**: The entity supplying the funds can't afford to continue funding, perhaps due to liquidity issues or bankruptcy. + +**See** [Credit Risk](https://en.wikipedia.org/wiki/Credit_risk) + +### 2. Threats From The Capital Markets + +**Threat**: The market changes in some way (perhaps interest rates, a stock crash, exchange rates) which affect the source of funding. + +**See** [Market Risk](tags/Market-Risk) + +### 3. Threats From Demand + +**Threat**: The reason for giving the funding changes - perhaps the sector is less attractive to investors or there is new, stiff competition. + +### 4. Global Issues + +**Threat**: Regulatory, legal or geo-political changes make it impossible for funding to continue. + +:::tip Anecdote Corner + +Boo.com was launched in 1999 as an online fashion brand, hoping to revolutionise the experience of online, interactive shopping. It arrived in a blaze of glory, spending $135 million dollars on marketing - made available to it because at the time the dot-com bubble was in full swing. + +Although there were both technology issues and operational problems, the overall approach of the company had been to spend lavishly from their enormous initial funding budget: getting a global fashion brand to market quickly (in order to capture the emerging online fashion sales market) was seen to be the biggest risk. + +However, by April of 2000, the dot.com bubble had popped, leaving investors questioning why they had invested so much into boo.com in the first place and refusing to invest further. + +On May 18th 2000, boo.com filed for bankruptcy, unable to pay its marketing, wage and technology bills, well before the site was profitable. -Startups often spend a lot of time courting investors in order to get funding and mitigate this type of [Schedule Risk](/tags/Schedule-Risk). But, as shown in the diagram above, this activity usually comes at the expense of [Feature Risk](/tags/Feature-Risk), as usually the same people are diverted into raise funds instead of building the project itself. \ No newline at end of file +::: diff --git a/src/images/generated/risks/posters/funding-risk.adl b/src/images/generated/risks/posters/funding-risk.adl new file mode 100644 index 000000000..0233d1a2a --- /dev/null +++ b/src/images/generated/risks/posters/funding-risk.adl @@ -0,0 +1,35 @@ + + + + + + + + + Raise Funds + + + + + + + + \ No newline at end of file diff --git a/static/img/generated/risks/posters/funding-risk.svg b/static/img/generated/risks/posters/funding-risk.svg new file mode 100644 index 000000000..91de65ae7 --- /dev/null +++ b/static/img/generated/risks/posters/funding-risk.svg @@ -0,0 +1,2023 @@ + + + + http://robs-pro:8080/api/renderer?format=svg + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +