I realize this is a naive question, but I've never seriously considered doing a startup until recently and I'm realizing how much I don't know...
So here is hypothetical: I have 40K of my own money to start something. Let's say after 6 months I've built something cool and monetizing it is likely. My cash is starting to run out.
1) What would you do?
2) Are there obvious places to turn for funding?
3) If I get one round of funding, hire two people to help me out and then need more funding but get it from a different source, how does this reconcile? I assume it's in a contract, but what should one expect?
4 from 3) If the original source of funding denies a second round, what does this mean for their original investment? Do they write it off? If I get a second round of funding, are they still expecting a pay-out?
5) Any book suggestions for books for learning about this? The book suggestions in YC News's archive is a bit overwhelming to dig through...
His papers deal with the nitty gritty, and are kind of nerdy, but you'll learn a ton of how things actually work. You can download them here. http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1769...
I recommend the first two in the list, The Exit Structure of Venture Capital, and How Early Stage Entrepreneurs Evaluate Venture Capitalists.
That said, while thats how funding actually works, the work of getting funding all takes place before an agreement is signed.