The goal of a startup is not just to raise money.  I don’t know who said that first, but I’ve heard that quite often lately.

Perhaps the greatest quote of the management icon Peter Drucker is this:

“Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Case in point – read about the success of Apple’s store strategy in today’s WSJ.  For the opposite, look at how the major US auto companies, particularly GM, had their beans counted to the point of losing comprehension of the basic notion of building marketable cars.  (I’m still not sure GM gets it.  Hertz gave me a Chevy Cruze this past weekend, and I found it to be bland, wheezy, and with entrance and seating seemingly designed for much shorter than average people.)

In the technology world we are in a design-driven era.  Apple certainly understands that and seems to be on a non-stop string of successes based on its design skills.  The lowering costs of technology development and distribution are allowing more products to be brought to market, and those that are differentiated in terms of user experience will be the ones that will create customers and prevail.

All that said, however, a startup has the unique requirement of being able to innovate and market while keeping itself financially viable.  If you and your team have the personal resources or the innate talents to completely bootstrap your company, or if your idea is one that can be done relatively “capital light” through a Y Combinator type program, you can strictly adhere to Dr. Drucker’s thesis.  On the other hand, the majority of startups don’t have that luxury.  There is the constant pressure to bring money in the door to meet pesky payrolls, rents, and other expenses.

My point is that startup management has to have on its primary agenda the forward financing of the company.  Using all the money on hand to develop a great innovation will come to naught if there are no funds to carry it to market and surround it with the infrastructure that becomes a real business.   Advisers and finance specialists can certainly play an instrumental role in this respect, but there is no escaping the necessity for senior management to be intimately involved in the process.  And, yes, it is a process.  It takes a lot of time, a steady building of relationships, and a repeated articulation of the vision as only senior management can do.

I’m not talking about just raising capital by selling equity.  That is one way to raise money, and the one most commonly attempted.  Other alternatives include selling services to generate excess income that can be applied to product development, pre-selling the product, and seeking government grants.  All of these require a thoughtful strategy and must be managed ultimately from the top of the company.

For a business to exist and to adhere to Dr. Drucker’s purpose, it has to have capital, and that capital doesn’t appear by accident.