Setting up a business can be the most difficult adventure to get on as it requires a lot of determination, ambition and goal getting, at the same time, but one major thing that a lot of people clamor about when starting a business is funding. The actual truth remains that funding doesn't really matter when a company's success is considered, a lot of companies had funding but still declared bankruptcy. Not all problems can be solved by throwing money to the problem.
Essential Product was a startup company with a funding of $33 million still went bankrupt. There are a lot of factors that could make a company go bankrupt and finance might be one of them but I can say categorically that it isn't a major criteria for a company to declare bankruptcy. Let's pick the factors one after the other;
Management
A bad management is a failed company. When the management of a company cannot make decisions that will improve the company or lead the company to a prosperous future, then the company is 1 meter away from bankruptcy. Making the wrong decision in business will affect every sector of the company and if the management can immediately recall the problem and find a solution, then maybe it can work but when the management is adamant, then there is a problem.
Mismanagement of Funds
A lot of businesses have collapsed due to this particular problem. The fact that people believe they have the right to deep their hands into the companies pulse and use money at their will, because there is a believe that the company is already successful because it had an initial sales. You cannot and should not tamper with a business funds at all, it should be aimed at growing the company so investors can buy into the company making you more profitable for you when you want to exit either by listing or by selling off to larger companies interested in buying.
Disasters with no Insurance
Disasters can be both natural and artificial and in the case of both, a company should have an insurance coverage but when startups do not have insurance, they tend to bankrupt. It is advisable that startups get insurance but while some cannot afford it, it is good that the ones that can afford it do get it.