I think I worded myself poorly. It's not initial funding I find odd. It's additional funding. You go out, get funding. Yay! Funding! Pays for starting the company and making it profitable. I just naturally ASSuMEd that your initial funding would cover startup costs, including marketing.
At least, that's the way my partners and I did it. Came up with an idea, setup initial work, got funding, launched on that funding. Maybe I'm just looking at it the wrong way (which I am sure is the reason).
You're kidding, right? I gave an example in which you've launched, have a profitable product, have $100k in the bank, and are debating the merits additional funding.
In my example, the additional funding will put a LOT of extra money in your pockets, even though you'll dilute your equity, and even though you'd have a profitable business without it.
Simplified example:
You have a customer acquisition cost of $10, and lifetime customer value is roughly $50. Average customer duration is 18 months. You expect this situation to last for 5 years. Your addressable target market has a population of approximately 20m individuals.
Ignoring all other factors, would you rather have:
a) 100% equity, and a $100k marketing budget?
b) 50% equity, and a $1m marketing budget?
c) 20% equity, and a $5m marketing budget?