Have you decided to dive into fundraising and finally establish your startup? Congratulations! You’ve made the most important step. Now, it’s time to talk about not so glamorous part of the work: fundraising.
First, I got some good news and bad news. The bad news: fundraising is a necessary evil, and without it, you won’t get anywhere. The good news: there are several ways to do it, and in this blog post, I’m going to show you some of the most promising.
Here they are:
Fundraising with the help of personal network
Also known as bootstrapping or self-funding, this type of fundraising can be surprisingly effective. So, ask around and see if any of your family members, friends, or poker buddies, can help you to obtain the necessary funds for your startup.
With bootstrapping, you can access funds without fighting bureaucratic obstacles, and get a flexible interest rate. However, keep in mind this way of fundraising only works for small businesses.
If you don’t have a personal network that contains investors, you might want to look into how you can grow your network. I already covered a piece about the topic earlier this year, which you can find here.
Find angel investors
Besides funding, angel investors can offer you priceless mentorship and guidance. These are people with a huge amount of capital, and even better, people willing to invest in a promising business idea.
So, where exactly to find them? You can start with Crunchbase, and check out companies listed there. Along with companies, you’ll find listed their angel investors as well. Other sources to check out are Angel.co and LinkedIn. You’ll be surprised how many people put their investment portfolio’s on their profiles.
Fundraising via ICO/IEO
Don’t roll your eyes just yet. ICO/IEO can be a great way to successfully raise funds for your startup. In fact, some companies managed to raise millions in a couple of minutes with the help of ICO/IEO.
Still, bear in mind that if you decide to fundraise via an IEO, you’ll have to find a reliable exchange for that purpose, and fulfill their requirements. With ICOs, things are simpler. My recommendation is to do the research and see what works better for you.
Explore crowdfunding platforms
In a nutshell, crowdfunding is raising funds for a project/company with the help of a large group of people online. If a community likes your pitch and idea, it can become excellent support especially at the early stage of your startup.
To get started, you can explore various crowdfunding platforms such as Kickstarter. However, keep in mind that competition on these platforms is fierce.
Fundraising with the help of startup accelerators
Startup accelerators are a cohort-based program where startups with big ideas can apply to receive training, mentorship, and necessary funds.
Startup accelerators can be found all over the world and some of the popular include Antler, Y Combinator, Startupbootcamp, etc.
Although a great way to network with other startups and experts, startup accelerators can be a waste of time if a startup lacks commitment. And like the fundraising platforms, you shouldn’t be shy about some competition.
Go for a venture capital
Going for the big bucks? Venture capital is the funding of early-stage and small businesses that are showing high growth potential. But there is more to that. With venture capital, you get mentorship, experience, and expertise, which are invaluable at the early stage of your startup.
However, there is a dark side to venture capital. The investors are usually seeking already established companies, with a proven record of success, while startups don’t usually have this level of achievement.
I’ve personally pitched to VC’s for my own startup but didn’t close a funding round (yet). Hopefully, in the future I can write a blog on “how to close your first VC”.
Fundraising through a bank loan
If you have a solid business plan backed with an exceptional idea, then you have a chance to get a loan from a bank. The loan can be in the form of working capital loans or funding.
For entrepreneurs, this is an excellent way to get access to a large amount of capital and generate income. Just don’t forget that there is a high-risk collateral loss because it’s it is an important requirement for loan grants.
I don’t want to be captain obvious here, but if you have a network of poker friends you can probably find a loanshark there.
Does product pre-sale sound familiar? You’ve probably seen some huge companies such as Apple and Samsung doing pre-sale and allowing buying their products before its official launch.
This is a great way to increase confidence in your brand and earn some extra points from potential customers and investors.
As you can see, there are many ways to raise funds for your startup. And don’t get discouraged along the way.
Every successful startup out there was once at the same place you’re standing right now. Some of them implemented fundraising strategies listed above, and look where they are today.
And guess what? You can be there too. Create the right strategy and just start.