“Most Investing is 80% Emotion (how the Investor feels about you – how you presented) & 20 % Logical (the potential of your Product/ Service & experience of your Team). The best way to get to someone’s emotions is to tell the Story of discovering your Idea and what impact you feel your Idea will have”. Wiz4.biz
Funding Topics: BootStrap, Friends & Family, SBA, Loans, Angels, VCs, CrowdFunding, Accelerators.
Starting with a $M Idea is great—but now what? You probably need a Website, Marketing, Admin + some office space, and enough Cash Flowing in each month to pay your housing, food, utilities & a few other minor survival things. Which means, you need good Cash Flow or mountain of $$$ for your needs. Whether it’s a cool new App or a gadget, most businesses require at least some Funding to be able to Launch in their early days. I’m often asked by entrepreneurs for help finding Funding. The good news is, there are quite a few places to get it (and many that are frequently over-looked). Read on for a first-time Founder’s guide to where to look for Funding, and which type might be right for you.
Begin with BootStrapping . . .
which means financing your company by scraping together any personal funds you or others can find. This typically includes your savings account, credit cards, and any home equity you may have. In many cases, using the money you have instead of borrowing or raising is a “great” approach. In fact, some entrepreneurs continue to BootStrap until their business is profitable. This can be very beneficial because it means you won’t have extensive loans or monthly payments to slow your Cash Flow -, especially if you run into snags along the way. But, if you’re looking to scale your business quickly, it can be advantageous to bring in outside sources of Funding.
1. asking Friends & Family . . .
for $$$ might seem like a intimidating prospect—but tapping those closest to you is often a good first step before getting external Funding. It can never hurt to ask. Before you ask your friends & family for $$$, though, you should have a Business Plan ready. This way, you can explain to them exactly what you’re making, how you’ll make money, and whether you’re asking for a Loan, an Investment, or a Gift (ie, whether or not they should expect to get back any money they put into your business, and if so, how much).
2. Crowd-Funding is an increasingly popular Funding method, such Kickstarter & IndieGoGo leading the pack. They provide you a platform to raise money from individual, small supporters across the web. You’ll set up a campaign and name a target amount of money you want to raise, as well as create “perks” for donors who pledge a certain amount of money. Then, you raise money for the campaign over a specified time period. With Kickstarter, you’ll only get to keep the money if you raise the full amount of your goal, but IndieGoGo will let you keep anything you raise (for a cut of the proceeds)..
3. Small Business Administration (SBA) has 63 centers across the country. Not only can these centers help connect you with groups of entrepreneurs for Networking & Angel Investors for Funding, they can help you determine what type of Loans or other Funding you might qualify for and help you apply. Your local Chamber of Commerce may also be a good source of information and guidance in terms of where to get local Funding. Many large cities have programs & organizations that exist solely to bring business into the local community.
4. checkout Micro-Loans.
If you’re looking for a relatively small amount of money (anywhere from $25 to $5,000), there are quite a few Micro-Loan organizations that lend to start-ups & entrepreneurs, such as Kiva & Accion. These websites cater to low-income entrepreneurs in the U.S. or those working for social good (and some only provide Micro-Loans to those living below the poverty line). But if you think you might qualify, check out their websites for more information.
5. Consider taking out regular Biz Loans.
If you can show that you’ve started gaining “traction” & making money (+ that a loan would help you earn even more), you may be able to qualify for a traditional Bank Loan. Many banks, such as Bank of America & Wells Fargo, have recently announced increased commitment to Small Business. While each bank and individual situation differs, this may be a good bet – if you’re looking to find Funding between $5,000 & $500,000.
If you’re “launching” a Tech Start-up
6. Look to Angels.
If you have a Tech Start-up, you’ll probably eventually need more capital to really get going, than BootStrapping & Crowd-Funding will afford you. You’ll likely need to reach out to outside Investors. A good place to start is Angel Investors – which are usually established business professionals with high net worths -who are looking to invest in promising companies. Typically, an angel will invest anywhere from $10,000 to a few $M dollars. To find Angels, ask other Entrepreneurs in your Network, or check out the Angel Capital Association, which counts over 330 Angel Investor groups nationwide. You can also look at AngelList, a website that helps Entrepreneurs make connections with interested Investors. So far, the site has helped more than 1,000 Start-ups get funded. In addition to making Direct Loans, Angel Investing groups sometimes Host events or competitions that can help provide new entrepreneurs with additional Networking opportunities. Check your local community for these groups.
2. Venturing into Bigger Capital
If you’re looking for some serious Funding (at least $1M + +), you’ll need to turn to Venture Vapital. Venture Capitalists (VCs) are more likely to require an in-depth, compete Business Plan, but they can also give you larger amounts of money. VCs typically invest in a few different companies for their Clients, and hope to make money off of one (or all) of them to pay back their Client’s Investments. What that means for you is that they see all kinds of businesses—and you have to make yours stand out. Also, you should know that VCs are looking for a return anywhere from 3-10 times their original investment – usually within the next 5-7 years – so it’s best to have an Exit Strategy in mind. The best way to get meetings with VCs is through introductions from other Entrepreneurs or Investors—which means that if you’ve decided to solicit VC money, it’s time to leverage your Contacts (and their networks) to see who you can talk to. Don’t have any contacts? It’s more of a gamble, but you can also browse the National Venture Capital Association Website and Pitch your business to the ones you find a connection with. While cold-calling a VCs may not be the easiest feat, it’s somewhere to start.
7. Now are you “ready” to Launch ???
Finding Funding can be the hardest part of getting your business off the ground, but also the most rewarding. Once you’ve saved, gotten approved for a Loan, or found other people to invest in your business, you can get back to—or start—your dream work. Though it can be a long road to success, finding allies along the way (whether they’re friends, angel investors, or venture capitalists -VCs) to help keep your business afloat can make all the difference in the world. Good luck!
Locating Investors is not the hard part of getting funded . In fact, thru the process of trying to raise money, an entrepreneur might have opportunities to talk to upwards of 40 to 50 Investors, depending on their idea & location. However, just as it takes a quality idea and pitch to find success, it also requires a quality Investor – one who works in the same field as the company, one who is able to shed wisdom throughout the development of the company, one who can come to a reasonable financial agreement that suits all parties involved. And that doesn’t come without due diligence, a well-crafted pitch with a realistic business plan, and a lot of research. When you’re looking to start raising for your company, consider these . . .
5 ways to find Angels & VCs.
1a. Through top-tier Business schools.
Call the closest university with a strong business or entrepreneurial program. They generally have a strong network of investors & successful entrepreneurs from their faculty, alumni, & guest speakers. Ask them if they might be able to point you in the direction resources.
2a. Thru your Industry Friends.
If you know of other Founders of companies similar to you in your industry who have found investors, ask them for their recommendations. As many investors specialize in specific markets, they tend to find companies thru networks. So do your research on Angels who work in your field, and try to get an intro.
With all the CrowdFunding platforms available, some with targeted industries such as arts, science, business, startups, and others with Angels like equity investments, loans, and venture networks, those who want to get Seed-funded have plenty of opportunities to try their hand.
Ideal for companies who are either active participants in their industry (say, a new Indie company who has close ties to industry), or Founders who don’t mind the bare minimum of guidance, or people who are extraordinarily good at Social Media. CrowdFunding is a viable option to maximize the number of potential views by investors in one go.
AngelList, MicroVentures, LinkedIn, & even Quora can be effective sources to find Angels. With online resources, be sure that you can establish some sort of credibility. The easiest way is by looking specifically for investors in your own market (so, AngelList makes it easier, as it sorts investors by region or industry).
5a. Angel Investor Networks.
are member-based networks that tend to service by location. They are often operating from a fund that has been set aside by an Investment firm to source deals for the network. Applications are pre-screened, the Angels can retain their anonymity, and Founders can find themselves getting offers from up to a hundred investors for one venture (as opposed to going from Angel to Angel individually).
Venture Capitalists [VCs]
1vc. Prove you are Market-Ready.
When you’re at the stage to start pitching to VCs, you should be established in some way. You could have major name recognition, or your company could have a good Social Media presence; your prototype should be working & showing signs of traction.The more risk that a potential investor can see in your company, the less they’ll want to invest in it.
2vc. Apply to Accelerator programs.
Offered by investment firms, seed funds, universities and other large established entities, Accelerator programs are found pretty much all across USA. Some of the top accelerator programs are hugely competitive, like YCombinator & TechStars, but the payoffs are big. Basically weeks-or months-long Boot Camps for the sole purpose of launching a company with classes & talks by highly regarded entrepreneurs,
Accelerator programs are a great way to meet other founders, get real-world guidance from industry Mentors, and sand-off some rough edges. Some Accelerators offer a Seed investment in return for Equity, and they usually culminate in a Demo Day presentation in front of an audience of Investors. What more could you want ???
3vc. Thru your Mentals (no) Mentors.
If you don’t have industry Mentors, you should consider connecting with a few before you start shopping around for investors. Your mentors will see you thru significant parts of your journey; they get to know your company, and you as a founder, but also have the experience to offer their guidance to help you navigate the industry.
They could be successful entrepreneurs themselves, or investment experts, or leading influencers in your field. Likely, they will help you to understand what Investors are looking for, or even introduce you to some who could be potentially compatible with your Vision.
4vc. Research the field & compile a list of potential Investors . . .
from your immediate network of industry people, that may align with your vision & goals. With thousands of VCs across the country, all you need is a solid list of 30 to 50, who can give you the capital investment that you’re looking for – and the best come recommended.
Tap into investors in your network, reach out to them in a low-stakes environment, lay out your ideas, ask for feedback, and always incorporate their advice into your next pitch.
5vc. your city’s Entrepreneurial community
Perhaps the first thing you should do when you’re ready to take your project out of the garage is to get involved with the other founders around you. Join regional tech and Startup groups on Meetup, Facebook & LinkedIn, attend events, help out with an organizing committee, to meet as many people as you can. And be a human being, not just a Pitching machine (not Baseball) – ask for advice, but also give advice when you can; talk about struggles in the life of an entrepreneur, & get to know some of the other founders, investors, & the tech community around you.
When you connect with the members of your community as a human first, then you can build stronger relationships and work together to help each others’ companies cross the finish line.
Comments: Do you know any other sources of Funding?
from Huff Post & the Moose (no the Muse) 9/18 enhanced by Peter/CXO Wiz4.biz
For more Info, click on Funding.