How to Raise Startup Funds

funding

So you’ve got a great idea for a business. You’ve thought it over, created a business plan, and are excited to put your plan into action. You’ve researched markets, done your due diligence in product and service development, and are ready to take the next step to grow your idea into a full-fledged business. Now, you need money to make it grow.

Raising funds for a startup is one of the most challenging first steps to building a successful business, and there are a few different ways to consider doing it.

Friends and Family

This will often be your first round of fundraising, reaching out to those closest to you who support your dream and have very likely heard all about it as you put your ideas together and developed them into a business plan. If you do draw in a number of investors from your social and familial circles, invest in solid legal representation. This isn’t the time to rely on a firm handshake and verbal agreement. Make sure you get legal advice and contracts drawn up, even if it costs. It will save you time, and hopefully good relationships, later.

Remember that even though they are friends and family, and are likely to be swayed by your passion, enthusiasm and general familiarity with what a driven, enthusiastic person you are, their help only extends as deep as their wallets. In order to fund a startup, you’ll likely need more than friends and family can provide. This is when you reach out to angel investors and venture capitalists.

Angel Investors and Venture Capitalists

This is where the big money is, but you’ll have to make an airtight case for the viability of your idea in order to make it in the big leagues of money acquisition. Check out tech-centric websites and publications such as Tech Crunch for directories of angel investors and venture capitalists, or sign up for  events and conferences such as Collision, Dx3, TechCrunch Disrupt or CES for opportunities to meet investors that might be interested in your business. Consider bringing along some branded swag to give out to people you meet to make an impression. There is a lot of money for startups out there, but there are also countless entrepreneurs and startups vying alongside you for those funds. Perfect your elevator pitch, develop a thick skin, and get ready to network.

Keep an eye out for networking events, workshops or lectures on investing and finance that can put you in touch with people who may be interested in funding your startup. Like many things in life, this is a numbers game: the more potential investors you meet, the higher chance you have of finding one who will invest in your particular business.

Crowdfunding

Another option for sourcing money for your startup is crowdfunding, in which individuals and businesses ask potential investors for cash for projects. Popular websites for this include Kickstarter, iFundWomen, RocketHub, gofundme and CircleUp. Do some research on which website will work best for you, as each has a specific focus and will benefit some startups more than others. Kickstarter, for example, is known for its massive funder base and focus on creative projects, while Rocket Hub specializes in worldwide campaigns and an international funder base. CircleUp focuses on early-stage consumer products, and iFundWomen is self-explanatory with a portion of the fees reinvested back into businesses.

The Pitch Deck

Once you’ve established where you will be pitching your business, you’ll need to create a strong pitch deck to show them why they should invest in your business. Your pitch deck is your one chance to impress a potential investor, so make it worth it. If writing and design aren’t your strong suits, consider hiring professional writers and/or designers to help you with words, graphics and layout. The investment will be worth it to have a product that looks professional. Reach out to trusted friends or contacts that work in a variety of related industries, including investment, PR and media to get feedback on your deck and how you can improve it.  

Sourcing money for your business can seem like a very tall mountain to climb. But like any challenge, take it one step at a time, and with incremental progress, you’ll achieve your goals.

Author: StickerYou Founder & President, Andrew Witkin

Andrew

As the founder of a global e-commerce leader in custom-printed, die-cut products, Andrew Witkin is widely recognized as a leading authority on e-commerce, customization, startups, marketing and the tech economy. Witkin has also served as VP North American Licensing for Nelvana/Corus Entertainment and Director of Marketing for MegaBrands/Mattel.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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