How to Fundraise For Your Startup
One of the biggest challenges in starting your own company is coming up with the funds to keep things running smoothly through the early bumps in the road. All of the other elements involved in launching a startup are difficult, yes, but the thing on most entrepreneur’s minds is fundraising. It’s no secret that most startup CEOs have found themselves extremely stressed about raising money for the business. In fact, it’s been pegged as one of the things that keeps people from starting their own businesses in the first place.
There are some tried and true methods that entrepreneurs can use to fundraise, and there are some outside-of-the-box methods as well. Of course, different methods will work for different circumstances, but there are incredible success stories that give experts a clear indication on what will work and what will not.
Here, we’ll focus on a mix of both traditional and untraditional fundraising ideas that can help to keep things moving through the earliest stages of establishing a startup.
One of the biggest advancements in fundraising has been the crowd-funding aspect introduced by mammoth fundraising companies like Kickstarter, GoFundMe, and IndieGoGo. All you have to do is present your company’s mission and the amount of money you’re looking to fundraise and let the crowds come to you. It’s a great way to get money raised and also build brand awareness, two very time-consuming steps that need to be taken when building a startup.
Of course, it’s important to note that there are some stipulations when it comes to crowd-funding. Essentially, you’re gaining tons of individual donors that now have invested in a piece of your company. In return, it’s customary that these investors get a special service or product related to the business as a reward for their investment.
A great many startups have thrived because of an Angel investor. This is an investor who has built enough capital through their own success to gift investments for an exchange of equity or debt with a startup. Where venture capitalists invest other people’s money in businesses, this is solely an individual who seeks out entrepreneurial causes to donate to or invest in.
A Personal Ask
Unfortunately, beginning your own startup journey may mean asking for money from friends, family, and colleagues. There’s no easy way to do this, however, sometimes it’s necessary in order to see your vision through to its first profits. The more you reach out to your community and family to promote your business in a positive light, the more likely they are to donate to your mission.
This can also mean opening your own wallet. If you’re going to ask others to help build your dreams, you should be prepared to do this as well. In fact, this is something that people will look for when deciding whether to invest or not. It’s important to document all investments, especially personal ones, so that you can track how much has been put into your business in order to determine the true monetary value of your startup.
Likely the most well-known source of funding for startups comes in the form of venture capitalism. Typically, a wealthy venture capitalist will invest, or loan, a large amount of money to a startup. These sums can total up to the millions and beyond. Because venture capitalists are shelling out such high amounts of money, they intend to see the business’s success through from the early stages all the way through massive success. This is a popular form of fundraising as it excites the market and gives young startups the chance to grow quickly.
This is just the beginning of where to look when starting to fundraise as you begin your startup trajectory. For more advice and tips on fundraising, stay tuned to my blog, visit old posts, and look out for continued advice in future blogs.