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How to get funding might just be one of the most concerning areas for any entrepreneur during a company’s initial stages. To help out, we’ve listed the seven great tips for startup funding we could come up with for this new year. Let’s get around to them.
From equity to bank loans, there are tons of startup funding options. Let’s start by making sure you’ve at least considered each one below:
- Borrowing from friends and family
- Asking for a bank loan
- Using a business credit card
- Acquiring a debt
- Pre-selling your product
- Selling assets
- Applying to government programs for startups
- Winning a startup contest
Of course, every path above sets a different start for your company, and it also bears different financial consequences. Some entrepreneurs would even start by crossing some of these off their consideration list. Maybe it’ll help you to sit down and do the same.
As only a small percentage of businesses get their funds from VC capital, which is our main area of focus in this article, chances are you’re already on your way with some of the listed funding options above.
Whatever you do, don’t take this lightly at all. On the contrary, study each option thoroughly and make well-informed decisions.
Do raising as much as you have a runway for it. That way, you can spend more time addressing your mistakes and scaling more and more.
Don’t let your company be one more that dries up on cash flow to end up sinking.
You need real numbers on a piece of paper. At some point, it comes down to that. So, do you have financial reports? How about regular board meetings?
Whether you go to an investor, but more so to a bank, you’ll need to have all sorts of legal and financial documents on your company to get started. So, at the very minimum, make sure you’ve got a solid business plan, for example. Doing so will not only help raise capital, but it will also ease growth for your business.
Make financial projections up to 5 years from now.
Launching an app thinking every mobile user will need it is a false foundation. In reality, you’ll need precise users who’ll need it. That requires profiling people who’ll be interested in your specific app’s primary function, as well.
Following the example above, a running app is not necessarily of interest nor a need for all mobile users. So basing a business on the premise that all mobile users will be interested in your product when you’re focused on a running app will make investors lose any faith in a pitch deck, for example.
As you think about how to get startup funding, make sure you focus on a sizeable market, as well. Maybe it could be one that is large enough to guarantee a return on investment, yet also one that is not so big you have no way of ensuring a differentiation from a wide and established product offering.
Since getting startup funding is what’s on your mind, think of the most significant area of consideration for any VC. In that sense, proven traction will be your magic ball.
If you have it, stress it and make it visible through graphs in your pitch deck. Increase your credibility that way. On that note, we’ve explained how to deliver a lethal blow with a traction slide as part of our essential elements of a successful pitch deck.
If traction is not part of your startup luxury per se, though, you can undoubtedly create realistic budgets that will get you what you need.
Project through milestones. Calculate realistic revenue figures. Measure and list your expenses, preset budgets, and define how much you’ll devote to areas aimed solely at growth, such as marketing strategies.
Human interaction (even remote!) is a proven means to attract that which you need in terms of funding.
Also, consider you’ll enter a relationship with investors. And you’ll want to keep that relationship a healthy one. Those kinds of relationships are so meaningful; they can even be a closer one than the one you have with your co-founders. You’ll also never get rid of investors, so have chemistry with them and make sure you see things similarly.
Another reason why it matters who does your funding is that, when things get rough, you’ll need to be able to count on fruitful chats with the people letting you work with their money.
Sometimes, a partnership can enhance your business growth. There’s excellent potential in that in terms of raising larger capital. A well-chosen business partner might bring more or similar money to your business table. So you can see this as a way to get startup funding, as well.
Also, a partner can be responsible for portions of your risk-taking and be liable for them, which should take some pressure off your startup shoulders. They can also help you strategically in seeking how to get startup funding.
Think about giving away equity, as that also means sharing a portion of your profits. In doing so, also assess the value of a partner who’ll bring new funds, ideas, and strengths to a business.
If you go down this route, make sure your pros are way more than your cons. Otherwise, if you choose someone with a different vision or work etiquette, you might end up with a nightmare on your hands that can lead to constant struggles, disagreements, losses, and more.
Also, and as a bonus tip before we go, whatever you do, never stop practicing your pitch.
Care to read from our CEO on how to get your startup off the ground with seed funding?
We’ve got tons of resources on getting businesses started and funding your startup if you care to read on.