Getting startup capital is the number one problem most new entrepreneurs face. It can be a tough process, with looking for investors, partners, or even loans, especially if you don’t know if you’re getting a good deal. And while it’s true that angel investors pitched in $24 billion (as noted by the ACA) to new business last year, that money is incredibly competitive to achieve. However, getting to the point where you stand out from the crowd might not be as bad as it seems.
No matter if it’s looking to land venture capital or throw an awesome Kickstarter, knowing how to go about any and all approaches are absolutely crucial but will require some meticulous steps first. And luckily for you, I’ve compiled a few good talking points to get started with. Check them out below:
Look Into Lending
Depending on what type of product or service you’re trying to sell, lending can be an excellent option to acquiring some funding. Granted, this isn’t a route you should take if you don’t already at least have a prototype or proof of success developed, as you won’t have the runway to be successful otherwise. Proving cash flow off the bat is important with lending because as Fundera notes, cash flow problems account for why 82 percent of businesses fail.
When preparing yourself to apply for a loan, itemize all of your needs, being able to explain each one. Those that lend to businesses need to see a clear plan in place, including the potential market, revenue, and what roadblocks might occur. Furthermore, if you haven’t owned a business before, then a lender might look into your personal finances, which if you’re not in good standing then a credit repair might not be a bad idea. The overall idea is to present that you know what you’re getting into, as well as why you’re worth the risk.
Know How To Pitch Your Idea
No matter if it’s to a bank, investor, or even your friends and family, being able to pitch your business is everything. Quite simply, people want to know how your business works, as well as if it’s an idea that will make money. And while that might sound simple, it’s actually much more of a process than you might imagine. After all, people can be critical of new ideas, which it’s your job to make them feel inspired off the bat.
One simple solution is to just talk to as many people as possible. Try to get a gauge for how you’re approaching them, as well as what points you might have been able to explain better. Additionally, when building things like a pitch deck or presentation, try to utilize positive highlights like social proof. Believe it or not, these strategies really work, because as noted by Super Office, 90 percent of customers stated that a positive review influenced their buying decision. And by highlighting these in your marketing materials, you’ll be viewed in a much better light.
Although a practice once reserved solely for products or fundraising, crowdsourcing has become a solid source for entrepreneurs to raise money for their business. Not only has it opened up to the world of startups, but even breached into new technologies too, with the latest craze of blockchain tech enabling companies to launch presales. Make no mistake, crowdsourcing has become a mainstay, because as noted by Pew Research, 22 percent of Americans have contributed to some crowdsourced item in the past year, and for your business, this might be the perfect move.
When examining the type of business you’re trying to start, there are a few different options to take on. For a singular product, going the GoFundMe or Kickstarter route is always a good choice. Additionally, if it’s a tech startup, then going through an accredited micro-fundraising platform, is a relatively new development, but has somewhat been surpassed by ICO’s (I.E: crypto/token presales). ICO’s can be a great option if you’re building something on the blockchain, however, is subject to new regulation. In short, to raise money as an ICO, it needs to be proven that you’re not a security or selling shares, but rather that your product is completely decentralized. And if your business wasn’t spawned out of the idea of a decentralized network/protocol, then you most likely can’t fit it in an ICO, but don’t let that discourage you from the other options mentioned above.
What are some ways you’ve acquired funding for your business? Comment with your answers below!