Last version published: 22/12/2017 16:28
Publication number: ELQ-79953-2
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How to Get Early-Stage Startup Funding
A guide on the different ways of obtaining startup funding including tips and expert advice.
by Mike LingleSuccessful entrepreneur and former software developer advising tech startups on fundraising, strategy, sales, and marketing.Follow 62
Introduction
Entrepreneurs always ask me what it takes to raise money. The answer is different depending on what stage your company is in:
>Idea: It’s hard to raise money on just an idea, so focus on friends and family.
>MVP: If you’ve built something and have a little bit of traction you can pitch angel investors as well as friends and family.
>Traction: If you‘ve built something and can show real engagement it’s time to start pitching venture capital firms.
The best time to go after startup funding is when you’ve already found product / market fit and you can show traction in the form of repeat customers.
But what if you’re just starting out and you don’t have customers yet? What if you don’t even have a product yet?
- Step n°1 |
Suggestions for early-stage startup funding
1) Come up with a no-money plan and start executing it now
2) Fund yourself
3) Find paying customers before you build the product
4) Start with friends and family
It’s important to set realistic expectations. Finding startup funding is an extra full-time job with no guarantee of success, and it’s even harder when all you have is an idea. Expect to spend at least six months (you can be pleasantly surprised if it happens sooner). Remember that you’ll still need to run your business and keep moving the ball down the field the entire time, which is where the “no-money plan” comes in…
One startup I worked with wanted to raise money right away. We decided that they would hold off and work on growing their customer base. A year later they have enough revenue to support a team of five people.
- Step n°2 |
Come up with a no-money plan and start executing it now
Investors want to get to know you, so you’ll usually have several conversations before you invest. Want to stand out from every other entrepreneur they’re talking to?
Show up with big news every time you talk to them.
“I just brought on an awesome technical co-founder!”
“We just launched our MVP!”
“We just signed our first customer!”
“TechCrunch just posted an article on us!”
To accomplish this you’ll need to already be in motion. The alternative is showing up to every conversation simply asking for money. Smart investors will tell you “no” unless you’re generating your own momentum.
Bonus: One startup I worked with wanted to raise money right away. We decided that they would hold off and work on growing their customer base. A year later they have enough revenue to support a team of five people.
Now they’ve earned the right to decide when, if, and from whom they wants to raise money. So much better!
by Mike LingleSuccessful entrepreneur and former software developer advising tech startups on fundraising, strategy, sales, and marketing.Follow 62
