How to Fund Your New Startup
This is it. You know it. You’re finally ready to launch your new business. Once it’s decided, there’s very few things that can get in the way of a woman on a mission. One of those things: money.
In fact, some of the greatest businesses will never be made due to lack of funds. Because let’s face it, not everyone has the same access to capital. The upside being, this same disparity has created nationwide opportunities in response. Funding your business at the startup stage (pre-product or pre-traction) can be challenging, but the barrier to entry has never been lower. Here are a few of my favorite resources for funding your new startup.
1. Your local Chamber of Commerce or Small Business Development Centers (SBA)
This is my favorite place to start because these are organizations whose mission is to help businesses flourish in their communities. They offer a myriad of services completely free of charge. They are also the most merit based #NoIntrosNeeded. Many of these centers host business competitions for their communities. Although requirements usually involve submitting a business plan, time spent in preparation is time spent developing your business. Talk about a win-win. Note: Some of these centers offer GRANTS, yes GRANTS to help start your business. Some grants have more lengthy requirements attached to them, while others just require that you start your business in a specific city. Look at the specifics, and take advantage of these amazing opportunities.
Fundraising platforms such as indiegogo and kickstarter have become increasingly popular. One of my favorites is iFundWomen; a great crowdfunding platform just for women. It’s not only packed with great advice but they also offer a step by step guide to optimize your campaign efforts. To sign up, all you need is a website and a social media presence for your business. Although there’s a lot of work involved in running a successful campaign, this is a great way to test the demand for your product/ service without making the financial commitment of building a product/ launching a service and then testing the market later.
Not exactly the most fun, but the majority of startups today are bootstrapped. This means self-funding your business. Sometimes this means you keep your day job and your startup becomes your side hustle until its self-sustainable. Although there’s no better feeling than going all in on your startup, sometimes that’s just not possible because of financial commitments and responsibilities. While running a startup is challenging enough, adding a full time job can make balancing things even more difficult, but as they say “struggle makes success taste twice as sweet”.
4. Getting Creative
Having a lack of financial resources is not always a bad thing. Daymond John calls it the “power of broke,” it’s the idea that difficult times can bring about great creativity and strength to succeed. This power, is something you can definitely harness. In the early days for example, the guys from Airbnb got creative selling cereal boxes to keep their business going (good for them, the startup is now valued at 30+ billion, yes with a B). Everyone has a skill they can build value out of. Be creative and get going.
5. Proving Traction
The problem with startups is that well, they’re new. It is much easier to obtain funding for “proven” businesses. If you need money to build your product/service, begin by showing there’s a need. There are many free ways to show traction. Assume you need money to build an online store for your own “candy.” Curate an Instagram or Facebook page where you upload content showcasing different types of candy, how it’s made etc… Get a large following on these pages to show there’s a market for goods like yours. Another idea is to create an MVP and get people to sign up on a waiting list. Numbers don’t lie, use them to your advantage and you will be more likely to secure funding.
6. Friends, Family and Network
In the early stages of your business, it’s best not to waste your time applying for venture capital. This is because almost no venture capital firms invest in an idea or business plan. At this point it’s really your friends, family and “believers” the ones most likely to invest. Reach out to these individuals and educate them about your business. Position yourself in places of opportunity, Mr. Right won’t come knocking on your door… neither will your investors… it’s your job to go out there and ask for what you want. Note: You can get a lot of NO’s but what you can’t do is run out of leads. Always ask for intros. Also, if you decide you want to go this route read this article; http://blog.elizabethyin.com/post/175963150230/how-to-raise-money-from-friends-and-family of all the resources on fundraising, this has been by far the most helpful.
7. Pitch Competitions/ Incubators
Aside from your local resources, there are many competitions and incubators available nationwide. The trick is to knowing where to find them. What I have learned, is that Twitter is the best place to find these types of opportunities. Focus on following key players in your industry (they usually retweet opportunities.) Twitter also does a great job of showing you these key player’s interactions. Go downstream from there and follow others in the same industry as they can provide additional resources. Note: Remember to be involved and always keep it industry focused. Do this, and your Twitter feed will start to look like a feed of opportunities.
8. Loans/Credit Cards
For some people this is not an option, but if you have this option and it’s between this and not starting your dream business, do it. I think nothing screams commitment like betting on yourself. If you decide on a loan, Remember to always read the terms and plan head financially. Think; “how many products/ services will I have to sell just to pay my loan?” Also, depending on the loan, you could be looking at a lengthy approval process. The good news is nowadays there are many different options for obtaining a small business loan. If instead of a loan, you decide to use your credit card, think about the card’s interest rate, terms and what that would look like in the long run. Always do your research.
9. Angel investors
These are high profile individuals who meet specific income requirements and invest in startups (writing checks of $1k- $100k or more). Find if there’s an angel investor network in your area and see if you can pitch them. If not, a great way to find angel investors is to setup a profile on websites such as; AngelList, Gust, and apply to different angel groups through there. Another option is to attend conferences and events where there will be angel investors present. Do your research and find what kind of investments specific angels make so that you don’t waste resources pitching someone who doesn’t invest in your industry. Note: Download networking apps such as Shapr, BEAM, Bumble Bizz as an extra way to not only meet investors but also likeminded individuals. And don’t forget to keep your business profiles like LinkedIn up to par.
What are some of the ways that you helped fund your business?
Pamela is the founder & CEO of bbeauty; a beauty tech company developing a mobile app for the makeup community. She’s a proud Texan and a recipient of the Ruby Red Ventures grant. When she’s not spending time with her family, you can find her working on her happy hobbies, listening to startup podcasts or playing tennis. You can connect with her on linkedin and sign up for the app at http://bbeauty.io/