🧑🎓How to fund your startup (part 2)
In part 1 we have talked about Bootstrapping, Raising money from Friends and Family and Crowdfunding (The DART). You did not find them compelling, but you are still in need of capital? Here’s four additional possibilities!
Hard, but not impossible. Your local bank is still an option.
Borrowing money from it is worth considering, since it might have small business loans with a reasonable interest rate. It’s needless to say that this was easier in the past.
As a matter of fact, Phil Knight, Nike’s founder, financed its shoe business in this way for more than a decade (medium).
Here’s a very appealing option, since the capital that you raise does not necessarily need to be repaid if the goals are met.
The conditions are rather strict, and the amount of money granted won’t be enough to fully fund your business, so consider it a nice to have. They are usually granted by institutions, the European Union offers some (welcomeurope), as does Germany (Exist) and other European countries.
Are you ready to trade equity for money, expertise and network? You should reach out to angel investors. They are wealthy individuals specialised in investing money in early stage startups.
You do not know how to get to them? First prepare. Angels base their decisions on technological, market and personal risk mitigation (crunchbase). Creating a working POC better than the status quo solves the first risk, having some customers giving feedback on what you offer tackles the second, being a cross-functional and talented team with good track records dispels any doubts.
Finally find their contact details and send your best elevator pitch deck (AngelList).
These are the professionals who are going to splurge a lot of money for a consistent stake in your business. You want them onboard, because they are going to fuel your growth and guide you through the different steps of the company lifecycle. They want you since your business is aligned with their investment strategy or (better) because you created a lot of hype and FOMO around your business (nfx).
Easy right? Not really. You need to be wary of whom you are bringing on board. Tiny investors, greedy sharks and overpromising door-openers are types of investors whom you should avoid (sifted).
Worry not, you can vet them by reaching out to other startup founders who had them on board. These days there are even tools like Landscape (link) that aggregate reviews of investors and founders.