Funding is Hard
Bootstrap, self-funding, debt, strategic partners, or angel capital–it’s all challenging. It’s a topic that is very near and dear to my heart as we had some very fun times last year with some angel group presentations. More on that later. :)
I have spoken on a few panels about funding, most recently at SXSW V2V and wrote about the experience for SUCCESS magazine. What follows are my five tips for fundraising.
1. Find your crowd
Try rewards-based crowdfunding, if possible. You may not only raise money but it is a form of market validation. There are thousands of platforms but the trick is finding your like-minded crowd. This also applies to angel investors. If you are female, go to one of the groups that champions female-led companies. If you have a bio-medical startup, find the crowd that is different from a consumer product or software angel group.
2. Check out your state programs
You may be surprised at what the various state agencies and governments can offer. In Arizona, we have a program that matches companies with banks for credit line financing.
3. Take smart money only
Make sure you are looking for money with connections or synergies (aka, so-called smart money). And if your gut says not to take someone’s money, don’t do it. Investors, even allegedly silent ones, are part of your team so if you do not envision yourself interacting regularly with the potential funder, stop the process politely and move on.
4. Eye on the runway
Finally, ensure that the person in charge of the runway calculations is separate from the sales or evangelist role. As startup leaders, we tend to talk ourselves into how "it will be better once this sale rolls in" or, "If only I could attend just this one important meeting" but that is not real cash. We need someone to tell us the straight facts, what our burn rate is, and when we're out of runway.
5. Be yourself
You likely started this business because of a passion or a mission. Show that passion! No one wants to back or fund someone who is not committed. A tired cliché, yes, but investors back the jockey (you), not the horse (the idea).
Never tone yourself down, change your personality, or compromise your principles for an investor. Not everyone will like you or your idea but you want to be free to be yourself so you can do your best work.
Check back next week for part 18 of this series. Subscribe to our blog for these updates straight to your inbox!