Startup Funding Tips – What to Do

Saturday, October 17th, 2015

startup funding

Have you ever heard of Kickstarter? It is the center of nearly every single startup company or business that exists in this world. Every day, there is a new startup company that emerges on the site. Yet, the question is, how do these startup companies fund themselves? Where do they get their capitals? Well, here are some tips on how to fund a startup company.

 

Meeting People Is Crucial

In order to be able to earn enough money to fund a startup company, the founder of the company should do his best to meet as many people as possible. This is because he can’t possibly fund everything himself as he is not likely to have enough capital. Therefore, it is always a good idea to request for some funding assistance from families first and then some closest relatives. Then, the founder of the startup company can move on to meet more and more people within every single day.

 

Fund the Dream

A successful founder of a startup company often has to take out his very first capital out of his pockets. He needs to put the money exactly on his dream. This is what brings a lot of entrepreneurs to the success they are enjoying today.

 

Offer Milestones Instead of Products to Investors

When a person plans to found a company of his own, it is a must that he has a clear vision of what and how the company is going to become in the future. However, when it comes to meeting and requesting for funds from investors, that person should not do the mistake often committed by other startup founders. That person should not offer products to investors. Instead, he should offer the investors milestones and checkpoints instead. This will make the investors believe more in that person because of his solid execution path combined with his clear vision.

 

In addition to that, investors will also see that person accountable. But then again, if the funds received from investors are not enough, the person with the business idea should try to bootstrap his business until it expands further in the future.

 

Offer a Value That Is Not Offered By Others

Investors will usually be happier when they receive a proposal of a long-term contract than a short-term contract. However, in order to be able to propose a long-term contract with any investors, especially an established company, the founder of a startup company should come up with a value that his competitors do not have to offer. RackSpace is one good example here. When it was first launched, the company offered a monthly payment model, something that was still unique back then. Additionally, RackSpace also aggressively promoted its customer service quality back then.

 

Use Pre-Ordering

If there is only an idea or a prototype available, it may be pretty hard to convince an investor. This is when a startup founder can use a pre-ordering system. This may allow him to receive capital from outsiders and also validate as well as test the feasibility of his idea in the target market.

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Disclaimer: This information is intended for informational purposes. Some information may not be accurate or current and are of the author's opinion (not 10KHits). It's not meant as financial, investment advice, a recommendation regarding a course of action or legal advice.


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