How to fund your startup?

Businesses start with an idea. Opportunities are everywhere.

Congratulations on finding a suitable one for your skills that you would like to pursue.

 

What next?

Figure things out at the high level; make a strategic plan. Assess what are the products and skills that you need to realize your project. List them.

Do you have these skills within your personal competent network? Sometimes you don’t need as much money as you think, you can instead do smart partnerships.

And if you still need to raise money then you should elaborate on your idea so that you can convince yourself and then investors.

Who are your potential investors?

It depends on how much money you need.

If you are looking for small amounts, then you are looking for love money primarily. Your friends and family can embark with you on your project without the need of an extensive 10000$ business plan.

You need to show them how the idea will work. They are motivated by your own excitement and belief in your own project, and they want to see you succeed.

If you need a substantial amount of money, then it is a different beast.

Here again, know your audience. If you are seeking a loan from the bank, work on the financials, make solid projections and hire a professional to help you.

Your credit history plays a major factor in your approval.

In my experience banks tend to take less risks and focus less on the story than on the numbers.

If you are going for professional investors some network together through what is known as a network of angel investors. The angels have web portals that list their requirements. We listed below the links to several angel investor groups. Note that they are regional so you may want to look for the angels in your area.

If you go on your own through professional investors that you don’t know, then we highly recommend that you produce a PPM “Private Placement Memorandum” . A document where you disclose all the info about the investments, the company and its road-map, the owners, and so on. It usually includes all of the legal disclaimers that you need to protect yourself in case the ship did not sail according to the plan.

These documents are usually costly and are better overseen by your legal counsel.

On top of the PPM, we recommend that you work on your elevator pitch. You need to be able to pitch your idea to a potential investor within what corresponds to an elevator ride.

I have pitched my idea in the elevator of Hilton Toronto to a COO of a multinational company that was attending the same trade show as me. Although we are not yet working together, we did exchange business cards.

To raise money from professional investors, be ready to perfect your pitch. Your story matters, but ultimately, at the seed stage, you will have to give a substantial stake in your company.

They typically want to see a good exit strategy with high return on their investments within 4 to 7 years.

You can go for VC venture capital. Here as well you have to be ready to give up a lot of equity and you need to be prepared with your planning.

There are other innovative ways to raise capital such as the blockchain investment. We will cover them in coming articles. So make sure that you bookmark this page and come back often.

 

Links to Angel Investors:

1 – Angel list for North America: https://angel.co/

2 – Canadian list of Angels: https://www.canadainvestmentnetwork.ca/

3 – US Angles Investors: http://usangelinvestors.com/

4 – Canad: http://angelonenetwork.ca/

5 – US based: https://www.angelinvestmentnetwork.us/

6 – US based: https://www.angelcapitalassociation.org

7 – US based: http://www.usaangelinvestors.com/

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