Part 1 of 2
You’ve been working for days on end, the business plan is more or less finished, you’ve started developing your product, and still putting some polish onto the conceptual side of things. You figure you can get the basics up and running, or simply put you’re at a wall, and the best way, and only way to get over it is cash.
Every business hits a lack of funding wall, and while small business loans are great for a number of SME’s and start ups alike, certain companies need an injection of capital to materialize and start seeing those revenues that are slated for years 3+ on the estimated cash flows of the business plan.
But the question then presents itself – how do I manage to do this?
First, is the three F’s – like in property – Location, Location, Location, is key, so in start ups Friends, Family and Fools are just as important. When you’re starting up, your personal network is key to sustaining your business – talk to family, talk to friends about investing – if need be sell shares, or bonds, you need little else than a piece of plain white paper, and a notary to make it legit. If you’re looking for a formal doc, a Google Search will provide you with the documentation you need.
But FFF’s can only take you so far – and depending if your business is capital investment heavy or not, you most likely WILL need investment capital.
So how do you go about getting it? First thing is first. Find out if you’re ready. Venture Navigator has online assessments that you can take to gage the state of your idea, online surveys such as the “General Business Viability” and “Investment Readiness” among others will give you a good insight into whether or not approaching investors is a good idea.
If your results are favorable, or even if you’re determined the next step is identifying those individuals who want to invest. The best way of doing this is to network, see if you know someone who knows someone. If this isn’t on your plate – check for any Business Incubators in your area, they are often associated with universities, and are private, your local government office will probably know of ones in your area. If they don’t call up the local universities, business schools and asks to talk to entrepreneurship professors. The whole thing about the entrepreneurship community is that entrepreneurs are very keen on spreading best practices, and helping each other out. Also try looking for groups of people who are interested in start up activity – the OpenCoffee Club is great for this and they’re very international and pretty much all over the place. This is a GOOD Idea – your network is key!
Once you’ve been networking, got some good contacts, and ins into individuals at seed funds, and incubators, the next step is presenting your idea to people who will in all likelihood be your first real investors. They will inject anywhere from $, €, £20-500k depending on your location, and your idea. They will also take your hand and provide advice, help you source individuals whose skills will help you grow your idea and company, and put you in touch with someone who will most likely be a mentor (more on mentors in future articles) and help provide you with the type of knowledge only an industry specialist can provide. Like everything in life, this isn’t free and expect to give up anywhere from 8-50% of your company. Nonetheless, should you get funding you’ll be well on your way to building that business you’ve always dreamt about.
In the next article in the series – we’ll be covering Angel and Venture Capital sourcing, funding, presenting do’s and dont’s as well as what you should expect. As an added bonus, I’ll also provide you with some useful links to Angel, VC, and Seed networks in the U.S., U.K., and Spain