Looking For Funding?
No big surprise, I get a lot of questions from entrepreneurs about funding—specifically on how to get it and where to look. I have several thoughts about this topic—more than this blog entry will allow—so I’ll just give you a brief overview. Where you are in the entrepreneurial process will dictate how you should think about securing early-stage funding. For example, if you’ve just scribbled an idea on a cocktail napkin and feel it’s the next big world-changing idea, then you’ve got a lot of homework to do before you reach out for funding. No potential investor will take you seriously if you don’t first do the research and prep work. In this case, it’s prudent to fully develop your idea and create your business model—how you’re going to make money, the market opportunity, competition, etc. Craft this into a solid business plan or, at minimum, a high-level investor pitch presentation.
Those seeking early-stage funding fall into one of two stages of starting up: 1) You have a fully developed business idea or prototype and need funding to launch; or 2) You’ve launched and you’re seeking a capital infusion. Although difficult for early-stage businesses, it’s possible to get a bank loan through the SBA. A more likely option is seed investment from angels or other early stage investors. Inc.com has compiled and maintained a fairly comprehensive list of Angel investors.
Before you take on an investor, consider your motivation for starting a business. Doing so can help identify the types of investors you should consider. If your primary motivation is to be your own boss, then you don’t want an investor who will take a controlling stake in your business and, in turn, call the shots. A silent investor is probably more appropriate. If, on the other hand, creating a new product or service is your primary motivation, then finding a investor with the management expertise to grow your business in exchange for management control is probably appropriate.
Once you’ve completed your due diligence and you’re armed with a really good investor pitch, the next step is reaching out to angels who are appropriate for your entrepreneurial ambitions.
Bryan Janeczko is a StartOut cofounder and founder of Wicked Start, the startup incubator with online tools to plan, fund and start a business.