How To Get Startup Capital – When a bright idea hits you like a blow, you don’t have time to think about how to find investors to implement the business idea. However, this is one of the main things you should deal with. Did you know that only 20% of all startups make it to the seed stage? Only 30% of them survive the 3-year barrier and 3% make it to the fifth year. The main reason is insufficient funds. Today’s article is a guide specifically designed for first-time startups, who want to know how to get app development funding and do it right the first time.
When you are trying to understand how to raise money for the creation of a business, it is difficult to find the purpose to start. Let us show you this item. The first thing you need to remember is that the standard method of earning money consists of different levels, called rounds. Here are the typical steps of fundraising for startups:
How To Get Startup Capital
The first round is the seed round. Seed round or seed capital is the amount you have before you meet with investors. In plain English, this is your money to spend on your startup or the money of your family and friends who believe in you and are willing to help. If you have enough money and don’t want to attract other people and their resources, you can start. Bootstrapping is a process in startup development when the founder relies on his own money or the money from the profits of that particular startup. This means that no third parties will be involved.
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Series A involves you meeting the first investors and getting money from them. Series B assumes that you have significant success from your startup as proof of business viability. The next series requires more significant results from you.
There are several ways to get funding. It also relates to the type of investors you want to work with. Moreover, you can appeal to different investors at different stages of fundraising. Here are the types of investors you need to know, how to find investors for your startup and contact them:
An angel investor is someone who is willing to invest in your business. These people usually do not give a lot of money and they can make risky investments with less guarantee of income. It is better to contact Angel investors in seed round and meeting A.
How to get angel investors? You can find angel investors at related industry conferences. Or you can also find them online. The most popular platforms where you can arrange your first meeting with angel investors are Angellist, Gust or Angel Investment Network. All these platforms work in the same way. Ordinary people along with individual entrepreneurs are looking for promising startups to help them in the early stages.
Stage Of Startup Funding To Get Investor For Seed Money Or Seed Capital Investment 7742176 Vector Art At Vecteezy
Venture capital is a form of financing where companies or large funds provide start-ups. An investment fund is an organization that makes joint investments on behalf of a group of people or companies that entrust this fund with their money. A venture capitalist is a person who has rights to manage a fund of money and invests this money in various projects.
How to start crowdfunding? There are many different platforms that use different partnership conditions. For example, GoFundMe is a donation-based organization that can help you raise money for a startup without any reward on your part. Another option is Kickstarter, where you set a reward for funding. You only need to provide it if your startup has raised the required amount. The Indiegogo platform uses a different system. Here you have to pay a fee of up to 9% to get funding. You can raise the required amount or not, but you have to pay.
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Venture capitalists are usually very demanding, they invest in reliable small or early-stage companies (start-ups) or vice versa, in dying companies with the aim of selling them to the highest bidder. Venture capitalists do not invest in risky business. Therefore, it is very difficult to get their support, especially in the early stages of the development of the startup.
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How to find a venture capitalist? The best way to meet these types of potential investors is to be introduced by one of them. Of course, you can contact them directly, but you have very little chance of being invited to a real meeting. VCs can find you on your own if you’ve already started making money.
It is clear that absolute beginners have no connection with such companies. So there is another option for you. This is for contacting startups.
Business Incubators are establishments that help young start-ups and companies get off the ground and get funding. First, these companies can provide you with seed capital. Second, they teach you. BI can organize lectures, invite famous entrepreneurs to meetings and share insights with you. And of course they can introduce you Vs after a while.
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Where to Find a Business Incubator One of the most popular business incubators is the Ycombinator. This company has nurtured more than 800 startups. They have worked with Reddit, Airbnb, Dropbox and many others. Twice a year, the company selects the most interesting startups and invests $120K in them. After that the selection moved to Silicon Valley for 3 months. During this time, Ycombinator organizers teach startup owners how to manage all business matters. After this period, startups meet investors who are ready to find their gold mine.
Crowdfunding is a method of raising money with the help of different platforms that offer different conditions. There are several platforms where your startup can get donations from people for free, without any rewards. This strategy will really work if your startup is connected to a charity or other noble cause. Other platforms allow you to collect money in exchange for various bonuses from you.
ICO is a new hype in the investment world. An ICO is used instead of a normal percentage in the company you are offering to get funding. You sell this cryptocurrency to your investors. The system is easy but at first you need to create an ICO, which means you need to find an experienced developer for this project. The easiest way is not to create coins themselves, but tokens based on existing cryptocurrencies.
You can find thousands of different platforms that can help you with financing and investing on the Internet. Whichever option you choose, you need to be fully prepared and ready for all kinds of questions. Let’s consider what things you need to prepare before meeting with investors.
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In a case only with friends and relatives, you can express your idea with the help of your hands and fiery speech. In everything else, you need to show your important preparation to convince everyone that you are a serious entrepreneur with a good idea. For the initial stage, you only need to prepare two items. This is a prototype and a Pitch Deck.
In the case of software development, a clickable prototype is required. It’s hard to say and explain how everything will work, which is why you should give your stakeholders a chance to test your product for themselves. Alternatively, you can build an MVP version of your app or website or software system and run a beta test before meeting with investors. If you don’t have a prototype or MVP yet, you can at least show them the design of your future project. Make sure the design looks good in meetings with potential investors.
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A pitch deck is a presentation that you create specifically for your potential investors. The simplest version you can do even in Powerpoint or any other similar program. Such a presentation should include detailed information about your startup, including all figures and research materials. To impress your potential investors, your pitch should be concise and persuasive.
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Tip. To protect your idea from copying, you must disclose “Confidential and Proprietary. Copyright (c) by…” and your company name in square brackets. And the phrase ‘All rights reserved’ on the first page of your presentation.
Even if you do everything perfectly, stakeholders may refuse to invest in you. There can be several reasons for that. Check them out to avoid these pitfalls.
A new market is great, but you have to define that market precisely. If you’re afraid of competitors, that doesn’t mean you should let them get ahead. Don’t be afraid of yours
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