How do I raise capital for my startup?
You’re walking down 21st St on your way to your job at 7am. All at the same time, you’re thinking about those spreadsheets you have to put together for that presentation, the evaluation form you’re about to receive from your boss, and…your billion dollar app idea. “I’m a hustler baby” by Jay-Z is playing in the background. One problem: you haven’t raised even a quarter of the necessary capital to start up. Sound familiar? Well guess what…
If you’re a hustler, you can do it.
Bold statement, I know, but hear me out. If you plan to go into business, you have to be able to sell. And if you’re capable of selling, you’re more than capable of raising money. I understand that finding an angel investor, one that fits in with your vision and can guide you on the path to success, is either not in your current plans, or is taking a little longer than expected. It’s time to stop searching and start doing. I hereby present you with 5 ways to raise money without an Angel Investor:
1) Crush it on Kickstarter.
“Crowdfunding, dude” is something you probably hear a lot when you tell your friends you’re looking to raise money. Thanks to sites (hyperlink) like Kickstarter, you can raise over a million dollars from complete strangers. The kick with this one, no pun intended, is the fact that you need to show your potential backers that it’s worth it, and that starts with a kick-ass blurb, a super-compelling explainer video, and a satisfactory reward once your product comes out. Yes, it’s true, technology is the least successful “category” on the platform, but 30% of tech projects get at least 20% funded, and that statistic proves it’s definitely worth a try.
2) Friends, family, fast.
This is the one that’s extremely overlooked. Data from Forbes and Entrepreneur suggests investors are less likely to invest if you haven’t raised FnF money, and 25% of all startup capital comes from here. When you think about it, this group is the easiest to convince to back you because they are already biased – they know you and (hopefully) love you. Show them a business plan and how they’re going to get their money back (and more) via a convertible note, and you may very well be on your way to your MVP faster than you thought. When it comes to best practices, it’s optimal to leave them out of your business operations, but by all means leverage their network and connections as much as you can to grow your company. If they see your passion and fire, they are more likely to back you financially, but make sure the expectations on how involved they’re going to be with the business are set from the start.
3) Sell your stuff.
Maybe it’s time to head to your basement and see what’s down there. Who knows – maybe you’ll find a valuable item or two. I know it’s tough to part ways with your baseball card collection from when you were nine or that vase you received from your aunt seven years ago yet never found a place for, but be honest with yourself – will you ever have a use for this item? Does its sentimental value outweigh the value you’re getting in return a.k.a the ability to fund your venture? If the answer is no, you should check out ebay.com. I can personally relate to this one really well, because in order to start TechSuite as we know it today, I had to sell my entire sneaker collection. Yes, it was awesome to have the original Yeezys, but I only wore them once every few months, and I was much more excited by future growth. Point is, if you’re truly passionate about what you do, parting ways with your perceived valuables shouldn’t be too hard.
4) Save up.
Between your day job and your startup, you work 12-18 hours on any given day. Obviously, you deserve a reward for your hard work, and want to use your money to splurge a little, whether that be picking up a tab or two at the bar, or taking your special somebody to a nice restaurant. I’m all for enjoying the fruits of your labor, but this is another case where you have to decide what’s more important to you. To put it into perspective, saving just 500 dollars every week can get you a prototype within a month and an MVP within five, and there are plenty of budgeting apps to help you do this. Exeq (hyperlink) is one I’m personally super excited about.
5) Start a business to fund your business.
This is my personal favorite one. Nothing screams hustler like buying low and selling high. In fact, I built up my sneaker collection through 3 strategies:
1) Camping overnight for highly anticipated sneakers to get them for retail price, then reselling them for much higher when they would sell out.
2) Buying a used sneaker for $100, then scouring Facebook groups for opportunities to keep trading up, until $100 turned into $1,000.
3) Buying sneakers in bundles for “package deals” then reselling them individually.
This approach can be applied to almost any industry. In this case, it makes sense to have more of the “quick buck” mentality, because remember, you’re doing this to be able to back your real thing. I’d recommend checking out Alex Becker’s Youtube channel for more ideas on how to make quick money.
Mix and match.
You can definitely do more than one of these things at the same time as a means of raising money. Don’t put all your eggs in the same basket – by “diversifying your portfolio” of fundraising activities, you’re maximizing the chances that you reach your target amount. If your startup is your baby, you’ll hustle to make it happen. This could very well be what gets you to that next level, like a meeting with your dream Angel. Stay lean, stay scrappy, and keep grinding.