Banks, angel investors, venture capitalists, friends and family are all forms of external financing that can be tapped to fund your business idea.
But what if you don’t have money, i.e. can’t find an angel to fund your business? Don’t worry, there is a way around this issue. It’s called bootstrap financing. The first step in this process is to take $1 dollar out of your pocket and put it into your company. That might sound like a strange thing to do but its done by many successful entrepreneurs including Bill Gates and Mark Zuckerberg of Facebook fame.
What many business owners do not realize is that you don’t need a lot of money to start a business. You just need an idea, some time and a few basic things like a computer or even just a pencil and paper. You can then use the Internet to conduct research on your product or service, create a prototype for your company and create a website for your company all for free!
Once you have conducted research on the product or service that you want to offer you can then begin the important task of building a network of potential customers who will be interested in purchasing your new product or service with out spending too much money. You can do this by using social media sites
To raise money for your business without the help of investors, you need to be willing to put real money into your business. The amount depends on how much you would want to make from the business. You may also need to make a personal guarantee that you will repay some of the loans if you can’t get the business to break even.
TIP: You can ask for equity only after you have seen real sales numbers and have proven that there is a market for your product or service.
To find venture capital on your own, here are some steps you can take:
1) Look at the sales figures for companies that are similar to yours and use those as a guideline. If they have been doing well, then there is a good chance yours will do well too.
2) Research other businesses that offer similar products and services, and see what kind of homes they own and how big their cars are. If they are all driving BMWs, then it’s likely that your business will do well too.
3) Think about how much money you will need to start your business and keep it running. Consider how much time you can put into it each week or month, as well as how much money you will need to live while working on it full-
How do you find an angel investor?
Once you’ve decided to self-fund your business, how do you find the capital?
I have been asked by many entrepreneurs where they can find angels to fund their businesses. The best way is to start with yourself and friends. However, if you don’t have that kind of funding available, there are some resources available to help you.
Finding funding for a business is perhaps one of the most difficult things to do. Unless you are an established business, it is often difficult to secure funding from venture capitalists or banks. However, there is another way you can get the money for your business: angel investors.
Trying to find an angel investor isn’t actually all that hard if you know where to look. There are several places where you can find angel investors that would be willing to help fund your start-up company.
Let’s take a look at some options you have when looking for an angel investor.
If you’re trying to raise funds for your startup, your first thought might be that you should try to find an “angel investor.” But the reality is that many startups do not need outside funding. They are able to fund their business operations from the revenues they are generating by providing goods and services.
Trying to get outside funding from angels, who are wealthy individuals, is a lot like fishing in a lake. You can spend an entire day casting for fish, but if you’re not actually standing in a river or near a coastline, it’s unlikely that you’ll catch any fish.
The first thing most businesses need to do is generate more revenues and profits. If they are not doing this, then they will have difficulty attracting outside investment of any kind. This means that they need to focus on increasing revenues and profit margins before even thinking about raising money from investors.
It’s easy to understand why many business owners do not understand this concept. They have heard of successful companies such as Google and Facebook getting millions of dollars in financing from angel investors. It seems like it would be nice if they could find one or two angel investors who would make them rich overnight.*
If you’ve ever tried fishing in a lake, you know just how rare catching fish is.
Sites like AngelList, Gust and FundersClub have grown to be pretty popular with investors interested in a more hands-on approach to their investment. These platforms are useful for founders who already have a business idea that they want to develop or an existing product or service they want to grow.
Lately, I’ve heard from several founders that they’re having a hard time getting the attention of investors on these sites, even if they do fit the target profile.
How do you get noticed on these sites? How do you convince investors to reach out to you and not the hundreds of other companies that are also competing for their attention?
“The angel investor network is the most vibrant and effective form of venture investment in the country,” said Andrew Housser, co-founder and general partner of BlueRun Ventures. “In my view, there’s an angel in every town in this country.”
Housser should know: BlueRun has invested $4 million in companies such as Autotask, a group offering cloud-based services for small businesses; Civitas Learning, which provides educational software to schools; and OneVote, a mobile app that makes voting easier.
Tapping this funding source is easier than you might think. The basic idea is that instead of raising money from a single “angel” — who may or may not have expertise in your business — you pitch your business to a group of individuals who can help guide your company through its earliest stages. These groups are typically organized around an industry or business sector.