Guest article : This article was written by Pinput, a web analytics solution.
How to raise funds for a startup? What are the best ways to organize a startup fundraiser? Find out how several companies have raised funds.
An investor does not finance an entrepreneurial idea. Nor does it finance a business plan. What an investor is looking for above all are startups whose product is adapted to the market and where the founder has demonstrated his ability to lead and develop the business.
The biggest challenge, however, is getting the initial funding you need to grow your product and your business.
Here is some data from the MCI MBA on how entrepreneurs have raised funds for their startups over the past year.
But not everyone has a large reserve to draw on at first.
Did you know that the source of your seed money may be in the corner of your house? The seed money can come from different places, such as family, friends, or the exhaustion of your credit card limits.
Practical advice: before raising a startup fundraiser
Suppose you want to develop a mobile or web application. Our first advice: do not spend thousands of euros to build an application until you have obtained the funding. Validate it instead by creating a prototype of the application. This prototype is useful for obtaining customer validation and for presenting the application to investors.
But if you haven’t listened to this advice and you currently have a product or are in development, at least consider making a product that will serve your future users. How to do ? Analyze the behavior of your first users with the‘PinPut web marketing tool, you can easily detect things that are wrong and gain 10 months of development (also valid for a prototype).
Once the initial validation has passed, hire developers or a custom software development company to create your technical platform, website or mobile application.
Here are 22 clever fundraising ideas that can help you get started on your business project.
# 1 keep an eye on big brand campaigns
Huggies ran a campaign called MomInspired in 2012. They launched a call for candidates for all “Mompreneurs” residing in the United States and aged 21 and over, with an idea for an original new product, innovative and viable to help make life easier for parents. The price was $ 15,000 and tips to help them realize their business dreams.
Pepsi Co. has implemented a program called PepsiCo10, where it has invited startups to submit their application ideas. Pepsi was evaluating the proposals based on a candidate’s ability to associate with brands PepsiCo and its commercial viability. The winners were then offered an all-expense paid trip to New York to meet the PepsiCo marketing management team and network with digital influencers based in the United States.
The latest in this list is #UberPitch, an Uber initiative where startups have the opportunity to present their innovative business ideas to venture capitalists while taking a tour of Uber with them. Uber has partnered with Google Ventures for this initiative.
# 2 Win startup competitions
Jennifer Reich of The Mommy MD Guides created a short video and won a large Office Depot contest called Survival of the Smartest for Small Business that awarded her a very generous sum for his office supplies.
Example: At Village francophone, after having participated in several competitions, they were able to go to the CES in Las Vegas and receive several interesting grants.
# 3 Look for university funds
Most startups are created as part of university life. Seek funding from that day.
The University of Waterloo offers a Velocity Fund, a non-equity grant program for startups that provides more than $ 400,000 a year to young local startups. Stanford University also invests directly in student businesses. Stanford is also providing a $ 3.6 million grant to StartX, a non-profit startup accelerator for entrepreneurs affiliated with Stanford.
Some universities may partner with the private sector and the investment community to offer start-up incubator or accelerator programs, like the ” [email protected] Accelerator “from the University of British Columbia. In London you also have the Dauphine incubatorParis Dauphine University.
# 4 Negotiate a client advance (pre-sell)
Selling your products before launch is an often overlooked and very effective way to raise the funds necessary to finance your business. Find an important customer, or potential business, who sees such value in your idea that they are ready to give you an advance on payments to complete your development. Variations on this topic include advance license or white label agreements.
If your product is intended for a larger mass, you can directly sell from your website.
Example: Many coaches on the internet use this technique to study the market and adapt their first offer.
# 5 Get financing for office equipment
This is called supplier financing. It’s much easier to get a financing for physical assets than a cash advance on future sales or a personal loan. If you need physical products for your inventory, you can convince many manufacturers and distributors to defer your payment until you sell the goods. It actually means an extension of payment terms normal from 30 days to a period of several months or more, depending on your credit worthiness and additional fees. This frees up valuable capital which can be used for salaries and the like. marketing expenses.
Many equipment finance companies offer 100% financing everything a young business needs, from servers to computers to furniture and fixtures.
# 6 Apply the work compensation policy
If you have a great business idea, you can ask people to donate in exchange for a position in your start-up.
Joanne Lang of About One assessed the team members based on their willingness to invest, given their circumstances. Founding members who invest and demonstrate commitment to the company have been pushed forward in the management hierarchy.
# 7 Exchange your services for an office assistant
Trade your skills or something you have for something you need. For example, if you feel that your product / service has some value for the owner, you can negotiate free office space in exchange for free service.
Carolyn Goodwin of Cake Communications suggests: “Try to find a partner outside of your industry, not a direct competitor. Offer benefits such as co-marketing opportunities, blogs, customer referrals in exchange for funding, support or access to the resources you need for your business. ”.
# 8 Crowdfunding
Ask people / potential customers to finance your business. In exchange, register customers for a discount, or exclusive support, or offers for early adopters.
Platforms such as Kickstarter, Indiegogo or Go Get Funding are great resources for creating your fundraising campaign. In 2014, Kickstarter had 22,252 projects that raised a total of $ 529 million and Indiegogo has benefited from a 1,000% increase in funds raised in the past two years.
Example of successes on Kickstarter: Coolest Cooler, Pebble, Ouya
Here is a Fundable infographic that shows data from successful crowdfunding funded projects:
# 9 Ask for local help
Check with the economic development offices of your state, your department and your municipality for the financing of your start-up. BPI, Frenchtech offers small business development centers across the country that can help connect entrepreneurs and investors. These institutions have an interest in helping businesses succeed stimulate local and regional economies. Depending on your location and the type of business you are creating, these organizations can provide you with financial resources, including loans and grants. Discover the best tips for a successful pitch.
# 10 Ready in peer-to-peer
It is a process by which a group of people come together to lend each other money. It has existed for many years, for example in small business groups or ethnic groups who support similar efforts. In the context of a start-up, look for a successful peer entrepreneur ready to finance similar new ideas.
# 11 Test your business idea on social media
Bill Gandy shared historic photos of Allegheny City, a community north of Pittsburgh, on his Facebook page. After appreciating his Facebook group, he thought of opening a gallery to display these photos. This is how he launched the non-profit historic gallery in the city of Allegheny. In less than a month, Bill has harvested over $ 12,000 in gallery funds. The strategic roadmap is also a good way to test your business idea.
Website creation – Personalized price estimation
Websites Are Us has developed a recommendation engine which allows you to obtain a free detailed price estimate as well as a selection of software and providers adapted to your website creation needs.
# 12 Create interesting content
This story was reported in Reason Digital. During the summer, a 9-year-old Caine set up his arcade store with a few boxes that he was about to build in his father’s auto repair shop.
Unfortunately, the store didn’t have many customers, until a customer called Nirvan Mullick, stopped and worshiped Caine’s playroom. He decided to make a film about it and the film became a hit on social media. After that, people from all over the world visited Caine’s playroom and a fund was created to allow him to attend college. The fund quickly reached its goal of $ 25,000 and got over $ 200,000.
Another example, Priska Diaz wanted to finance her invention, a bottle called Bare that offers airless milk, so she created a website presenting the concept with photos of prototype baby bottles. The concept won wide acclaim in social media as potential customers awaited product development.
She set up a pre-order system and organized a presale directly from a website, which raised more than $ 50,000 for her business Bittylab.
# 13 Start a project in parallel
Entrepreneur Alex Genadinik used the revenue from the tours he organized on ComeHike to launch Problemio, which creates mobile apps for business planning and creation.
Our co-founder, Rahul Varshneya, wrote an article on “How side projects can be your way to entrepreneurship”. In his article, Rahul mentions, “Side projects are extremely easy to start because you don’t have to depend on them for a living. You probably already earn a salary from your day job. So you don’t have to worry about a source of income, even if you fail. ”
A good way to create additional income is to create content via a blog. Find out how to monetize a blog without spending too much time on it.
# 14 Get funding as a birthday present, literally
In 2008, when Cynthia Kersey, divorced and close to her fifties, wanted to pursue her dream idea, namely to guarantee a child’s right to education. She organized a party for her 50th birthday and invited all his acquaintances. She asked each guest to bring $ 100 instead of gifts and announced that she would use the gifts as seed money to open her Los Angeles nonprofit, The Unstoppable Foundation.
# 15 Reduce luxury
Over 90% of start-ups are self-funded (also called bootstrapping). It sometimes takes a little longer to save a little money before you start and grow organically. There is no better way to say it, “Cut out your luxury.” Most business owners who start their own businesses, cut back on spending to save, and invest that amount in the business.
# 16 Sell additional equipment
Most people have unused things left at home. This can be a good way to start your seed fund. By registering unused items on LeBonCoin or by organizing a garage sale, you can raise the funds necessary to start your start up.
Brandi Hamrick of You Grow, Girl, says, “When I started my business and needed money, I was selling stuff on Ebay. My closet was clean and I had more money to invest in my business. Sell last year’s handbags and clothes on Ebay, and use LeBonCoin for bulky items such as furniture and appliances. You can even organize a neighborhood garage sale ”.
# 17 Do you have a big house? Let yourself go!
Fay Johnson, founder and editor-in-chief of LIFE magazine, rented her apartment to start its seed funding. Fay listed her San Francisco apartment on Airbnb and began renting it out for five nights to a month. She used the money raised to finance the costs of the first issues of her magazine. No need for fundraising!
The founders of Eversnap did the same.
# 18 Second mortgage
Do you have a house on loan? The second mortgage can be an option to raise funds for your startup. They are also called home equity lines of credit. These loans allow you to tap into the equity in your home. To calculate the amount you can borrow for a second mortgage, take the value of your home and deduct the value of any outstanding mortgage.
# 19 Self-employment assistance
This type of funding is often overlooked. This is part of unemployment assistance and can be used by recently unemployed people who want to start their own business. The Ministry of Labor’s self-employment assistance program is a government effort that helps unemployed people return to work in their own businesses. You have the support of experienced mentors andincome security thanks to unemployment insurance benefits.
# 20 Online Loans
US Secretary of the Treasury Larry Summers said at the Lend It 2015 conference that he expects online lenders to eventually reach more than 70% of small businesses. This phenomenon happened more recently on London territory.
Online lending services such as OnDeck and Kabbage have become a popular alternative to traditional commercial loans. Online lenders have the advantage of speed. It takes an hour to complete an application, and the decision and accompanying fund scan are published in a matter of days.
# 21 Government funding
Public funds are allocated to support new technologies and important causes, such as education, medicine and social needs. A good place to start looking is bpifrance.fr.
# 22 Pension funds
Investment retirement account funds are an alternative source of funding accessible for young companies. You cannot use your own self-directed funds for your start-up, but many others are willing and able to lend you money on theirs, on the right terms, if they believe in you and your cause.
Debra Cohen of Home Remedies of NY, Inc. took out a $ 5,000 loan from her husband’s retirement savings plan. She had 5 years to pay it off at a minimum interest rate.
Do not take all these ideas as “good” for your startup, there are plenty of others, the most suitable solution will mainly depend on your startup idea and your vision of things. We wish you good luck in carrying out your business project!