If you’ve been following our series, “How to Turn Your Idea into an App“, you may recall our strategies on how to prototype your app without any money or coding experience. This week, we cover how to find cash for your startup – the next important step to bringing your idea to life. Although there will be folks who choose to forego living out their business idea due to the belief that they don’t have enough money or resources to justify the risk, the reality is that many opportunities to raise money are right under your nose. And one thing to keep in mind is that all you really need (to raise or fork over) is enough to getstarted; you don’t need all of it up front. Here are eight places or people to turn to when raising cash for your startup.
1. Check your own wallet first.
Edemond Dougherty, a contributor for entrepreneur magazine recommends using your own money to get things started before looking at any other sources. Pro: if you are personally willing to invest in your idea, others – aka investors – will believe in you. Con: you may not have the cashflow and therefore will have to tap into savings, home equity, retirement accounts, even credit cards.
2. Ask your friends and family.
You don’t have to look hard to find a cautionary tale of mixing business with close relationships. But the biggest benefit to asking friends and family for seed funding (in addition to your own money) is that they love you and want to support your dreams and aspirations. They’re also much more accessible than just about any other source. The down side of course, is they may know little about the space and therefore may not add much value beyond their wallets. Both parties must also be prepared for the dynamic shift in the relationship that comes with the territory.
3. Venture Capitalist aka VC. VC’s will bring a high level of experience and support. Added pros: some will assist with marketing, building out a team, and general management. They may even participate in future rounds. Con: you may have to bargain a larger share of your company’s equity than you were prepared for. Think Shark Tank. Tip: You can also offer them equity, partnership, a seat on your board, or an executive position in exchange for their funding. But above all else, remember that 1% ownership in something, is better than 100% ownership in nothing.
4. Find a Strategic Partner.
Dave Kerpen, CEO of Likeable Local, suggests finding a strategic partner is one of the best ways to fund your startup without having to pitch to investors. Pro: they will be more willing to invest in your idea because they envision more than just a monetary gain. Some will even invest opportunistically if your company aligns with their business goals and interests. Some folks in this category will act as “silent partners” which can also be good for you if you’re worried about having too many cooks in the kitchen, i.e., opinions and personalities. Con: unless you find a corporate strategic investor, some folks in this category, such as Angel Investors, might be lesser known which doesn’t help with getting your name “out there” from a PR standpoint.
5. Behold the Power of Crowdfunding.
Tap Kickstarter or GoFundMe to meet your monetary needs. Pro: has the potential to raise a substantial amount. Con: some crowdfunding sites only give you the money if you raise your entire goal, so you may be wise to set the bar on the modest side. Read more about why EdDougherty suggests entrepreneurs should jump on crowdfunding quickly here.
6. Join an accelerator program aka Incubator.
Pro: Accelerator programs like Y-Combinator and 500 Startup offer early-stage seed funding and a sort of startup bootcamp; in exchange for a 5% stake in your company, they offer valuable advice, resources, connections, and the ability to raise a seed round. Con: some of these programs require you to participate full-time, which would mean quitting your day job. Learn why Leo Polovets believes accelerator programs are a no brainer here.
There you have it! For more information on how to get your startup rolling, connect with our Mobile DI team here or leave a comment below – we’d love to help! Add and like us on Facebook and follow us on Twitter to get the latest updates on mobile app development and so that you can share the posts you like with friends.
Love this post? Subscribe to our newsletter!