So you’re an entrepreneur with a new business idea, but you don’t know how you’re going to pay for it.
As an investor, the number one question I receive is, “How do I get start-up funding for my business?”
Let me introduce myself. My name is Jade Alberts, and I am the Founder of Peer Guidance, and I am an Angel Investor. I am also an entrepreneur who has sold a business, and now I help other entrepreneurs to be successful, so they can make an exit too.
My philosophy is:
I have written this article to inspire you, and give you a detailed 6-Step process that will help you increase your chances of success when it comes to securing funding for your idea.
But before we learn the six steps, let’s start with a definition of what start-up funding actually is.
What Is Start-Up Funding?
Startup Funding is the capital you require to start and grow your business. There are many different sources for start-up funding. For example, some entrepreneurs use their own money, or borrow money from family and friends. There are many government programs where entrepreneurs can seek grants and loans. Once a start-up has gotten some traction then funding may come from financial institutions including banks, Angel Investors or Venture Capitalists.
What Start-Up Funding Is Not
Early stage money for your business is not an opportunity to buy yourself a job, or use other people’s money as your personal bank account.
That’s why most companies bootstrap their businesses from the beginning, because access to cash is not usually an option. Any money you do have, or receive from investors, needs to be spent wisely. I highly recommend that you treat every start-up dollar like it will be the last one you ever get – because it could be.
With that in mind, I hope you can use the ‘6 Steps To Get Funding For Your Business’ that I have outlined in this article.
If you’d like to read our full definition of what a start-up funding is, then check out the Ask A Business Expert Dictionary by clicking on this link.
If you’d like to watch a video featuring Business Expert Jade Alberts explaining how to get start-up funding, then watch then click below – or read on!
6 Steps To Get Funding For Your Start-Up
Here are 6 Steps to help you get funding for your new business.
- Prove That A Real Customer Wants To Buy What You Are Selling
- Don’t Ask For Investment Too Early
- Ask For Help
- Reach Out To Investors
- Be Ready For Tough Questions
- Have The Drive To Succeed
Click here to download your copy of the ’6 Steps To Get Funding For Your Start-Up Checklist’
6 Steps To Help You Get Funding For Your Start-Up
Step 1: Prove That A Real Customer Wants To Buy What You Are Selling
This is as simple as it gets. You must go into the market and sell your product. If no one wants to buy it, you need to figure out why. The rest of the steps mean nothing if you build something that nobody wants to buy.
Step 2: Don’t Ask For Investment Too Early
I genuinely believe that founders don’t spend enough time on the business. Many companies focus on raising funds too early. Instead, they need to invest this time to prove they have a viable business.
When companies are raising funds, as an Angel Investor I ask them:
I’m not saying that people don’t invest in early-stage companies. What I am strongly suggesting is that you work on your business first, because investors want to know that you can start a business and run it, and most importantly, sell your product.
Step 3: Ask For Help
Building an investable business is hard. Finding the right investors is harder.
When you are looking for capital don’t fool yourself into thinking you already have all the answers. Being an entrepreneur is a long journey, and you don’t need to take it on your own. So make it your job to build a team that has the right people, and investors, who can help you realize your dream.
Step 4: Reach Out To Investors
I am a HUGE fan of founders reaching out to investors and asking them out for coffee or a zoom meeting.
So how can you do this effectively?
- Go to networking events that include investors and and introduce yourself. This shows you have the drive and the ability to cold-call.
- Start building these relationships and ask them if you can send monthly updates. Most investors want to get to know you before they invest in you.
Working with an investor is a long-term relationship, and if you are only interested in their money, chances are you won’t get it.
Investors also talk to each other all the time, and in Alberta, we are very collaborative. If one investor becomes your champion, they may bring in others to invest, or introduce you to more investors who might invest in your company.
Step 5: Be Ready For Tough Questions
Every investor has their own thesis and different ways to measure the companies they will invest in. They will also ask tough questions in a variety of areas as they perform their due diligence process.
Market Understanding
- What opportunity/problem do you solve?
- What is the size of the market?
- Why is your solution the right one?
- Have you validated your idea?
- Do you have traction with customers?
Competition
- Who is your competition?
- What differentiates you?
- How will you guard and deepen your moat?
Business Model and Financials
- How you drive sales and make money?
- How will you grow sales over time?
The Team
- Why will you and your team dominate this space?
The Deal
- What is the size of the deal?
- What is the structure of the deal?
- What is the timing of the deal?
- How will you use the proceeds?
Exit Strategy
- How will we all make our money back?
So, if you want an investor to part with their hard earned money, then make sure you can confidently answer these types of questions.
Step 6: Have The Drive To Succeed
There’s too much advice about step 6.
So basically, you need to have a positive attitude, passion, and the drive to succeed.
When you do, investors will pick up on this, and there’s a better chance that you’ll get them interested in going on the journey with you.
Conclusion
After reading this article, I hope you’re able to implement the 6 Steps To Get Funding For Your Start-Up which are:
- Prove That A Real Customer Wants To Buy What You Are Selling
- Don’t Ask For Investment Too Early
- Ask For Help
- Reach Out To Investors
- Be Ready For Tough Questions
- Have The Drive To Succeed
Because the reality is that most businesses become lifestyle businesses, and this is not a bad thing. Some of these businesses scale slower and are incredibly profitable. Lifestyle businesses are the heartbeat of the Canadian economy, and many of them are eventually sold, some for millions of dollars.
Yes, it might not be your goal, but you should be PROUD if you create a life for yourself and your family. I know your family will be proud of you.
The last few pieces of advice I have for you are that when you have an idea, tell it to people and listen to their feedback. An idea is a starting point, and the more you listen, the stronger the idea becomes. Asking for help is not a sign of weakness, and there will be many people there to help you along this journey.
Jade Alberts
I’m an Entrepreneur, Angel Investor and a Strategist that Tells It Like It Is. I’ve had a successful career as a sales Entrepreneur. Yes, I mean Sales Entrepreneur. I was allowed to create the sales that allowed me to understand growth, margin and profit. This was extremely handy when I became an Entrepreneur. I now share my knowledge with aspiring entrepreneurs as I believe lack of capital should not get in the way of what you need to succeed. I have exited a business and helped three others exit.
Peer Guidance – Purpose Before Profit is a group of Entrepreneurs helping Entrepreneurs. We guide Startups, Entrepreneurs and Small Businesses through their challenges focusing on Growth, Scaling & Angel Investing. https://peerguidance.ca/