— August 28, 2017
As Entrepreneurs many of us watch Shark Tank as they make raising money look easy. I’m asking for $ 100,00 for 20%, there is some debate, and they then conclude the discussion with a handshake or hug. If you believe the real world works that way, you’ll be facing a harsh reality if you’re looking to raise money for your venture or business.
Here are four real world ways to raise capital for your startup:
1. Use Your Own Money
Yes, your own money, unless you have an excellent track record of having a successful exit or if you are a seasoned executive you will most likely have difficulty raising funds. Set aside funds for your venture while you are working or set aside savings to get things started. Think about it; you want someone to give you money. Therefore, you will need to show your prospective investor that you know how to manage money by having some of your own to put towards the venture. Don’t have money? Work 3 jobs if you have six months of runway to get it started. Jasper Cain who is currently raising money for his smart watch shares “Every time I had a pitch meeting, they asked how much of my own money is going into the project. Fortunately, I was smart enough with my money to have funds and have skin in the game aside for sweat equity”.
2. Sign-on Partners
Sign-on partners who also see the vision and have the talent to make it happen. As a Digital Marketer, people who approach me with ideas which simply do not have the capital. Therefore, we have reduced or comped our fees instead of equity or options in the business. This will assist you with getting your project going without having any delays due to lack of funding. Further, if investors see strong partnerships with suppliers or marketers attached to the project, it may make it easier to raise funds from an accredited investor.
3) Bootstrapping is another way to get the ball rolling. This just means you use current sales or profits and dump it back into the business. Don’t have anything to sell, ask for pre-sell orders through crowdfunding sites as this will see the market’s appetite for your product and service. It’s a de facto focus group without having to pay big money to see the marketability of your offering.
4. Line of Credit
4) A line of Credit is great when you have great personal credit, a strong idea and a plan for execution. Now a word of caution, only open a line for what you need and brings you to early stages for your development. For example, if you’re developing a technology and you just don’t have enough funds to move forward, get a line of credit to just get to an MVP or minimally viable product. If you have an MVP, it will make it easier to raise funds and even though you don’t have a finished product. The further you are to market, the more valuable your proposition will be to investors.
Although Shark Tank makes it look easy to raise money, follow these four steps out the gate to get the capital to move things along and get closer to your dreams.