When most startup founders like about how they will fund the growth of their business they think about venture capital investors. One of the companies that I partner with to help entrepreneurs find funding put the chance of obtaining venture capital at .05%. If that is the case what are some other sources of startup funding that you should consider that many overlook.
Look in the mirror
If you have read any of my article, read my books, or taken any of my online courses then you will know that I am a huge fan of startup founders having some of their own money invested in their business. Even if that means investing enough to have a logo made. It is important to consider why an investor should risk their money on your idea if you aren’t willing to risk whatever you can afford to invest. Regardless of the amount.
Investing some of your own money can also help with the future valuation of your startup. Using your own funds to accomplish milestones, such as users and your first clients, can help you get a more favorable valuation and retain more of your startup’s equity.
According to Barron’s, over 1800 corporate venture capital programs were active in 2019 and about half of the venture capital deals done including corporate VC money. Those are impressive and important statistics to note.
Many startup founders overlook the opportunity to partner with corporations to develop their products or services and have those corporations fund their growth. That can be driven by the belief that the bureaucracy of large corporations can stifle a startups growth. But being funded by a corporate VC arm can have it benefits.
In traditional business models the thought was that you followed a process that goes design a solution -> build the solution -> sell the solution. Smart companies flip that process around to sell -> design -> build. While pre-selling a solution before customers can experience it can be tough it is a viable funding source. One simplistic example is how many online marketers use webinars for business development. What most people don’t know is that often times the webinar content isn’t even produced when it is promoted. Once the webinar gets a sufficient amount of registration the presenters then seek questions from the registrants and then build the webinar around those questions. They sell it -> design it (based on the questions people want to have answered → build it (and look brilliant for answering everyone’s top questions!).
Entrepreneurs have to be masters at marshaling resources. Including making use of resources that they don’t own. Joint ventures are a great way to fund your startup’s growth. Sometimes you can leverage another company’s capital through a JV and other times you are able to leverage other resources they have such as equipment, etc. Either way those are resources your startup isn’t having to pay for.
There are a lot of ways to secure startup funding. If one route is not working for you take the time to explore others. The key to being a successful startup founder is being creative. Don’t fall into the trap of assuming that one startup funding source is the only one available to you.
Until next time, I hope you “find your voice”.