Daily Post #494 Where is the money?
This post is a continuance of the two previous posts; financial proposition and work the dip.
So we have determined that your idea needs some kind of investment to get off the ground. And with investment I mean in a broad manner;
It could be you investing your time (and through that your own money) on one end of the scale, and it could be a venture capitalist investing hard cash on the other end of the scale.
As I have mentioned before, when the times are good and there is water everywhere, it’s easy to find water to quench your thirst. However when the weather turns and the wells dry out, it’s not as simple as just dipping your water canteen into the flowing river.
So what alternatives do you have when you can’t (or don’t want to!) raise venture capitalist money? And just for the record, don’t if you don’t have to.
Enter the noble art of bootstrapping. How to make it without raising external money.
First of all look long and hard at what you are creating.
It is really focused on customer/user delight? or are you building something you want to have built? Do you KNOW people will want this? You really have to lower the risk now and make SURE you have customer satisfaction as you number ONE priority.
Then of course, what can you strip off your tech roadmap to launch sooner? The sooner you launch, the sooner you will have customers, which gives you traction which gives you revenues, since you are focusing on the paying customers first, right?
Can you rent hardware instead of buying it? can you use any kinds of loans (with reasonable interest rates!! we’re not talking loan sharks here!)
Maybe you have set aside your own funds for this, if you have been smart enough to save up to be able to start your own business, good for you!
Then of course we have the three F’s — Family, friends and fools.
But here an important note of caution, just like with the loans, make SURE than anyone that wants to give, invest, lend you money are truly and 100% in on that this is a business VENTURE as in business RISK. So they are in fact risking all of their money on you and your idea, and no, there are NO safe bets.
For the next step we have all the so called soft funds; grants, stipends, in-kind support from organizations and so forth. Don’t underestimate how much help you can get from these, so make sure to spend time going through the websites and databases that cover these.
Try to avoid hard funds, ie venture capital, early in the process, hard funds are venture capital, investors seeking a good return on their money.
Somewhere between those two are business angels with semi-hard funding, they are still investing their money and are hoping for a return but they usually have a longer time frame in mind and usually don’t have as an aggressive take on their expected ROI (return on investment).
Then of course one of the best ways of funding your idea is working with your customers/users, getting them onboard early as beta testers and pilot customers. Why not offer them 6–12 months free license fee in return for being guinea pigs in the beginning?
Don’t think that you need to raise money the first thing you do, there are so many other ways of making your dream come true.
