There are many aspects to consider when trying to finance your project.
You really need to think about what sort of fundraising suits your project best.
And how much equity you're willing to give up, in order to secure that funding.
Generally, you don't want to sell more than 20% of your company,
because you want to have enough skin in the game going forward,
and that will be a problem for the later stage investors.
Here are some of the main ways people are using to raise funds these days.
Angel investors.
Angel investors are usually high net-worth individuals,
who have built and sold a business before.
They are now equipped with a lot of time and money
to help the next wave of founders, to get to their next level.
Angel investors like to work in groups
and they normally write $25,000-$100,000 cheques.
So you may have to talk to a few of them to fill your whole financing realm.
Accelerator programs.
Typically, accelerator programs run for a limited duration,
something less than 6 months,
and you're given a small amount of money, something like $50,000-$100,000
in exchange for about up to 10% of your company.
And during the program you're surrounded by mentors
and given access to all these networks and advice
to help accelerate the growth of your company.
And also help you raise your first institutional round of capital.
Strategic investors.
Strategic investors are usually a bigger company operating in your industry.
They normally get involved because you help one of their business units.
You need to juggle the pros and cons when working with a strategic investor,
because you may get a lot of sales from the distribution deals,
but you may also limit your future growth.
Because there may be exclusivity that may come with the deal terms.
Venture Capital.
So the thing to understand about venture capitalists,
is they're professional money managers.
They get paid to produce outsized returns.
So that means that they're looking for companies
that can grow to a $100 million in revenue or more within 5-7 years time.
Crowd funding.
Crowd funding platform is a great way to get marketing exposure
but it's generally not enough to close your whole round.
You can list your project on the platform for a fee.
It's best to direct smaller investors to the crowd funding platform
that reduces the number of share holders on your registry and also the paperwork.
Because when you get to 20-50 investors,
you are required to do more paperwork by law.
Government grants.
It takes a lot of time and energy to get the process right,
and that is a big distraction from building your own company.
I highly recommend you to engage a professional grant writer
because you do need professional help.
So it makes sense to pay someone a success fee, to get the grant process going.
Sales.
To pre-sell your product, if you get enough interest
you don't actually raise funding and you can retain full ownership of your company.
This is fantastic because it's really hard to sell,
especially when you have nothing to give in return,
and you have to get over that barrier at some point.
And if you do, you've demonstrated that you have a customer who has a real problem
that they're willing to pay money for it.
You know how much they're willing to pay for it,
and you'll get a sense from that,
of how big the market and the opportunity is.
And this is all information that you'll need to know later on
when you are raising a round from investors.
Successfully closing a funding round
is actually only the first step to a new journey.
Next up is iteration, and you should get people that could support you around you.
Don't forget to join in the conversation and let us know your thoughts
and what you're working on.
We'd love you feedback.