Fundraising · Crowdfunding

Have an idea - How can I fund it?

Anonymous

July 11th, 2016

I have a unique business idea and an investor who I need to meet in the middle with budget. Unfortunately, I do not have the $10k to put in at the moment, am reluctant to ask family, and cannot take a loan. I'm looking for ideas of how I can raise my part of the funds to get this developed and moving forward.

How would you come up with the funds? Thanks.

Andrew Gassen Senior Product Manager at Pivotal Labs

July 11th, 2016

1) I think being able to answer the question about why you need funding is important.  Why is that?

2) Why are you hesitant to ask friends/family?  That's usually the starting point.

3) Can you pre-sell to customers to raise funds?  $10k isn't a heck of a lot to need to raise, you should be able to do that IF you've got a viable business.

4) Try to verify that you have a viable business.  I second Victoria's comment.

Victoria Cabrera Marketing Coordinator at Patxi's Pizza

July 11th, 2016

Have you tested the idea and it's assumptions in any way? This screams Lean Startup methodology. In other words don't need to build the full product to test your idea http://members.founderdating.com/discuss/topic/Lean-startup

Roman Semenov Web development, Mobile development, Outsourcing

July 11th, 2016

And taking in attention all said behind, you could think about co-founder who able to move your project forward.

John OHanlon Owner of Banks Printers

July 11th, 2016

Why do you need funding?

Daniel Turner Interaction Designer, Xerox PARC

July 11th, 2016

I hear you, original poster. My family and friends don't have money (certainly not any to lose), nor do I, so don't let people who have that luxury pressure you into thinking that's an option. Even a $1k loss could be serious and leave someone in debt or without things like health care.

But! Hit the library and look for books like Gothelf's Lean UX, Alvarez on customer development, Klein on UX for Lean Startups. Especially since you don't have the privilege of money (losing your own, or someone else's), you need to do what you can to make sure you don't end up like 94% of startups -- which is to say losing it all. Work hard to challenge your assumptions that your "idea" is really not being done elsewhere. Challenge your assumption that people will want it AND WANT TO PAY FOR IT; just because you or friends like it has almost no correlation to that. Don't ask people "this is my idea, do you like it?" Research what problems people can't deal with, and see if your idea might relieve their pains. Build paper or human-run prototype (cost? almost nothing but time), test them with real, unprompted people with the goal of breaking, not confirming your assumption.

That will give you a stronger, more likely product, and something you can take to investors beyond "I have an idea".


Martin Omansky Independent Venture Capital & Private Equity Professional

July 14th, 2016

There is no hard and fast rule for this. Even people with substantial resources sometimes need early financial help because their projects require large gobs of cash - like many ventures in the life sciences. However, investors are less confident about smaller deals that do not feature a significant investment by the founder. This is not a reflection on the quality of the idea, but the perception by the investor that the founder should have something significant to lose if the venture doesn't succeed. Of course, there are many investors that have their own reasons for investing or not investing, so I would say that the lack of a founder's investment is not always governing. To be safe, however, you should have your own funds invested in the venture AND funds in reserve (perhaps 2 yrs. of salary equivalent) before you go into business. Please be advised that business is about money, and that not everyone with a "good idea" can develop a going concern. Sent from my iPhone

Martin Omansky Independent Venture Capital & Private Equity Professional

July 11th, 2016

Don't go into business without your own funds. It is a disaster waiting to happen. I would suggest you find a corporation in your industry that would be willing to finance your development costs in exchange for a distribution agreement or license arrangement. Take your share of the license revenue and go on to the next venture.

Marsh Sutherland

July 13th, 2016

I doubt you need $10K to launch your app.  find good cofounders. don't hire contractors. this is founderdating.com after all

Elena Ginebreda-Frendel Associate Manager of Communications

July 11th, 2016

Could you tell us a bit more about your idea? Crowdfunding (Indiegogo, for example) could be a great option!

Michael Heiligenstein Marketing Manager

July 13th, 2016

If you have a 401(k) or IRA, you could consider ROBS financing. This involves forming a corporation and buying stock in it using your retirement plan, and it's relatively inexpensive compared to other forms of startup financing. The downside, of course, is that you're risking your retirement assets on the business.

If you can't/won't put any money behind your business, it's very difficult to find others who will do so on your behalf. This is why getting your own finances in order is one of the most important things someone can do who is planning to start a business - saving money, building up your credit score, etc. $10k isn't a crazy amount of money, and most investors & lenders will look at it as a red flag if a startup entrepreneur won't throw that much behind their idea.