Crowdfunding · Digital marketing

What Are Some Of The Today's Fundraising Options Available To An Early Stage Start-up Project Besides Crowdfunding?

AbdurRazaq Osuolale

Last updated on April 17th, 2018

Hello All,

l'm working on a project that combines top two internet industries (social media and e-learning) to create a first of its kind. The project tosses the world to a unique way of connecting with others around the globe that's based on learning and capacity advancement without loosing the interactivity of a regular social media platform.

The product development has started but currently needs funds to continue. I don't want to go crowdfunding because of the sensitivity of the project. I talked to an angel investor but seem to have his focus in other areas, further tries to get to talk to more investors have not been successful as there are really very few early stage investors out there and they are difficult to find.

I was wondering if anyone in this beautiful community could help with any piece of information, advice or ideas of other options that I can leverage to get funds.

Nikki Cheah Attenbrough Founder of Piqo, R&D electrical engineer, programmer, multilingual

April 27th, 2018

I think it's a lot harder nowadays to get funding because of the sheer quantity of startups that are well, starting up. Seed/angel investors have moved up, further along the lifecycle, where before, an idea would land you seed funds but now, you not only need to have an MVP, you need to have paying customers (if you're a B2B business) or have at least 10000 MAUs (for B2C businesses). Do you have government grants you can apply for? Or perhaps go the incubator/accelerator route?

Sarah Mathews Software Developer

Last updated on March 19th, 2019

When it comes to growing outside money, most people consider venture capital or angel investors. Look towards government grants as well. One of the most unbelievable trends of the last few decades has been the decreasing cost to start a business. It is particularly true for technology businesses, but I think it applies to many other industries as well. The success of a startup depends on various factors such as a brilliant idea, perseverance, and adequate initial capital. One must look for the various fundraising options available to an early stage start-up project beside crowdfunding.

Jens Straten Entrepreneur with German Ingenuity

March 22nd, 2019

Finding an investor takes time. You also need to look beyond Silicon Valley if you are looking to get funding quickly.

In a first step, you need to decide what you want to get out of the funding process. If it is just the money, you might be able to find foreign investors that are willing to take a risk by giving you a low interest rate loan that requires no payments for 5 years or so. Just keep in mind that these folks neither care about your company nor about your product. So, this isn't for everyone. This type of funding is also easier to come by if you are purchasing real estate and machinery as part of the process. Basically some collateral in case things go sour and don't work out.

Now, if you are looking for an investor that provides help beyond money, you need to find the right angel investor or venture capital firm. Obviously, VC will only work if you can show financial forecasts that peek their interest. On the angel investor side, you will have to really reach out to a lot of people to find that one investor who loves and buys into your idea. That will be a time consuming process and you will encounter some frustration along the way.

Other options are self funding (be careful and only use money that you can afford to lose) and friends&family funding (be sure that your idea isn't just great, but can also make money).

For all investors you should have a clear plan that outlines what the money is being used for and when you expect to make money (in short, a business plan).

Unfortunately, being a startup entrepreneur brings many hardships and there is typically no easy route or shortcut to success. Good luck!

Steve Skura, MBA Looking for a social media manager for my magazine startup.

May 7th, 2018

It really depends on how much money you need. If you need less than $10K, I would try to fund it yourself and get your product to the next level. The further along you are before you start talking to investors - the better.

When it comes to seed stage... there is crowdfunding, friends & family, credit cards, and/or a private loan from a bank.

As the experts say, you need to decide what your "MVP" is... Minimum Viable Product. Feel free to connect and message me. I would love to learn more about your startup.

Lloyd Jacob Founder of 5 startups, 2 sold, 1 was part of Y Combinator, looking for next adventure in Drone Tech

March 21st, 2019

The responses here are pretty good. I would also suggest looking for early stage investors outside of Silicon Valley. Investors outside are pinged less often and are more open.

Gareth Hughes Pursue your passion, enjoy life, give back.

March 20th, 2019

Early stage investors are difficult to find. You may want to see if there are any incubator or accelerator options in your area. Many of them can introduce you to investors once you've gone through their program.

Another option is government grants. Check out the Small Business Innovation Research (SBIR) program. There's over $2B available for startups and small businesses. They're very competitive and the grants don't provide working capital (there needs to be some R&D involved), but they are non-dilutive. With your focus on e-learning, you may want to check out the Dept. of Education, they participate in the SBIR program.

Good luck!

Stephen Stokes Portfolio investor, established (non-startup) business investor, real estate investor

March 27th, 2019

One of the issues I believe you have is that you said you do not want to go the crowdfunding route "because of the sensitivity of the project." I am guessing you mean you do not want someone to take you or your team's idea.

I live in San Francisco and I have seen a lot of startups. It is very extremely rare that startup ideas get stolen at this stage. If your project is successful, it will likely be copied but I don't see the value in hiding your project at this point. Matter of fact, I see a lot of downside to hiding your project because market feedback is most important during this stage of the process.

Right now, your team is probably working very hard and focusing on going down one path and I would hate to think you are in a bubble and getting zero feedback from potential client sources.

I personally think crowdfunding would be an excellent choice not only from a funding standpoint but also to gain valuable feedback.

I hope this made sense. Good luck!

Jim Michael Co-Founder and Chief Operating Officer, Energine Inc.

March 28th, 2019

You may want to take a look at a security token offering (STO) as a means to capitalize your startup. You still need seed capital for the legal and other dependencies, but you gain access to a larger pool of investors. For instance you might create an offering under Regs D and S to gain access to both domestic and foreign investors. See my book STO Revolution for a non-technical introduction to the topic. STOs are appealing to investors because they increase liquidity. It is a new area of investment but there are about 100 STOs raising funds thus far.

Another possible option if you are in the USA and are willing to locate your business in an Opportunity Zone would be to target Opportunity Zone Funds that invest in your type of business. Investors in OZs get to defer taxes on capital gains, receive a discount on those taxes, and earn tax free returns on the investment in those funds.

Also look into the EB-5 program. If your business will create 10 jobs for each $1 million raised you should be able to find foreign investors looking for investments which permit them to receive a green card for USA residency.

Hope that helps and good luck.