As anyone in the fast-paced and risky startup industry knows, funding is key. No business can survive without adequate funding, and startups often need an extra boost to get off the ground and turn unexplored ideas into a reality.
But if you can’t front the money out-of-pocket, what are your options? Here’s how to secure investments as a tech startup.
1. Friends and Family
Getting high-profile investors on board is the ultimate goal, but those investors won’t come along if your startup is barely developed and you don’t have investments from friends and family. Although asking for investments from people you know personally may seem strange, it has several distinct advantages. Remember, this isn’t charity, it’s people believing in you investing in something they believe in, hopefully for a return on that investment.
Every startup needs initial cash to get started, and people you already know will have more faith in you than the average stranger with lots of money. With some initial funding garnered this way, your startup will be able to develop, attract a great team and start to crystallize its vision more before approaching big-time investors.
Friends and family will be easier to pitch to (and are a great practice tool in that way). They also will be more tolerant of any temporary setbacks. Finally, getting personal acquaintances onboard establishes you as a trustworthy person. Other investors down the line don’t want to entrust someone with their money when the people close to the person aren’t even willing to.
2. Government Grants and Accelerators
In most countries, governments want to see small businesses grow and thrive, boosting the overall economy and creating jobs. This has manifested itself in the form of government programs and grants. For example Mbele na Biz.
Both the Small Business Administration and the Small Business Lending Fund strive to help businesses succeed with financial assistance. By writing a good grant proposal and having a sound financial plan, your startup may qualify for various forms of funding.
Startup accelerators are a great way to get much more comprehensive help within the private sector. Accelerators work just like their name suggests fast-tracking businesses ideas into the market. If your startup is yet to progress very far through the financing process but has a sound businesses idea, an accelerator may be the better option for you.
Accelerators offer more than just investments in return for equity: they offer direction and mentorship. Be aware that this can both be helpful and harmful; if you don’t get along with or have a similar vision as your mentors or directors, you may end up going in an unwanted direction or not qualifying for the next accelerator round. Growth Africa is one of the best startup accelerators that you should check out.
3. Your Team
When getting ready to present your vision to angel investors or venture capital firms, both of which have the potential to invest huge sums of money into your startup, your team can be one of the most crucial factors.
A company is only as good as the people running it. Investors want to see a healthy mix of experience on any startup executive team. If everyone in your startup is heavy on coding knowledge and not much else, that might scare investors off. Diversity of experience and business acumen is key.
Your team should also contain good public speakers that can excel at both one-on-one interactions with clients and investors and at larger meetings or presentations to investment firms. Not everyone in your company needs to be incredibly charming and charismatic but having at least a critical mass of people willing to give a good pitch is important.
4. Your Pitch
That brings us to the last, and potentially most important part of securing investments, something that will come up again and again during the long startup journey: the pitch. If you can’t inspire somebody to believe in your own vision, they’re not going want to back you financially.
In fact, inspiration and vision, especially in places like Silicon Valley, can trump numbers and figures for many investors. A lot of large individual investors don’t take on incredible amounts of personal risk when they put money into a project, since they have the funds to do that one hundred times over. That makes a good pitch the difference between securing investment as a tech startup and not.
Startups face tough competition and financial rigors on a daily basis. By securing investments consistently, you can bring your startup from a vision to a fully functioning business. Start with getting investments from friends and family to supplement any personal funds you put into the project. This will help get the startup off the ground, as well as show future investors that people believe in your vision.
Consider applying to startup accelerators or even government-affiliated grants or loans as well. Accelerators offer mentorship as well, just make sure to choose the right one for your company. Finally, ensure you have a great team and a great pitch for the long term. Those are the most vital elements to both a good startup and a good chance at securing investments.
This post first appeared on Fuzu