Starting a new business can be a daunting task, particularly when it comes to obtaining funding and not operating at a loss for an extended amount of time. It can be difficult to obtain the initial seed funding needed to get your startup up and running, but luckily we've been through the ringer enough to walk through the basic must-do's for an up and coming team.
Here are some tips on how to raise your initial pre-seed funding for your startup:
Begin by developing a solid business plan (otherwise called a roadmap). This may appear to be a no-brainer, but believe me when I say it is critical. A solid business plan will assist you in clearly articulating your vision and goals, as well as making you more appealing to potential investors. Include details such as a lengthy explanation of your product or service, your target market, and financial projections, as well as your "it" factor that will give you the credibility required when investors are trusting their money with you.
Build a list of potential investors. Friends and family, angel investors, venture capitalists, and even crowdfunding platforms may be included. Begin by contacting your personal network to see if anyone is interested in investing in your idea, because the friends and family fundraise always comes first, and is a bit lower pressure than an official raise (although the same urgency should apply and the money raised should obviously not be squandered). If not, don't be afraid to pitch to strangers - you never know who they might be - which is why we recommend being very vocal on LinkedIn and other niche industry sites, there are investors and entrepreneurs continously combing these sites for their next big investment - be loud and proud about your vision.
Practice your pitch until it's perfect. When it's time to pitch potential investors, make sure you have a solid pitch that clearly communicates the value of your product or service and why it's worth investing in - there are numerous resources on developing a strong pitch, and the first place we always push young entrepreneurs is to the YCombinator youtube channel, where you will find an unlimited amount of value regarding funding, development, and pitching your product. Before presenting your pitch to investors, make sure to practice it and get feedback from other, ideally those who have experience in the space. If you find yourself completely unconnected from the investment community, find an incubator, accelerator, or a university entrepreneurial program and force yourself into those circles (don't be afraid to help out and provide value in exchange).
Be persistent and proactive. Do not be afraid to put yourself out there and approach potential investors (via LinkedIn, meetups, etc.). And don't be discouraged if you don't hear back right away; it may take hundreds of pitches and follow-ups before you land an investor. Just keep going, and for every refusal, find out why, use it to make you better, and keep going.
Don't overlook alternative funding sources. Don't give up if traditional funding sources like venture capital firms and angel investors aren't biting at your advances. There are various alternative funding options available, including crowdfunding platforms, small business loans, and even grants (if anything equity-free is available, prioritize that first for obvious reasons). Maintain an open mind and consider all of your options, even if it's not the gold-standard Andreessen-Horowitz type of attention you were hoping for.
To summarize, obtaining seed funding can be difficult, but with a solid business plan/roadmap, some traction, a strong network of potential investors, and a killer pitch, you'll be well on your way to making your startup dreams a reality. Just remember to be proactive and persistent, because it can be the most defeating thing in the world hearing 1,000 no's, but if the next one is a yes, they are all irrelevant, and probably made you that much better to cause that first yes.