Did you wake up this morning with the inappropriate realization that your mom and dad are not about to give you that 20 million dollars you need to start your dream business?
Here’s a list of 5 methods you can use to farm startup cash.
1. Partner with a business accelerator
Business accelerators are all over; in fact, there’s at least one in every state in the US.
Accelerators are often organizations with a general mission to improve the living quality of a city, state, or region. Find one and get involved. The typical accelerator will give you a fixed time period to succeed with seed capital they’ve provided, all in exchange for an equity position in your company. A good accelerator will give you access to a robust collection of mentors and solutions like office space and logistics resources.
2. Consider Initial Coin Offerings
ICOs are an up and coming way to create capital for your company. The Underlying concept here is that if you can look at your business model and find something to tokenize, then you have assets with rights to ownership that can be sold within an ICO. Think Initial Public Offering without the SEC regulation. This funding method takes advantage of blockchain technology by creating an immutable ledger of individuals that own the rights to your tokenized asset; the owner of your tokenized asset can buy and sell your asset as long as the terms fit within parameters set by you during the initial offering. An example of a tokenized asset could be ad space on your website.
3. Set up a Susu with family and friends
Don’t sleep on susus, yes susus! Passed down for thousands of years by cultures all around the world; it has gone by many names e.g. throwing partner, merry-go-round. The word Susu is used in West Africa and the Caribbean. A susu is a savings mechanism that occurs when 10 people decide to spend 10 weeks paying in 100 dollars each week. In turn, the first pay in will create a 1,000 dollar payout for the first beneficiary and successive 1,000 dollar payouts for every member after that. The process continues until all 10 participants have received 1,000 dollars. All members will continue to pay in even after they’ve received their respective payouts. Susus work at making you save your money, however, the nature of the partnership acts more like a loan to those who receive payouts earlier than the rest of the group. Individuals in the middle can use the susu as a way to save for a vacation or a wedding. The opportunity for creativity is real, do it multiple times and shuffle the order each time; savvy entrepreneurs also have the opportunity to purchase someone else’s order to move up when the money is needed.
4. Compete in pitch competitions
Pitch competitions are a great way to market your business. You don’t always have to win to walk away with value. The idea is to put your best foot forward and be accessible after the event. The icing on the cake will be the 1st place prize that often includes thousands of catch-free dollars. Find a competition in your city and throw your hat in the ring.
5. Create a crowdfunding strategy
Consider the crowd, marketing your pre-capital business model through the internet is a great way to drum up buzz on a large scale. If your product is what the people want then you’ll be raising an army of day one’s that will take to social media to advocate for its perpetual growth. Find them and treat them well.
There are a lot of ways to raise capital, consider the methods listed above but before you jump in headfirst, bring yourself up to speed on how equity financing works by speaking with an accountant. Find a good consultant that can help you build out effective internal processes in turn ensuring your money doesn’t get lost due to lack of organization. You will need a definite understanding of the amount of money you need to accomplish your goal so consider working with a finance professional to help you build thorough projections. Happy farming!