Unless you are going into a business venture with your pockets lined, getting your startup started takes capital. Finding the startup capital for your new company means finding investors, which is sometimes like going on a treasure hunt if you don’t know the right avenues to take. To help with the funding hunt, here are five tips for finding an investor for your startup company.
Rehearse and Re-Rehearse Your Pitch
The way you handle your startup pitch could be the difference between walking every player on the team of pitching the perfect game. Before you step foot in front of an investor, it’s imperative that you practice your pitch until it becomes part of your vocabulary and a topic that you are the authority on.
This means rehearsing, which should basically lay the groundwork for how you will handle meeting with investors. In other words, not only will you have to know your business plan like the back of your entrepreneurial hand, you’ll have to predict potential questions. Don’t go it alone, rehearsing with a friend instructed to give no mercy is a great way to get the kinks out of your startup pitch.
Research the Investors
Obtaining investments for your startup starts with knowing your audience: the investors. Learning about an investor’s ideals, past investments, and overall business mentality will help in securing the funding you need. But don’t put all of your startup’s eggs in one investor’s basket.
If you want to reach the largest audience possible, make a list of at least three potential investors you’d like to pitch to. Then, learn everything there is to know about each investor. Once you get a feel for their sensibilities, set up pitch meetings based on the most desirable to least desirable investment opportunities. By doing so, you’ll know how aggressive you need to be from one meeting to the next depending on your success rate.
Know the Difference Between Investment Types
Put your pitch and list of investors aside for a moment. Before you walk into the shark tank, you need know what type of investment you want to acquire for your startup. Besides, the investment type has everything to do with your potential for success. Private equity and venture capital are the most common types of investments and are made by privately owned institutions and individuals.
Venture capital in particular has the most room for growth because most venture capitalists provide expertise and advice for startups. Angel investing involves obtaining capital from an individual with an upper-level net worth, but it also comes with high interest. If you’re unsure of the approach to take and the interest rates involved, Fisher Investments on Financials can help you navigate the investment waters so you don’t end up with the wrong investment for your startup.
Be Honest About Your Startup’s Potential
One of the most important pieces of advice when it comes to securing funds for your startup is being realistic with yourself and your investors about the startup’s potential. This is hard to do early on because, in most cases, you won’t have any sales under your belt. Likewise, it’s very easy to become starry-eyed about how well your business will do.
In terms of ROI, you need to plan for the lower end of success. It may sound like the will to succeed isn’t there, but by playing it safe on the investment end, you’ll leave plenty of room for better-than-expected results on the business end. Likewise, planning for a smaller ROI takes some of the pressure off, which is extremely helpful when it comes to running a startup.
Let the Government Help
Private lenders can get you most of the way to your investment goals, but in case you need to fill in some funding gaps, the government can help. The U.S. Small Business Administration has an SBIC Program, which helps small businesses connect with investment companies. In addition, the government also offers numerous other loans and grants for qualified startups looking for investment help.
The investment tips above will help turn your startup dream into a fully funded reality.
It’s a sobering reality that 60 percent of new startup firms fail in just five years. However, the future is much brighter for startups nurtured by incubators. Ninety percent of these are thriving three years after their inception, and 87 percent are still in business five years after their launch. If you dream of launching a successful startup, partnering with one of these incubators that are transforming the tech industry could give you the helping hand you need.
DreamIt Ventures: Where Dreams Come True
Image via Flickr by Tech Cocktail
Business partners Steven Welch, Michael Levinson, and David Bookspan launched DreamIt Ventures in 2007 with a plan to help inspiring tech minds get their ideas out of their garages. Since that time the Philadelphia incubator has expanded its program to New York City, but its simple philosophy remains the same.
“We’ve brought in companies that have little more than an idea on a napkin,” Levinson once told Forbes. “But in three months they can prove a market need and adjust their business model.”
The incubator gives tech teams up to $25,000 in seed funding, expert mentorship, and the opportunity to present their projects to investors at a demonstration day. Its success stories include location-based mobile gaming platform SCVNGR and the largest online ticket search engine, SeatGeek.
Y Combinator: Coding Credentials in California
With more than 300 graduates including file-hosting company Dropbox and social news and entertainment site Reddit, Y Combinator’s got an enviable track record. This Mountain View-based incubator is the brainchild of Harvard-educated coder Paul Graham. His partnership with Silicon Valley investors Ron Conway and Yuri Milner sees every Y Combinator company receiving a generous $150,000 investment in convertible debt on commencing the three-month program.
With its focus on coding and the internet, Y Combinator needs a fast internet connection with plenty of bandwidth. This Californian incubator and others like it would do well monitoring Internet specials like the bundles offered by CenturyLink.
Techstars: Elite Incubator Nurtures Transnational Startups
Image via Flickr by Robert Scoble
With each Techstars rotation hosting just 10 teams, its program is seen as one of America’s most elite. The incubator celebrates startups with global appeal, and this approach has seen it give birth to successful brands including social media organizer Socialthing, which was acquired by AOL, and tablet publishing platform OnSwipe.
Tech teams can enrol in its three-month programs in seven key locations: Austin, Boston, Boulder, Chicago, London, Seattle, and New York City. Each team member receives funding amounts ranging from $6,000 to $18,000 in exchange for a six percent equity stake in its companies.
Capital Factory: Help to the Power of 20
It’s all about the number 20 at Austin’s Capital Factory. Its chosen start-ups receive $20,000 in seed money, $20,000 in extras including legal and web-hosting facilities, and unlimited access to a prestigious list of 20 homegrown mentors, including Smart Bear founder Jason Cohen and ApartmentRatings.com creator Jeremy Bencken.
Originally launched as a summer program by local entrepreneurs Joshua Baer, Sam Decker, and Bryan Menell, Capital Factory has grown to become a year-long endeavor for its passionate team. It even attracted the attention of President Barack Obama, who toured its home in the Omni Building in May 2013 as part of his tech-focused visit to Austin.
Capital Factory holds two annual demo days which put startups in front of angel investors. The practice has boosted the fortunes of graduates including social music event app Vivogig and swim team management system Swimtopia.
Environmental Business Cluster: Helping Tech Go Green
Founded in 1994, Environmental Business Cluster is one of the oldest tech-focused start-ups in the United States. However, this institution takes a decidedly modern approach to technology. The Environmental Business Cluster has nurtured more than 150 eco-conscious tech companies since its inception. It’s also grown to become the largest environmental and cleantech incubator in the United States.
The incubator, a partnership between the city of San Jose and the San Jose State Research Foundation, has provided counseling and education, office and conference space, and access to investors for a range of firms interested in waste management, renewable energy, and other environmentally-friendly endeavors. Its graduates include solar energy producer Optony Inc. and wind tower maker Wasatch Wind.
It takes more than a bright idea to find business success. These startup incubators give aspiring entrepreneurs the additional tools they need to make it in the competitive tech industry.
Starting a business is a scary — but thrilling — process. So many things determine whether your start-up will succeed or fail. The Lean Six Sigma is a school of thought in business management that focuses on doing more with less.
This means stretching resources to the maximum while keeping costs to a minimum. With the Lean Six Sigma tactics, you’ll find growing your business is less scary and more thrilling than ever before. Here are five concepts to help you do just that.
Make the Most Out of Time
Time is a pesky little thing that likes to get in the way of big progress. Putting together improvement for a process is difficult, especially when things have already started and everyone is deep into their jobs and plans. So collect as much data as you can and categorize it. This will help you focus on what the biggest problems are. Find out the numbers and determine what they mean. What is your input and output? Who are your suppliers and distributors?
Get to know your employees and management teams and find out how they work best. Do they do well in groups or produce more by themselves? Try to accommodate your employees in the way that makes them more effective and productive.
Invest in Software
Now that you’ve got your plans together and everyone on board, it’s time to invest in some quality software suites. Use a homegrown system software that provides useful information and graphically shows statistics for your projects. To maximize the effectiveness of these software suites, bundle Verizon FIOS internet connectivity with other necessary services to save money and streamline things for your accounting department.
Gain everything you can from one program before you move on to the next, but don’t settle for one that only provides one service if you need six more. Once you have technology on your side, it’s time to hit the ground running.
Spread Your Resources Evenly
Commit to your new plans. Use the amount of man power and resources you need to carry out all of your projects and ideas. The key is to not be wasteful with them. If you only need five people to work on something, don’t use six. This will keep payrolls manageable and projects running smoothly because you don’t have one person getting in everyone else’s way. Find or train someone with a strategic view for your business who can come in and teach staff before your first project.
Focus on your customers. Without consumers, there’s no demand. The point of an improved method is to keep customers satisfied and coming back for more, which grows your business.
Trust in Your System and Analyze It
Once you have everything started, you have to maintain this way of working or everything will be put to waste. Schedule regular training classes to teach new employees how to work in your business. Use as much as you can from your resources before incorporating more. Have the man power to keep things productive — not messy. Keep your eyes on the numbers and other important information so you can prevent them from declining before it’s too late.
Win the Race
Companies who believe in and adopt the Lean Six Sigma philosophy are businesses that are striving toward the reduction of waste and inefficiencies. With six sigma, a company will have only 3.4 defects per million. What customer would be crazy enough to give their money to any other business? With more efficiency and better resources, any business can adopt the six sigma school of thought and attract those clients.
Hard work and dedication will make this program work for any business, but it’s not always a walk in the park. There will probably be bumps in the road and obstacles to bob and weave through. Once you work out all of your kinks, it should be a smooth ride to the top of the business food chain. So don’t get discouraged and be smart by planning ahead, using proper training and strategies to help you succeed.
If you are wondering what the future holds for humanity, look no further than the surprising and innovative world of startups. Companies like these are leading the way toward the newest, most creative solutions to the problems of today and tomorrow. From faux-meat to crowd-sourced healthcare, startups are on the forefront of human ingenuity. Keep a close eye on these 10 companies fresh on the scene.
Founded by vegan visionary Ethan Brown, Beyond Meat has worked in the labs of the University of Missouri for 10 years to create the world’s most chicken-like non-meat food. This means cleaner protein, less animal cruelty, and possibly another step toward solving world hunger.
ZetrOZ, or Zero Electrical Impedance “OZ,” markets itself as having produced “the world’s smallest ultrasound pain therapy device.” Although the device is still in clinical trials, the ZetrOZ team believes their portable, handheld technology will be a cost-effective pain relief alternative to pharmaceuticals for both humans and animals alike.
This website is the ideal solution for people who enjoy the free, open-ended music streaming capabilities of Spotify and Pandora, but hate ads and predictable playlists. Real, human users create their own music playlists across a variety of genres to satisfy every aural palate. You’ll want a fast FiOS connection to properly take full advantage of this site
Don’t want something anymore? Send a picture of it to Gone and the app will help you sell, recycle, or dispose of it. All you have to do is take a pic of that old cable box and they’ll see if you can get a few extra bucks for it.
Whenever you need a reliable source of engaging content that’ll increase traffic to your website, CopyPress is the answer. Headquarted in Tampa, Fla., CopyPress hires a team of freelancers to create high quality, captivating content targeted toward any audience imaginable.
Leap Motion is the kind of technology that would fit right at home in a modern-day science fiction film. Designed to “augment” the traditional keyboard and mouse, according to co-founder Michael Buckwald, Leap Motion allows you to manipulate objects on a computer screen just by waving your fingers. The $79 USB attachment, roughly the size of a key fob, picks up minute movements up to 1/100th of a millimeter, and is used for both 3D modeling apps and games.
If you combine taxis with Craigslist, you might get something half as cool as Lyft. This nifty company uses social media technology to connect freelance drivers with people who might need a lift across town or around the city. Riders choose to “donate” money to the driver, who will receive his or her earnings for the day in a single lump sum. If you see a car with a fuzzy pink mustache on the grill, you’ve just seen another happy Lyft driver cruise by.
Peace Corps veteran Chase Adam developed Watsi, a crowdsourcing alternative to third world healthcare, in 2010. Similar to Kickstarter, each patient’s fundraising page will have their picture, location, details about their medical needs, and a target goal. You might fund a heart transplant in Bangladesh one day and a prosthetic limb replacement in the Congo the next.
H.U.M.A.N. Healthy Vending
In a market dominated by honey buns and chocolate-slathered candy bars, H.U.M.A.N. (Helping Unite Mankind and Nutrition) decided to challenge the high-calorie standards of the vending machine world by introducing Healthy Vending snacks in offices and schools worldwide. Products include sugar-free beverages, organic potato and pita chips, whole grain bars, and anything else that might wet the palate of a health nut.
The future looks bright for these 10 budding startups. Keep an eye on this motley crew, and don’t be surprised if one of these companies becomes “the next big thing” down the road.