Image provided by ShutterStock
When you already have your startup idea and you decided to pursue it, it could be overwhelming. You can feel stuck when it comes to what to do next. Keep calm and talk to someone from the industry. Usually (most) entrepreneurs are quite open to helping one another.
Before you thinking about venture capital firms, accelerators or even business angels, you need to have an MVP. If you don’t know what MVP stands for, it’s “Minimum Viable Product” -the most basic version of your idea that you could release. I promise you, you will hear this acronym at least twice per week for the rest of your entrepreneurial life.
To get an MVP running, you might have to burn some money in the development and push it out to the world. If you don’t, let me tell you I’d be jealous because you got a massive advantage already. But if you do, here are a few ways to get seed capital to turn your idea into a startup.
Startup Contests at your School
If you’re at college, look at the entrepreneurial programs at your school. They might have a few contests based on ideas to give a little bit of capital to jump-start your project. This will not only give you a chance to win some money, but it’s great practice for pitching your idea. However, you have to be very careful and really check those contests before applying for them.
Beware, school contests can backfire because there are a lot of schools that ask too much to participate. They will expect you to spend too much time on a business plan you will never use again. It’s too early for you to do anything more than the Business Model Canvas. Time is very valuable, so make sure your school really understands startups and entrepreneurship.
Get Seed Capital Through a Private Crowdfunding
I think this is one of the best options you can have. Basically it’s crowdfunding between your friends and family. This is a great because they know you, and they know your capabilities and will likely support you. Also, it could be that they support you simply because they love you.
However, it doesn’t have to be a sacrifice for them. You should be generous with the people who first believe in you and give them some perks if things work out. Especially look into your relatives and friends who are interested in startups, investing, or your product area.
You can make a pool fund and have them all invest together in your startup. This can be segmented depending upon the amount they each contribute. If you’re going to pursue this route, make sure of the legal procedures to make this work in your country, and also remember to be reasonable. You can’t give that much equity away this early on.
Crowdfunding Platforms like Kickstarter
There are a lot of crowdfunding platforms to decide on. Kickstarter is one of the most popular ones and one of my favorites. However, I think Kickstarter works better if you have a physical product or a tangible service that costs money.
I find that people are more willing to support your idea if you’re asking them to buy it. They don’t know you that well, so everything revolves around the product. The important thing is that they’re passionate about the product. If the product solves a problem or a pain they have, they will likely be more than happy to give you a chance and buy some of your product and contribute money.
For product focused (or product-focused?) ideas, you also have an accelerator based in New York called Quirky. If that’s your case, you should definitely check them out!
Fund the idea yourself
Some people think this is not a good idea, but I think it is. Imagine a few steps further when you get in front of a business angel: If you have no money, it’s ok and it’s admirable you got to the point where your product is ready.
But, if you had money and didn’t put any into your own company, why would they? You’re basically telling them you don’t trust your own idea, so it could be off putting to them. They need to see you’re genuinely dedicated into make your startup thrive.
I’m not saying you should fund it completely yourself. Remember you will probably not have a salary for a long time. And, if you have to make other jobs and services, try your very best that they are related to your startup’s industry.
I think there are a bunch of us that made a few mistakes along they way and you will probably make a few too. Just research and read as much as possible to learn from others. Remember to measure everything and don’t spend that much money just yet.