One 단기알바 benefit of having seed capital is it shows potential investors you are serious about your business. No matter what approach you take, your first step in getting startup seed money must be raising the profile of your company. Do this right, and you will be on the path to getting seed money, which could put your company on a path to success.
In addition to understanding your business and how seed funding can help grow your company, you will need to understand different types of investors, what they may bring to your business, and how they make investment decisions. Some types of investors you want to avoid include ones who would get too involved in your business in an unhealthy way, ones that are motivated only by greed and money rather than a business idea, and, of course, loan shark types of investors that require a personal guarantee or collateral in order to guarantee the seed investment.
You will also have to consider how much progress your business would have made at various size investments, and how much of the business you would have had to forgo to receive this amount of seed money. It is also worth bearing in mind that one investment might not be enough to take your business to market, in which case you will have to go back to the drawing board. When you have a new business venture that you are looking to launch, it may be difficult to persuade mainstream investors to get on board with the initial round of funding.
It is often said that it is bad to mix business and family, so approaching people who are close to you looking for funding can be difficult, but a friend-and-family seed round can be an excellent beginning to a new business, and there are ways you can approach that initial seed funding round in a way that could reward the people who invested, and give you the cash you need. A friends and family seed round does not have to be a formal process like a traditional investing one — it is okay to approach potential friends and family investors in a more casual manner in order to ask for their investment.
Pre-seed round investors are usually friends and family members or business angels, and investments can be anywhere from $50,000-$200,000 for 5-10% of equity. Angel investors are high-net-worth individuals that invest in startups in seed rounds in return for equity stakes in the business. Strategic partners — seed fund investors are generally experienced, high net worth individuals looking to put their earnings into profitable entrepreneurial experiences.
There are several different sources of capital that your startup could look into including investors, crowdfunding, and borrowing from family or friends. There are a lot of ways to obtain the cash needed to launch your new company, but one of the most common is with seed money.
Entrepreneurs who are starting to generate income from their entrepreneurial endeavors can use seed capital to create a strong financial foundation for their business. Not only does a successful startup need money to create a strong foundation, but it must have funds to cover everything from hiring employees to marketing. Many startups inevitably require another infusion of capital in order to grow and scale, meaning that they need to go through multiple rounds of funding.
Unless entrepreneurs have savings already, they must consider seed rounds, otherwise, their startups do not stand a chance. If you are comfortable giving up equity stakes in your company, and have reached the point where you are able to demonstrate growth potential in your idea, then you might be ready to begin the seed funding process.
To be successful at this stage of raising startup capital, it is about convincing potential investors that your company has the potential to be a business with a long-term earning potential. Raising seed funding also has far reaching implications for your company, because it shows VCs that there is consumer interest and trust in your idea. It is important to recognize the benefits that getting seed money can have on getting your company off the ground, providing working capital for hiring employees or developing your product — and giving you a head start on marketing and advertising.
Before being able to raise proper seed money, expect to have a well-developed Minimum Viable Product (MVP), a solid core team, early traction, and great customer experiences to demonstrate your businesses opportunities. For most of us, this is going to take a well-developed idea, good knowledge of market opportunities, an MVP & some initial traction (take a look at comparable startups raising money for a reference). The amount of funding you need depends on the estimated operational expenses, and how many people you need to hire to launch your product or service, but most seed rounds run between $500k to $2m.
If you do not have any other options, research venture capitalists and angel investors, and pitch your short, yet compelling, summary of your company and opportunity to as many as possible (see “The Documents You Need” below). You will likely need an executive summary and slide deck that you can show investors, and possibly keep for the VCs to show to their other partners. A written business plan helps investors see your vision, and may lead to them taking fewer shares in return for funding.
Your closest family and friends may or may not be willing to become investors in your idea (that is, want to get a piece of equity in your company in return for funding), and may only lend you money, but in any case, make sure to clearly outline where that money will go, how you plan to compensate them, and what risks they will take if things do not pan out. If you spend your career building a company that cannot defend its profits, your investors will make an underwhelming return, but you are the one that never gets your time back.