You’ve got an idea for a startup. You think it’s brilliant, but you don’t have any money to get it off the ground. What do you do?
If you’re like most entrepreneurs, you seek early-stage funding from a capitalist. These capitalists have a lot of money and they aren’t afraid of risk – within reason. Though they may be willing to put money into your startup idea, they’ll also seek ownership or management of your business in order to offset their financial risk. You can give up control in exchange for money, or you can find another way to reach your goal.
It’s your choice and it’s not an easy one. More and more entrepreneurs, however, are seeking to sidestep venture capitalists in favour of a more DIY approach to funding, and they don’t start with much.
If funding your own company sounds like the path for you, then you’ll need to be single-minded in your focus. Know what you want, have a plan, and stick to it. Need more guidance than that?
Here’s where to start.
When trying to establish a startup, many people fail to clarify their goals – they stop with vague entrepreneurial dreams. This isn’t enough. If you want to be successful, you need a clear goal, including milestones to reach along the way. Set numbers and build a timeline defining when you want to reach a given goal. This will make the process more manageable and give you moments of success to celebrate on the road to your bigger goal.
Though early-stage funding is meant to help businesses set up their basic framework, acquire office space, and prototype products, there’s a lot you can do, even before you have this funding, especially if you’re willing to put in the time. For example, you can fill out the incorporation papers when you get home from your day job or on the weekends. You can also create a website, print business cards, and start developing your product out of pocket.
Why put in all this work when you don’t have the money to take your ideas further? Expend the effort now to save effort down the road. No matter whether you’re crowdfunding your idea, investing in the stock market to earn money, or just socking away savings, you’ll have an easier time onboarding staff, getting an SBA loan, and generally getting your business moving if you invest time in the basics early on.
Finally, even if you don’t want to yield control of your business to venture capitalists, you’re going to need to make smart connections. When people work with venture capitalists, they aren’t just working that connection for the money. They’re doing it because venture capital is about human capital – about the ways business savvy individuals can push and inform your company, shaping its direction beyond the bounds of your individual knowledge.
Without venture capitalists, then, you’ll want to build connections with past colleagues. Perhaps people you worked with at other startups or entrepreneurs you admire. This will be easier to do if you have a fully shaped company with a product prototype – all that recommended groundwork – than if you simply have a nebulous idea. If you can show commitment to the hard, boring parts, these connections will be easier to come by.
You can build a startup without working with venture capitalists, but it isn’t easy. Be prepared to take the long road to success; it could be many years before you have the money to really launch your business. If you spend those years honing your product and your corporate narrative, however, you’ll already be 90 percent of the way to success when the funding comes in.
Feature image: Miran Rijavec via Flickr.