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In todays’ video, we are going to talk about 4 ways to raise money for your business without the need
A lot of entrepreneurs ask me when they should start looking for investors. My advice is to start very
early. Get out there before you need money.
Basically, start looking at the time you’re starting your business, and get to know people. Go to industry
conferences, go to investor meetings, introduce yourself and ask people for advice. Tell them you’re
working on something exciting. Don’t mention that you’re looking for money so that when you come
back later, it’s now a warm introduction rather than a cold call, and that’s very important.
I always say Bootstrapping is the first thing you should consider whether or not you need an investor. In
fact, 90% of new businesses start with that. Bootstrapping means that you use your own money to fund
90% of all businesses start with just their own money. They start with their own money but if you need
investors or you anticipate that you will need investors, you have to do it in a very kind of structured
sequence. In other words, there are friends and family, there are angel investors, and there are venture
A lot of people come to me and say “well I need $5 million to do this, so I think I’ll go directly to a
venture-capital firm I’ll get the $5 million in one time.” Wrong! It doesn’t work! No one is going to invest
if they think you have no skin in the game. If you ask any investor for money, the first thing they’re going
to say is “how much did you put into this?”
Friends and family are the first people you need to talk to when looking for capital for your business.
You use family when you are not looking for a large amount of money, usually around $50,000 or less.
They are the ones who invest in you very early. They’re not looking for a product. They’re not looking at
you to have a prototype or a customer. They just believe in you and you can ask for small loan amounts.
Angel investors are people like you that invest their own money. They might invest $25,000, $50,000
$100,000, but they expect to see a prototype. They expect maybe to even see a dollar of revenue. They
expect something because there are not looking at the product; they’re looking at the whole business.
They usually can invest in the form of Loan or Equity stake.
A little further down the road, you might need $5,000,000 or $10,000,000. That’s venture capital
territory. If you need a larger amount of money, venture capital could be a good option. However, be
ready to justify your valuation and give up some equity.
Those people, though, will expect maybe a couple million in revenue and good traction. They don’t even
want to invest a small amount like $25,000. They start at $2,000,000 or so. They expect a good bit of
equity for that as well, so your valuation better be up there.
So you need to think this way: I’ll start myself, start with friends and family, then with angel investors
and even venture capital if I need that much.
If you need help raising money for your business we place a link in the description below of the “get
funded program”, a program that help a lot of entrepreneurs raise money.