Most startups are funded by the entrepreneur’s personal means, while some start with money borrowed from friends and family members. There’s nothing wrong with investing your assets or personal relationships in your vision, but it can be risky. When you’re young, even those closest to you may doubt you due to lack of experience and a positive bias. This skepticism can be a significant hurdle in fundraising.
Some people think the only option is to find an angel investor or attract venture capitalists, but this isn’t always the case. In 2024, there are many innovative alternatives to debt or selling equity to start a business.
Here are the top four fundraising tips for aspiring entrepreneurs in 2024.
1. Leverage crypto for fundraising
Many overlook the potential of cryptocurrencies beyond investment value. Cryptocurrencies play a monumental role in fundraising. Platforms like Kickstarter allow people to invest in startups based on belief in the idea and vision. Crypto investing also offers anonymity for bold ideas that some may not want to be associated with.
With crypto fundraising, you open up a vast potential source of investment globally. Tech businesses can raise funds through crowdfunding, with many platforms supporting crypto payments. Small businesses can create tokens and sell them to investors through token presales and ICOs, providing value tied to the business’s success.
2. Why, when, and how much?
Answering why you need funds, when to start fundraising, and how much you need is crucial. Lack of resources is a common reason ideas fail, so funding is necessary not just for launch but also to sustain a business until profitability. Understanding the purpose of the funds and having a clear timeline is essential for successful fundraising.
Determining the amount needed is challenging but vital. Having enough to launch, cover expenses, and create an emergency fund is crucial to prevent running out of funds prematurely.
3. Be careful with your equity
Understanding what investors want is crucial when trading equity for funding. Presales are straightforward, but trading equity adds complexity. The value of equity is based on belief in the idea, and selling too much equity can impact the business’s future value. Balancing equity sale with funding needs requires accurate financial projections and understanding investors.
4. Make a killer pitch
Craft a compelling value proposition for investors and learn from rejections to improve your pitch. Research your target audience to tailor your pitch effectively. Embrace feedback and use it to refine your presentation for better chances of fundraising success.
Raising funds is a crucial step for many potential entrepreneurs. Embracing new technologies, understanding fundraising fundamentals, leveraging equity, and refining presentation skills are essential for successful fundraising.
