Clichés become clichés because they are based in fact and one that applies to startups is “it takes money to make money.” Everyone knows this principle in business but the task of getting funding becomes more difficult if you have an alternative startup. Convincing everyone from your angel investors to banks will take more effort if your business is not in the mainstream. It takes a lot of persuasion and someone that’s willing to see outside the box to recognize your vision.
Understanding the Investor
Every investor has a primary goal when they invest their money in your enterprise and that is to make more money. As an entrepreneur you have to have a clear understanding of your investor and what it is that he or she wants with their money. While the primary goal is to make more money there are investors out there who are willing to delay their return for the greater good. This is truer when you have an alternative startup with social, cultural, financial and environmental benefits. Finding investors with these attributes will give you a greater chance of funding your startup.
It is not an Overnight Process
The funding process is time-consuming, because the vast majority of startups do not succeed. Every investor is well aware of this fact and they will scrutinize every aspect of your proposal to minimize their risk. If your startup is a capital-intensive model expect to spend a large amount of time raising capital to receive funding. This process becomes lengthier if your investors don’t see eye to eye with your alternative startup.
Communicate your Ideas Clearly
By definition an alternative startup means mainstream investors will have a hard time understanding what it is you’re trying to accomplish. Individual investors and large VC firms have clear ideas on the type of startups they are willing to fund. If they do not understand what you’re trying to accomplish you will probably not receive any funding. You have to communicate your ideas clearly with every potential investor. This means adapting the way you present your proposal differently to each investor, because not everyone speaks the same language when it comes to investments. Don’t assume everyone is an expert in your field and they can understand what you are saying. You have to simplify the process of your project so it can be understood by everyone.
If you are not able to do this hire professionals to rewrite your presentation so it can communicate your ideas more succinctly. Once you get the right presentation go over it so it becomes second nature when you are delivering it to your investors.
The success of Kickstarter has made it possible for alternative startups to find funding. In May of 2012 the Pebble E-Paper Watch was able to raise more than 10 million dollars on Kickstarter and other companies such as Double Fine Productions and InXile Entertainment had pledges in the millions of dollars. What this shows is you are not limited to the old ways of getting funded for your startup. Kickstarter is not the only option when it comes to crowdfunding you can try Crowdtilt, Believers Fund, Rockethub and Quirky as well as many others. The beauty of these crowdfunding sites is they specialize in different niches so if you are a programmer, an inventor or an artist you will be able to directly access those investors interested in your particular field.
One of the biggest mistakes startups make is limiting their potential pool of investors to their city, state or country. No matter what country you live in you have to look outside of your borders because there are billions of dollars waiting to find the right investment opportunity. Whether you are in the startup, pilot, roll-out, growth or expansion stage you can always get investors from many parts of the world to infuse capital to keep your enterprise going.
Asking for money is hard to do for most people, but if you believe in your idea wholeheartedly don’t give up because you have been turned down by people who don’t have the vision to see the possibility.