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The other F-word. When you’re idea rich, but cash poor

Community Manager

The other F-word. When you’re idea rich, but cash poor

So you’ve got the big business concept you think might be ‘the one’.

But there’s still a long road ahead, and in the early days your main concern is likely to be the f-word. That’s right, funding.

 

ideas and money Sq.pngWe've had various discussions and articles about how startups can go about getting their hands on cold, hard cash.

 

But what do other entrepreneurs who’ve been there, done that and bought the tee-shirt have to say on the matter?

 

We approached the participants from last year’s prestigious Virgin Media Business Accelerator, which was powered by TechStars and sponsored by Liberty Global, to see what advice they have for entrepreneurs beginning the daunting task of financing their venture.

 

Jim Rand, founder of Switchboard Audio

Start looking for funding earlier than you think is going to be necessary. Not only because it will take longer, but because the best investors only do so after getting to know you. Giving relationships time to develop increases the probability that you’ll be able to choose from the best set of investors. It not only gives you a chance to get comfortable with them, but also to grow your options by way of intros you get through the earliest meetings.

 

I advise spending a lot of time on initial meetings six months or more in advance of the deadline, then follow up intermittently while you focus back on the business. With two months to go, focus again on those contacts in order to negotiate and close.

 

When closing, send emails to everyone in a condensed time frame to generate urgency, and if you have more than one strong prospect, get them talking to each other. They might even know each other already.

 

Rich Edwards, founder of Repairly

It’s easy to get sucked into long hours and endless work when you are trying to run a business and raise funds; they are both full-time jobs. My advice is don’t forget to look after yourself. If you’re not well-rested and in a good mental state, you won’t be able to perform your best when you need to. Let’s face it, financing is critical in order for businesses to go from idea to reality.

 

Alex Omeyer, founder of Stepsize

Know which source of funding is appropriate for your startup. Not all businesses are meant to be VC (venture capital) backed, and that’s okay. If your business is not designed to return massive funds several times over, seek alternative sources of funding because you won’t be able to raise from VCs.

 

If, like Stepsize, your business is suited to VC investment, there is a method to fundraising which you can learn from others who’ve been through the process. There are also great books and blogs teaching how to do it step-by-step. Programmes like Techstars will also teach you everything you need to know about it.

 

My final piece of contradictory advice is that there are no rules. What worked for others might not work for you. Figure out what’s special about your team and company, get out there, see what works and what doesn’t, and adapt accordingly.

 

Daniele Galifa, founder of GoalShouter

Firstly, engage smart, nice people you trust and love working with. Keep focused on delivering value to your customers while tracking and monitoring potential investors over a long period of time. Keep an eye on investors operating in the same industry and/or with complementary interests in their portfolio. You should get talking to these potential investors early on, even before you start the fund-raising process. This investor list from TechStars is amazing.

 

You should operate fundraising using different sources such as grants and R&D tax claims, and also spend any money wisely, even after securing your first round.

 

Finally, I’d say avoid starting digital businesses in Italy. Think instead about Paris, Berlin, London, Madrid or the Nordic countries. Good luck!

 

What's your funding story?

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