School of Startups: How to Raise Capital for Your Startup?

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In today’s rundown:

  • 🫰What is bootstrapping, and how can it help me raise capital for my startup?
  • 😇What are angel investors, and how can I find them?
  • 🫶What is crowdfunding, and what are the different types of crowdfunding?
  • 💰How can I use pitch competitions to raise capital for my startup?
  • 🕸️What are some tips for building a strong personal network to help me raise capital?

As an entrepreneur, you have a great idea for a business, but it can be challenging to turn that idea into reality without the necessary capital. Raising capital for your startup is a critical step in the process of launching and growing your business.

In this article, we will explore different ways to raise capital for your startup, including bootstrapping, angel investors, venture capitalists, crowdfunding, small business administration (SBA) loans, pitch competitions, strategic partnerships, and personal networks.

“Don’t worry about failure; you only have to be right once.”

-Drew Houston, Dropbox Co-Founder, and CEO.

A solid business plan

Creating a solid business model is essential for the success of any startup or business. A business model is a framework that outlines how a company plans to generate revenue, create value for its customers, and achieve profitability over time.

Here are some key reasons why creating a solid business model is important:

  • Clarity: A solid business model provides clarity and direction for the company. It helps to define the company’s goals, target market, and value proposition and provides a roadmap for achieving those goals.
  • Differentiation: A solid business model helps to differentiate the company from its competitors. By clearly articulating the company’s unique value proposition and competitive advantage, the business model helps to establish a clear and compelling position in the market.
  • Focus: A solid business model helps the company to focus its resources and efforts on the most important areas. By defining the key activities, resources, and partnerships required to achieve its goals, the business model helps the company to prioritize and allocate its resources more effectively.
  • Adaptability: A solid business model is adaptable and flexible. As the company grows and evolves, the business model can be adjusted to reflect changes in the market, customer needs, and other factors.
  • Investor confidence: A solid business model is essential for attracting investors and raising capital. Investors want to see a clear and compelling plan for how the company will generate revenue and achieve profitability, and a solid business model provides that plan.

Overall, creating a solid business model is critical for the success of any startup or business. It provides clarity, differentiation, focus, adaptability, and investor confidence, and helps to establish a clear and compelling vision for the company’s future.

From a very early status even before the pitch deck there are tools like the Business Model Canvas. A free template on the internet can be found here.

Bootstrap Your Business

Bootstrapping is the process of starting and growing a business with little or no outside funding. This means leveraging your own financial resources, such as savings or credit cards, to finance your business. While bootstrapping can be a challenging path, it can also give you complete control over your business without having to answer to outside investors.

To bootstrap your business, you need to create a realistic budget and stick to it! Look for ways to reduce costs, such as working from home instead of renting office space or using open-source software instead of paid alternatives. You may also need to take on part-time work or side hustles to generate income while you build your business.

Bootstrapping is a great way for entrepreneurs to extend the period of time a startup can sustain operations without additional funding or revenue. A more popular term in the startup and investor community is the runway. The amount of runway helps them determine how much time they have to make progress on their project.

It is important to know what amount of money you have set aside will last you how long. Do you have enough money to get you a Minimum Viable Product (MVP) where you can generate revenue or even enough to get to the next stage to convince an investor you have a viable product and they should continue to invest more?

As a rule, a startup must secure a runway for at least 18 months.

Some would say that 12 months is enough, but more realistic people know that a startup needs at least 3 months to secure the investment, and it needs money to get through that time, and it needs a reserve fund for those at least 3 months, simply because it is smart.

Now, let’s get back to bootstrapping.

For example, let us write a hypothetical scenario of a young entrepreneur trying to get his business off the ground. Let’s call him Peter. Peter had a great business idea, but he didn’t have any capital to get started. He knew that he would need to bootstrap his business if he wanted to make it a reality.

So, he started by doing market research and validating his idea. Once Peter had a solid plan, he focused on building a minimum viable product (MVP) that he could launch quickly and inexpensively. He used free or low-cost tools and resources to create a website, social media accounts, and other marketing materials.

According to Gartner a minimum viable product (MVP) is the release of a new product (or a major new feature) that is used to validate customer needs and demands prior to developing a more fully featured product. To reduce development time and effort, an MVP includes only the minimum capabilities required to be a viable customer solution.

Peter also took advantage of his personal network to spread the word about his business. He reached out to friends and family, asking them to share his website and social media accounts with their own networks. To keep costs low, Peter operated his business from home and avoided unnecessary expenses. He focused on generating revenue from his MVP and reinvesting that revenue into the business.

Over time, Peter’s business grew, and he was able to attract investors who were impressed with his bootstrapping efforts. Today, Peter’s business is thriving, and he is grateful for the lessons he learned while bootstrapping. Bootstrapping a business requires a lot of hard work, imagination, and determination, but it is possible.

By focusing on creating a solid plan, building an MVP, leveraging personal networks, keeping costs low, and reinvesting revenue, entrepreneurs can bootstrap their way to success.

Stages of Funding

There are several stages of funding that startups may go through as they grow and scale their businesses. Here are the most common stages of funding:

  • Family, Friends, and Fools or “Love Money”: People who know you and care about you so they want to help even but have no idea of what you are really doing.
  • Pre-seed funding: This is the very first stage of funding where startups typically raise capital from friends and family, angel investors, or accelerator programs. This funding is used to develop a business plan, create a prototype, and conduct initial market research.
  • Seed funding: This stage of funding is typically used to help startups build their products and grow their customer base. Seed funding can come from venture capital firms, angel investors, or crowdfunding platforms.
  • Series A funding: This stage of funding is used to help startups scale their businesses and expand their operations. Series A funding typically comes from venture capital firms and is used to build out teams, refine products, and grow the customer base.
  • Series B funding: This stage of funding is used to help startups achieve profitability and expand into new markets. Series B funding is typically used to invest in sales and marketing, hire additional staff, and develop new products.
  • Series C funding and beyond: Series C funding is the third round of financing that a startup receives, and it’s used to continue scaling the business and expanding into new markets. Subsequent rounds of financing are typically referred to as Series D, Series E, and so on. These rounds are used to support the ongoing growth and development of the business.

When a startup reaches a certain level of growth and success, it may consider two options for raising capital and providing liquidity for its founders and investors.

Acquisition or Going Public: An acquisition is the takeover of a smaller company by a larger company, usually for a substantial sum of money. For the startup company, an acquisition can provide an exit strategy for its founders and investors, as well as access to the resources and expertise of a larger company. The larger company benefits from acquiring a promising startup that adds value to its portfolio and can potentially drive future growth.

Going public, on the other hand, refers to the process by which a startup issues stock to the public and becomes a publicly traded company. Going public can provide a startup’s founders and investors with significant liquidity and access to a larger pool of capital.

However, going public also brings with it increased regulatory requirements, greater public scrutiny, and the potential loss of control over the company. Ultimately, the decision to acquire or go public depends on a variety of factors, including the startup’s growth potential, the availability of potential acquirers or investors, the company’s financial condition, and the preferences of the founders and investors.

Startups should carefully weigh the pros and cons of each option and consult with legal and financial experts before making a decision. It is important to note that not all startups go through every stage of funding, and some may skip certain stages altogether. Which funding stages a startup goes through depends on a variety of factors, including the company’s business model, its growth potential, and the amount of funding it needs to achieve its goals.

Angel Investors

Angel investors are individuals who invest their own money in startups in exchange for equity. Unlike venture capitalists, angel investors are typically willing to invest in early-stage companies that may not have a proven track record. Angel investors can be a great option for startups that are looking for smaller amounts of capital.

Once you have decided that you want to bring angel investors on board, the next step is to find the right one for your startup. If you are not already connected to a network of startup investors or wealthy individuals in general, you may not even know where to start. Typical questions young entrepreneurs are asking themselves are.

  • Where should I look?
  • What questions should I ask them?
  • How can I tell a good investor from a bad one?

There have never been so many resources for finding and connecting with potential angels as there are today. With the world being as interconnected as it is, you can find angel investors with little effort.

For example, in the U.S. there is the Angel Capital Association

Many of the associations list local angel capital groups which angels can reach out to and send them their pitch decks for evaluation.

  • The general range of investment is usually up to about $2 million.
  • Often a number of angles from the group will pool amounts of $10K-$25K to create an investment.
  • Often multiple angel groups will work together to share risk/reward.
  • Some angle groups also focus on industry.

Let’s create another example, let us write a hypothetical scenario of a young female entrepreneur trying to find the right business angel for her business and herself. Let us call her Sarah.

When Sarah started her business, she knew she needed to raise capital to bring her idea to life. She began researching different sources of funding and soon learned about business angels – high-net-worth individuals who invest in startups in exchange for equity.

Sarah reached out to a local angel investor network and was connected with several potential investors. She quickly realized that working with business angels required a different approach than traditional fundraising methods.

First, Sarah needed to be prepared to pitch her business and answer detailed questions about her market, competition, and financial projections. She spent time crafting a compelling pitch deck and rehearsing her presentation to ensure she could confidently communicate the value of her business.

A great pitch deck is a critical tool for startups seeking to raise funding from investors. Great resources for finding great pitch deck samples are websites of prominent business professionals and accelerators and incubators as well.

For example, places like Y-CombinatorTechstars, and other individuals like Guy Kawasaki have models published on their websites.

Sarah also learned that business angels typically look for more than just financial returns. They want to work with entrepreneurs who are passionate, driven, and coachable. Sarah made sure to convey her dedication to her business and her willingness to learn from experienced investors.

Finally, Sarah recognized that working with business angels meant giving up some control over her business. She needed to be comfortable with the idea of having outside investors who would have a say in important decisions.

After several meetings with potential investors, Sarah was able to secure funding from a group of business angels who shared her vision and believed in her potential. With their support, Sarah’s business was able to grow and thrive.

If Plan A doesn’t work, the alphabet has 25 more letters.”

– Claire Cook, Author.

Working with business angels can be a great way for startups to access the capital and expertise they need to succeed. By preparing a strong pitch, showing their passion and coachability, and being willing to share control of their business, entrepreneurs can attract the right investors and build lasting partnerships.

To find angel investors, start by networking within your industry and attending startup events like the Pirate Summit in Köln Germany or EU Startups Summit. You can also use online platforms such as AngelList or Gust to connect with potential investors.

When pitching to angel investors, be prepared to explain why your business is unique, what problem it solves, and how you plan to generate revenue!

Venture Capitalists

Venture capitalists are professional investors who manage a fund of money that they use to invest in early-stage companies. Venture capitalists typically invest larger amounts of money than angel investors, but they also require a higher level of due diligence.

There are groups like the trade organization that represents the venture capital industry in the United States the National Venture Capital Association.

The NVCA’s membership includes more than 400 venture capital firms and 1,000 individuals, representing a broad range of sectors, stages, and geographies. Members of the NVCA are actively involved in funding and supporting startups in a variety of industries, including technology, healthcare, energy, and consumer products.

Range for VC’s generally for a first round is $2M – $5M.

It is worth noting, that Venture capitalists are looking for businesses with a high growth potential and a proven track record of success.

For example, let us write a hypothetical scenario where our friend Peter needs to expand his business and needs more money to expand his business.

When Peter’s tech startup began to gain traction, he knew he needed to raise significant capital to take the company to the next level. He decided to explore working with venture capitalists (VCs), who are known for investing large sums of money in high-growth companies.

Peter began by researching different VC firms and identifying those that had experience in his industry. He also connected with other entrepreneurs who had worked with VCs in the past to get their insights and recommendations.

Once he had a list of potential VCs, Peter began reaching out to them and sharing his business plan and financial projections. He quickly learned that VCs were interested in more than just a great idea – they wanted to see a track record of growth and a clear path to profitability.

Peter spent months refining his pitch and building relationships with potential investors. He also made sure to research each VC firm thoroughly, understanding their investment criteria, portfolio companies, and management team.

When Peter finally secured funding from a VC firm, he was excited but also aware of the expectations that came with the investment. He knew that the VCs would expect regular updates on the company’s progress and would have a say in major strategic decisions. And more often than not they may also want a seat on the board of directors.

Peter worked closely with his VC partners, leveraging their experience and connections to help grow the business. Together, they were able to achieve significant milestones and eventually sell the company for a substantial profit.

Working with VCs can be a challenging but rewarding experience for entrepreneurs. By doing their research, refining their pitch, and building strong relationships with potential investors, entrepreneurs can attract the right partners and access the capital and expertise they need to take their businesses to the next level.

To attract venture capital, you need to have a strong business plan, a clear vision for the future of your company, and a plan for how you will use the funds. You will also need to be prepared to give up a portion of your equity in exchange for the investment.

Crowdfunding

Crowdfunding is a method of raising capital by soliciting small contributions from a large number of people, typically via the Internet. There are several different types of crowdfunding, including donation-based crowdfunding, rewards-based crowdfunding, and equity crowdfunding.

General crowdfunding statistics and facts 2023:

  • Each year, $17.2 billion is generated via crowdfunding in North America.
  • On average, crowdfunding campaigns raise $28,656.
  • Crowdfunding campaigns have an average success rate of 22.4%. The average number of backers of crowdfunding projects is 47.

Donation-based crowdfunding involves asking people to donate money to a cause or project without any expectation of a financial return. This type of crowdfunding is often used for charitable causes, social causes, or creative projects.

Rewards-based crowdfunding involves offering backers a reward or incentive for contributing to a project. The rewards can vary depending on the level of contribution and can range from a thank-you note to a product sample or exclusive access to the finished product.

Equity-based crowdfunding involves selling shares or equity in a company to investors in exchange for funding. This type of crowdfunding is typically used by startups and early-stage companies to raise capital from a large number of investors.

Debt-based crowdfunding involves borrowing money from a large number of investors, typically via an online platform. The borrower agrees to pay back the loan with interest over a set period of time.

To launch a crowdfunding campaign, the first step is to choose a platform that fits your needs and goals. Some of the most popular crowdfunding platforms include KickstarterIndiegogoGoFundMe, and Crowdfundr. Once you have chosen a platform, you will need to create a compelling campaign page that explains your project or venture, sets a funding goal, and outlines the rewards or incentives for backers. You will also need to promote your campaign through social media, email marketing, and other channels to attract potential backers.

For example, let us write a hypothetical scenario where our friend Sarah needs a different kind of capital than angel investors. She needs to get the money to produce it while building a pool of buyers.

When Sarah decided to start her social enterprise, she knew she wanted to involve the community in her fundraising efforts. She turned to crowdfunding, a method of raising money by asking a large number of people to contribute small amounts of money through an online platform.

Sarah began by researching different crowdfunding platforms and selecting one that was well-suited to her needs. She then spent time creating a compelling campaign page, complete with a video, photos, and a clear description of her business and its impact.

To generate interest in her campaign, Sarah reached out to her personal and professional networks and asked them to share her campaign with their own networks. She also used social media to spread the word about her campaign and engage with potential supporters.

As the campaign gained traction, Sarah continued to update her supporters on her progress and offer incentives for larger donations. She also made sure to thank each and every supporter, showing her appreciation for their contributions and building a sense of community around her business.

“If you launch your campaign with zero audience, you are launching to crickets.” — Khierstyn Ross of Crowdfunding Uncut

In the end, Sarah was able to exceed her fundraising goal and raise enough money to launch her social enterprise. She was grateful for the support of her community and proud of the impact she was able to create through her business.

Crowdfunding can be a powerful way for entrepreneurs to raise capital and engage with their communities. By creating a compelling campaign page, leveraging personal and professional networks, and offering incentives for donations, entrepreneurs can attract a large number of small contributions and achieve their fundraising goals.

To launch a successful crowdfunding campaign, you need to have a compelling story, a clear value proposition, and a plan for how you will use the funds. You will also need to have a strong network of supporters and be willing to promote your campaign on social media and other online platforms.

Small Business Grants and Loans

When Peter and Sarah decided to expand their small business, they knew they needed additional funding to do so. And one of the ways to get more money was through government loans to small businesses.

They began by researching the different types of loans and grants available and identifying which ones were best suited for their business needs. They also made sure to meet the eligibility requirements, including having a good credit score, a solid business plan, and collateral to secure the loan, if that was demanded in the program.

Once they had identified the loan program that was best for their needs and goals, they began the application process. They provided the chosen government agency with detailed financial statements, tax returns, and other documentation that demonstrated their ability to repay the loan or to justify their claim for a grant.

Throughout the application process, they had to work closely with a program officer, who helped them understand the loan/grant terms and requirements. They also made sure to ask questions and clarify any uncertainties they had.

After several weeks (usually) of review, they were approved for a loan or grant, whichever they applied for. They were pleased with the low-interest rates and long repayment terms, which would give them the flexibility to grow their business without taking on excessive debt.

EU 🇪🇺

The Single Market Programme (SMP) is the EU funding programme to help the single market reach its full potential and ensure Europe’s recovery from the COVID-19 pandemic. With €4.2 billion over the period of 2021-2027, it provides an integrated package to support and strengthen the governance of the single market.

The €4.2 billion Single Market Programme will strengthen the governance of the EU single market. It will help to:

  • make the internal market work better with measures including improved market surveillance, problem-solving support to citizens and businesses, and enhanced competition policy
  • boost the competitiveness of businesses, in particular, small and medium-sized enterprises (SMEs)
  • develop effective European standards and international financial and non-financial reporting and auditing standards
  • give even higher protection to consumers
  • maintain a high level of food safety
  • produce and disseminate high-quality statistics

The program brings many activities together under one coherent umbrella to reduce overlaps. It focuses on investment where it will have the most impact.

Check SMP Programme website.

USA 🇺🇸

The Small Business Administration (SBA) is a federal agency that provides loans, loan guarantees, and other forms of assistance to small businesses. SBA loans can be an excellent option for startups that are struggling to secure financing from traditional lenders.

To qualify for an SBA loan, you will need to have a strong business plan, good credit, and collateral to secure the loan. You will also need to demonstrate that you have the ability to repay the loan.

In order to get an SBA-backed loan:

  • Visit our Loans page to find the loan that best suits your need
  • Enter your Zip Code on Lender Match to find a lender in your area
  • Apply for a loan through your local lender
  • Lenders will approve and help you manage your loan

Working with the SBA can be a valuable way for small business owners to access capital and grow their businesses. By doing their research, preparing a solid business plan, and working closely with an SBA loan officer, entrepreneurs can increase their chances of securing an SBA loan and achieving their business goals.

Check SBA Website.

Pitch Competitions

Pitch competitions are events where entrepreneurs pitch their business ideas to a panel of judges in hopes of winning funding or other resources. Pitch competitions can be an excellent way to raise capital, as well as gain exposure and network with potential investors.

When Sarah learned about a pitch competition in her industry, she saw it as an opportunity to showcase her innovative business idea and potentially win some funding.

She began preparing for the competition by following these steps:

  1. Research the competition: Sarah looked into the past winners and the judges’ backgrounds to get a sense of what the judges were looking for.
  2. Craft a compelling pitch: Sarah spent time refining her pitch to make sure it was engaging, concise, and clearly communicated the value of her business idea. She also made sure to include a call to action and a clear ask for funding.
  3. Rehearse, rehearse, rehearse: Sarah practiced her pitch in front of friends and family, incorporating their feedback to improve her delivery and messaging.
  4. Prepare for Q&A: Sarah anticipated potential questions the judges might ask and prepared thoughtful, concise responses.
  5. Dress to impress: Sarah made sure to dress professionally and present herself in a polished manner.

On the day of the competition, Sarah confidently delivered her pitch and answered the judges’ questions with poise and clarity. She also made sure to network with other participants and judges, showcasing her passion and knowledge for her business idea.

In the end, Sarah was announced as the winner of the competition, securing funding to help bring her business idea to fruition. By following these steps and showcasing her unique value proposition, Sarah was able to stand out from the competition and win the judges’ approval.

Winning a pitch competition can be a powerful way to secure funding and gain recognition in your industry. By doing your research, crafting a compelling pitch, practicing your delivery, preparing for Q&A, and presenting yourself professionally, you can increase your chances of success and bring your business idea to the next level.

To prepare for a pitch competition, you need to have a well-rehearsed pitch that highlights the unique value proposition of your business. You should also have a strong understanding of your target market, competition, and financial projections.

Strategic Partnerships

Strategic partnerships are alliances between two or more companies that work together to achieve common goals. These partnerships can take many forms, including joint ventures, licensing agreements, or supplier relationships.

USA 🇺🇸

In the U.S. there is a growing area related to Tech Transfer where universities and government agencies have Intellectual Property and look to license it to startups.

FedTech is a startup accelerator and venture studio focused on commercializing technologies developed by federal researchers and laboratories. The company works with government agencies, research institutions, and private sector partners to identify promising technologies and create startups to bring those technologies to market.

FedTech’s approach to commercialization is unique in that it leverages the resources and expertise of the federal government to support the development of new startups.

In addition to its accelerator program, FedTech also operates a venture studio that provides early-stage capital and support to startups that are developing innovative technologies.

Another is the University of Chicago’s Polsky Center for Entrepreneurship and Innovation is a leading entrepreneurship center based at the University of Chicago. The center is focused on supporting the commercialization of new technologies developed by researchers at the university, as well as fostering a culture of innovation and entrepreneurship among students, faculty, and staff.

One of the key areas of focus for the Polsky Center is the transfer of technologies from the university to the private sector.

The center works closely with researchers and faculty to identify promising technologies with commercial potential and helps to facilitate the licensing and transfer of those technologies to startups and established companies.

EU 🇪🇺

The biggest pan-European technology transfer network is called Knowledge Transfer Europe (KTE), formerly known as ProTon Europe. KTE is a non-profit association of technology transfer offices from universities, research organizations, and public research institutes across Europe.

KTE’s mission is to promote and facilitate knowledge transfer and innovation across Europe by connecting technology transfer professionals, sharing best practices, and providing training and support.

The network serves as a platform for collaboration, allowing members to share knowledge, expertise, and resources, and to work together on joint initiatives and projects.

KTE also works to promote the importance of technology transfer and commercialization to policymakers and the public, advocating for policies and funding mechanisms that support innovation and entrepreneurship. The network is a key player in the European innovation ecosystem, supporting the development of new products, services, and technologies that have the potential to drive economic growth and improve quality of life.

Finding a Strategic Partner

When Peter started his business, he knew that forming strategic partnerships would be key to his success. He identified a potential partner in the industry that shared his values and had complementary offerings.

Here’s how he created a successful strategic partnership:

  1. Build a relationship: Peter reached out to the potential partner and started building a relationship. He asked about their business goals, challenges, and vision, and shared his own. They discussed potential areas of collaboration and how they could benefit each other.
  2. Align goals and values: Peter made sure that their values and goals were aligned. He identified areas where their offerings complemented each other, and where they could work together to provide greater value to their customers.
  3. Create a win-win situation: Peter presented a proposal that would benefit both parties. He showed how their collaboration could create new opportunities, increase revenue, and expand their reach. He also made sure to address any concerns the partner had and found solutions that would benefit both parties.
  4. Establish clear communication: Peter and his partner established clear communication channels and set expectations for how they would work together. They established regular meetings and check-ins to ensure that they were on track and could address any issues as they arose.
  5. Measure success: Peter and his partner established clear metrics for measuring the success of their partnership. They tracked their progress and made adjustments as needed to ensure that they were achieving their goals.

By following these steps, Peter was able to create a successful strategic partnership that benefited both parties. They were able to expand their reach, increase revenue, and provide greater value to their customers. Strategic partnerships can be a powerful way to grow your business and achieve success, as long as you take the time to build a strong relationship, align goals and values, create a win-win situation, establish clear communication, and measure success.

What is also very important and we all must not forget is to create a legal document defining our strategic partnership relationship. A partnership agreement is a document that contains strategic proposals that have been decided upon for the duration of the partnership. This document legally binds the parties to avoid future differences.

Support organizations

For U.S. formation some law firms have tools that can help. Some also have special programs for startups, like Startup Percolator.

One of the key features of Startup Percolator is its “Startup University” section, which provides a comprehensive library of resources for entrepreneurs looking to launch and grow their businesses. The section includes articles, videos, and podcasts on a range of topics, as well as resources such as templates, checklists, and guides.

In addition to its content, Startup Percolator also offers a range of tools and resources for startup founders and investors, including a startup directory, job board, and events calendar. The website also hosts its own podcast, where industry experts share their insights and experiences on a range of topics related to startups and entrepreneurship.

Overall, Startup Percolator is a valuable resource for anyone looking to launch or grow a startup, providing insights, advice, and resources to help entrepreneurs navigate the challenges of building a successful business.

“In business, you don’t get what you deserve, you get what you negotiate.”

– John Mariotti, President/CEO & Founder of The Enterprise Group.

Strategic partnerships can be an excellent way to raise capital, as well as gain access to new markets, resources, and expertise. To form a successful partnership, you need to identify potential partners that share your values and have complementary strengths.

Personal Networks

Finally, one of the most overlooked sources of capital for startups is personal networks. This includes friends, family, and acquaintances who may be willing to invest in your business. While these investments may be smaller than those from professional investors, they can be an excellent source of early-stage funding.

To leverage your personal network, start by creating a list of potential investors and reaching out to them individually. Be transparent about the risks involved in investing in a startup, and be clear about what kind of return they can expect. You should also have a solid business plan and financial projections to share with potential investors.

When Sarah started her career, she knew that building a strong personal network would be important for her success.

She followed these steps to build a successful personal network:

  1. Attend networking events: Sarah attended industry events, conferences, and other networking opportunities to meet new people and make connections. She made sure to bring business cards and introduce himself to as many people as possible.
  2. Use social media: Sarah also used social media to connect with people in her industry. She joined relevant groups and participated in online discussions. She also reached out to people she admired and respected in her field and requested a connection.
  3. Follow-up: After meeting new people, Sarah made sure to follow up with them. She sent a personalized email or message to thank them for their time and ask if they would like to grab a coffee or connect further.
  4. Give back: Sarah also looked for ways to give back to her network. She offered to introduce people who could benefit from each other’s services or expertise. She shared articles or resources that he thought would be helpful to her connections.
  5. Stay in touch: Finally, Sarah made sure to stay in touch with her network regularly. She sent periodic emails or messages to check in and see how people were doing. She also looked for opportunities to connect in person or online.

By following these steps, Sarah was able to build a strong personal network that helped her advance in her career. We can call it social capital. She was able to make valuable connections, learn from others, and find new opportunities. Building a successful personal network takes time and effort, but it can be a valuable asset for your career and personal growth.

Social capital

Social capital has proven to be just as important as financial capital when it comes to startups. Social capital refers to the networks and relationships that a startup has with individuals and organizations, including customers, suppliers, investors, and other stakeholders. These relationships can provide a wide range of benefits to a startup, including access to resources, expertise, and support. Research has shown that startups with strong social capital are more likely to succeed than those without.

For example, startups with strong networks of mentors and advisors are more likely to make better decisions and avoid costly mistakes. According to a survey by the UPS store, 70% of small business owners that receive mentoring survive for five years or more. This is double the survival rate of founders who don’t receive mentoring.

Similarly, startups with strong customer relationships are more likely to have a product-market fit and generate sustainable revenue.

Raising capital for your startup can be a challenging process, but it is a necessary step in launching and growing your business. By exploring different options for raising capital, including bootstrapping, angel investors, venture capitalists, crowdfunding, governmental loans, pitch competitions, strategic partnerships, and personal networks, you can find the funding you need to turn your idea into a successful business.

Not to forget! A good business person possesses a combination of traits and skills such as a strong work ethic, leadership, strategic thinking, adaptability, creativity, risk-taking ability, excellent communication and interpersonal skills, financial management skills, and a focus on customer satisfaction.

They must also possess a deep understanding of their industry, competitors, and market trends. Additionally, a good business person is committed to ongoing learning and self-improvement and is able to build and maintain relationships with key stakeholders such as customers, employees, investors, and partners.

Good luck!

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About the Authors:

George Vukotich, Ph.D. is an educator and startup investor that has worked with hundreds of startups. He has built and designed a number of tech and innovation hubs including FinTank and 1871 which has been recognized as the #1 tech hub in the world. He is an author of a number of books and papers, including Mentoring Startups which focus on the specifics of helping in a startup environment which is very different than a corporate environment. He is on LinkedIn and would be happy to connect. He also has a website www.georgevukotich.com with more information.

Marko Lavrenčič, M.A. is a startup mentor and news editor who has managed and mentored dozens of startups. He mentored startups in the largest regional business accelerator ABC, while also mentoring high school classes. He has founded a number of SaaS brands including the online real estate search engine Gohome in markets in Slovenia, Italy and Serbia. He is the author of a number of articles and co-author of TV news stories for the first German national TV channel ARD and European ARTE TV, covering politics, elections, startups, the migrant crisis, business and sustainability. He can also be found on LinkedIn and is happy to be contacted. He also runs a website, http://www.businessobserver24.com, where he reports on regional business development opportunities.

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