How to Get Funding for Your Startup

http://www.thedailymuse.com/entrepreneurship/ways-to-get-funding-for-your-business-idea/

by KMinshew • 13 years ago

38 6 13 years ago

patio11• 13 years ago

Consider also the option of getting funding from a first customer. Many, many people have signed a contract on the basis of a napkin pitch before -- for example, approximately every consulting engagement ever. You can even sell the same napkin to multiple people in parallel. You can then take the contracts or memorandums of understanding to a bank and say "Hey, these represent money in the future, can we have money today?" and have that happen.

I apologize to all the business guys who are looking at me in slack-jawed amazement right now but they don't teach this stuff in engineering school.

mindcrime• 13 years ago

I love the idea of fund-raising from customers. There are a few different angles on it, and one memorable one was the TextDrive thing[1][2].

That turned out a little bit controversial later[3], but it illustrates some nice, creative thinking. Is there a way you can get your customer to commit some money today, to an extent that they might not otherwise, based on future considerations? If you can do it without creating a scenario that bankrupts you in the future, it might be worth a shot.

[1] http://www.joyent.com/blog/celebrating-textdrives-three-year...

[2] http://photodude.com/2004/06/01/textdrive-or-how-to-raise-40...

[3] http://techcrunch.com/2012/08/16/cloud-computing-company-joy...

toddrew• 13 years ago

Accelerators should have been mentioned in the article.

agibsonccc• 13 years ago

One other thing not often thought of. Capital is expensive. Not only do you lose some control when you take capital, you now have a responsibility to investors. Many seem to, in my experience (take that as you will), jump in acting like it's free money. Raising capital isn't the end goal. It's just the beginning. With a more traditional fund with actual customers approach, it's reasonable to do business as you'd like (obviously this invokes a debate of a startup vs a life style business) but with customer funding, you not only have validation, but you can always raise a more favorable round later. Github is one very good example of this. In the end, cash is king.

joshuaellinger• 13 years ago

Boy, that's a thin article.

Bootstrap good. If you need $1M+, you need VC. Duh.

The advice is okay hardly 'hacker news'.

snorkel• 13 years ago

"Many banks, such as Bank of America and Wells Fargo, have recently announced increased commitment to small business."

Hah! Nice one. Yeah, I once walked into a BOA branch myself and asked about start up funding, me being a long time customer, bills all paid on time, and a decent amount of funds in savings accounts there, surely they would consider helping me start a business, right? HA HA HA!!!

The deal is you have to be an established business that has already been banking with BOA with for at least two years as a business before they consider granting you any type of business loan. Without that you can have a free lollipop from the bowl and then get the hell out.

How to Get Funding for Your Startup

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