Tag Archives: Investors

How Do You Fund an Early Stage Venture? Four Suggestions

Situation: An early stage venture which focuses on a humanitarian mission needs funding. The founder is more interested in providing a peer-driven platform and service than in producing profits. She envisions most of the funding coming from donations rather than investors, at least near term.  How do you fund an early stage venture?

Advice from the CEOs:

  • Given that the venture is focused on building a peer-driven software platform, it is possible that it may be of significant value if the venture was to be sold for its technology or audience. Facebook and similar platforms could have a distinct interest as the venture attracts a significant audience. Is this a potential conflict with the original vision? The answer to this question will impact funding choices going forward.
  • There are several resources available to assist in fund raising:
    • Look for local groups that assist with fund raising.
    • The Foundation Center (www.foundationcenter.org) specializes in helping organizations to secure funding for non-profit ventures from foundations. They have online facilities as well as locations in New York, Boston, San Francisco and other major cities. They also provide training in raising funds from foundations.
  • Us the founder’s network to find people with an interest and contacts in fundraising.
  • Connect with local churches and synagogues which also excel in fund raising. The congregations may be smaller than the mega-churches, but the members are often very connected. Because of the humanitarian nature of the new venture, churches and synagogues may be natural partners.

Financing: OOM or OPM? Three Things to Consider

Situation: An early stage web Company is looking at steep ramp up expenses. Many companies have bootstrapped their way to success. However outside investment may speed the process. How have other CEOs evaluated these two options?

Advice from the CEOs:

  • Raising money takes time and is a major distraction to your development process. The two big variables will be investor interest and timing of investment.
    • Talk to Angels and VCs now. Start by presenting a broad outline of your technology and business model. Ask what they will want to see to offer you funding at different levels.
    • This will give you a reality check as to investor interest in funding you, and creates a roadmap to funding if the response is positive.
  • What are you seeking? Money or accountability? One CEO bootstrapped the company early, then looked for outside investment to gain accountability and advice – a whip to help move things along.
    • This CEO found that investors brought few of the anticipated assets, and added a new level of distraction and pain.
  • If you are looking for funding to purchase content to serve through your portal, consider a more creative way to gain content.
    • Can you use a Web 2.0 portal through which your target audience provides both the content and the consumer audience in a marketplace exchange? Establish the audience and add premium services to monetize the model.
    • This can minimize your upfront cash investment requirements, and may create a faster track to positive cash flow.

Note: OOM = Our Own Money; OPM = Other Peoples’ Money

Key Words: Investors, Investment, Ramp-up, Bootstrap, Financing, Cash Requirements