Sometimes you sit somewhere looking out of the window and sipping your favourite coffee and then an brilliant idea comes to your head. You can't resist it, you know that it's going to work and you want to tell the whole world about it. You know this is something big and it will change lives of many people. You start thinking how successful you're going to be in next few months. Your brain has already decided - you will do it. All you need now is to rationalize the whole thing (easy part). Okay, the plan is ready, the last step you need to do is to build the team which will work on the idea to make it market ready. By this time you realised that the idea needs a team of at least 4 people plus you of course. The last thing you need to start is.. money.
Where do I get the money to invest in team of 5 people for 6 months?
1. Bootstrapping.
Obviously, you can take this money out of your pocket or share equity and do it together with the rest of the team. It can be risky, as around 80-90% startups fail, so it can be the worst investment of your life. On the other hand, you are independent and the product will look exactly as you (and your team) want it to be.
2. Loan.
Sometimes you need a lot of money to invest at the very beginning - to buy expensive hardware / machines, if you don't want to split equity - taking a long term loan maybe a good choice. Still independent, risk is divided into several months, for some startups - it may be tempting.
3. Accelerator program / incubator.
This is dead simple, you sell 6-10% of your company for 20-100k and you spend up to 6 months in a course which helps you grow and validate your business. This is one of the most popular ways to begin with, it has very limited risk - you burn others' money.
4. Business angel.
Harder to find, harder to get and very unpredictable as it depends on one person's decision. Private investor can be a very good source of contacts and money, most likely he/she will also have a good experience in business (hey, this is why he/she has the money). Less paperwork, direct contact - if you like this style - go for it.
5. EU funds.
Pretty easy to get, very time consuming and frustrating, but many companies used resources from EU to start.
6. Crowdfunding - Kickstarter.
Recently very popular thanks to many successful (mostly hardware) projects - crowdfunding uses the power of the scale to help you quickly get money and also build a customer base at the same time. It needs a lot of preparation because your success depends on this single page or video which needs to attract thousands of people. It can be also incredible tool for validating your idea - if you have thousands people who want your product - that's a good sign!
Whatever you choose, the hardest part is to start. Don't take it too seriously, though - after your first business is viable or dead - you can always start another one.. :)
Where do I get the money to invest in team of 5 people for 6 months?
1. Bootstrapping.
Obviously, you can take this money out of your pocket or share equity and do it together with the rest of the team. It can be risky, as around 80-90% startups fail, so it can be the worst investment of your life. On the other hand, you are independent and the product will look exactly as you (and your team) want it to be.
2. Loan.
Sometimes you need a lot of money to invest at the very beginning - to buy expensive hardware / machines, if you don't want to split equity - taking a long term loan maybe a good choice. Still independent, risk is divided into several months, for some startups - it may be tempting.
3. Accelerator program / incubator.
This is dead simple, you sell 6-10% of your company for 20-100k and you spend up to 6 months in a course which helps you grow and validate your business. This is one of the most popular ways to begin with, it has very limited risk - you burn others' money.
4. Business angel.
Harder to find, harder to get and very unpredictable as it depends on one person's decision. Private investor can be a very good source of contacts and money, most likely he/she will also have a good experience in business (hey, this is why he/she has the money). Less paperwork, direct contact - if you like this style - go for it.
5. EU funds.
Pretty easy to get, very time consuming and frustrating, but many companies used resources from EU to start.
6. Crowdfunding - Kickstarter.
Recently very popular thanks to many successful (mostly hardware) projects - crowdfunding uses the power of the scale to help you quickly get money and also build a customer base at the same time. It needs a lot of preparation because your success depends on this single page or video which needs to attract thousands of people. It can be also incredible tool for validating your idea - if you have thousands people who want your product - that's a good sign!
Whatever you choose, the hardest part is to start. Don't take it too seriously, though - after your first business is viable or dead - you can always start another one.. :)
Comments
-Aleksander Towcik
I don’t have any experience with any of the forms mentioned in the presentation because starting my own business didn’t required large amounts of money at the start. I work alone and the only thing I had to buy was new computer so it was pretty easy and I didn’t have to ask for any founds at all.
I visit kickstarter.com from time to time to see if there is anything interesting on people minds. Right now I have found few games I'd really like to play and also a tv series which right now has 2 complete seasons and another one in preparation.
Cheers