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“What’s the code?”
The 2-metre tattooed security guard whispers in the middle of a dimly lit alley. Three hours later, our character is seated at the final table of a card game, joined by some very unfriendly and scary gamblers. It’s his final play and all depends on the cards he’ll choose: either he wins and manages to pay his debts or the story doesn’t have a happy ending.
We all know at least one movie with this cliché, but there are other situations where suspense also reigns and where you must play your cards right in order to keep your startup alive.[/fusion_text]
Fundraising is usually one of the main headaches for startup founders and for early stage startups it can sometimes feel like an endless loop: to raise money you’ll need traction, but to build a prototype and gain traction you might need money. The goods news is that nowadays, there are more channels and different ways to find that initial investment that will provide the push that some of these startups need. Clearly certain types of funding are more adapted to specific types of companies but all these forms of funding are considered Seed Money: The necessary money to for your startup to take it up a notch.[/fusion_text]
“Of course honey, you were always such a bright kid, how much do you need? You’ll pay us when you become a millionaire”
This is the capital entrepreneurs can ask their families or friends. It can be the easiest way… but also the trickiest one: Most of the time, it’s not easy for these people to understand the project or the context which may lead to false expectations which creates problems further down the road. It’s important to take the necessary time to explain all the risks involved and that maybe, according to the odds, they may never get their investment back.[/fusion_text]
Crowdfunding is usually done through a platform like Kickstarter or Indiegogo, whereyou expose your product and with some luck, collect the desired amount of money from a large number of people, in exchange for rewards.
You also have equity crowdfunding, see Seedrs, where instead of rewards you give small percentages of equity.
If well done, Crowdfunding can provide you with the necessary money, raise awareness and capture the interest of other investors. Not all products fit well into crowdfunding and remember you’ll always need to design a good strategy. Don’t assume this to be an easy option – it’s not.[/fusion_text]
Business Angels or Angel Investors are affluent individuals that invest a certain amount of money in your startup, usually in exchange for an equity stake. Though it’s different from the pressure a VC puts on your performance, this money brings more responsibility whereby the investor now also has a say in your decisions. One of the benefits is that these investors normally already have valuable networks and resources that can become really useful.[/fusion_text]
This pretty much covers the short definitions of the three ways through which you can look for your first investment but you should go deeper. If you’re lucky enough to be reading this blogpost right now you can be one of the last few to get your early bird ticket(available until Saturday) for the Lisbon Investment Summit. This is your chance to get great insights on fundraising in a surprisingly informal and slightly unexpected startup conference.