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Crowdfunding & Investment: A Simple Guide to Funding Your Startup

Most businesses need financing to help get your product off the ground. There are many options out there, but perhaps not all of them are a good fit.

In this article I will provide concrete actions you can take to fund your startup business. In some ways, it is easier than ever to start a business. Building a website is easier than ever, you can make transactions online for little to no cost, and promotion is free using social media. 

However, if you want to take your business to the next level - say build a product, an app or engage thousands of potential customers - you'll need some seed funding. 

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So, let's start with your options. 

Venture Capital

Financing that investors provide to startup companies believed to have long-term growth potential. Generally comes from well-off investors, investment banks and any other financial institutions.

Pros: Large investment, invaluable connections and resources.

Cons: Large equity exchange, typically only for mid-late stage founders. 

List of top VC Firms: 

Accel

Sequoia Capital

Kleiner Perkins Caufield & Byers

Benchmark

Greylock Partners

Backstage Capital (Great choice for POC, Women, LGBTQ+ Founders)

SoGal Ventures  (Great for female founders)

Crowdfunding

Funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

Pros: No equity given (unless you do equity crowdfunding - which is typically for later stage founders), build a large following online, engage with customers immediately.

Also, during your campaign you'll be 1) proving demand for your product 2) growing your audience and 3) engaging with high-income individuals to back your campaign. All three of these aspects will prepare you for great meetings with investors. In other words, crowdfunding can lead to future investment deals! (See link at the end of this article for how to meet and network with investors)

Cons: 3-6 months planning needed in advance (depending on the amount you need to raise), large time commitment required

List of Top Crowdfunding Platforms:

Kickstarter

Indegogo

Republic

iFundWomen

Angel Investors

Often entrepreneur's family and friends, but also there are a growing number of angel investment firms. May be a one-time investment to help the business propel or an ongoing injection of money to carry the company through earliest stages.

Pros: Great option for early-stage founders, much needed support and encouragement

Cons: Large equity sacrifice (due to higher risk), may have to compromise on your business model or brand messaging. 

List of Top Angel Investors:

SV Angel

500 startups

Y Combinator

Founders Fund

SoftTech

Tech Coast Angels (For SoCal Founders)

Raise Funds & Impress Investors

So now that you know the types of funding options that are out there, and which one is right for you, I recommend reading the following articles to help you seal the deal on your funding goals:

The Art and Science of the Warm Intro

How to Successfully Crowdfund Your Business

Annie Brown is the founder of Lips, a creative sharing platform for women, and Marketing Director at Trolysis, a renewable energy company.



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