How To Fund Your Startup | Funding A Startup

like it's fascinating to me that all the successful entrepreneurs I know they look at being resourceful they don't look at somebody else needs to pay for this thing how to fund your startup in this video I'm going to help you overcome the challenges maybe you have an idea and you're wondering like where does the money come to get this thing started or you don't feel like you know the right people in your life to actually help support you and maybe lend you some money to build the first prototype those are real challenges but here's what I know is I know that some of the best entrepreneurs that I've ever met never looked at capital as the primary challenge they always looked at being resourceful and I want to I want to unlock that and show you literally eight different ways to fund your startup okay it's super powerful now I've been fortunate enough that you know I've done pretty much every one of these I've gone through some incarnation I started building companies when I was 17 failed did it again was 19 failed tried again finally after like consulting and licking my wounds and building my confidence back up and at 24 I started a company called spheric technologies with the money I saved but then I've also gone in and invested in a ton of other companies with my own money companies like intercom that's gone on to raise you know tens of millions of dollars in funding you to me supporting my brother and his company supporting my friends locally like I what I've learned is there are different ways to get your dreams your product your software funding and that's what I want to share with you guys today the first one for me is bank or credit cards I think that many people start off and they think well I need to get an investor to get involved in my business to start and that couldn't be further from the truth at the end of the day if you are a credible person and you haven't made horrible life decisions that have just like cratered your credit score or relationship with your banker then you should be able to go to the bank and borrow some money I mean ideally you'd have a credit card I mean some of the best companies Airbnb Joe and Brian talked about it we like applied for all these different credit cards at the exact same time and you that funding to start Airbnb I started pretty much with my credit card because I mean if any expenses like servers or whatever that was the way I started when I started and be host we needed to buy software and infrastructure and we had lines of credit and I mean that was you know personal lines of credit loan to the business but all the infrastructure so I just think business banking bank loans and credit cards do have this place especially credit cards I just I love meeting founders that hustled so hard to just make it work the second thing is to trade equity and that's both equity in the business so the value of the business are a piece of the business and sweat equity your time so this is nights and weekends and just making it work I mean a lot of you guys have jobs and I think people think they need to quit their job to start the business and that's just not the case what I always say is try to get this new business to at least you know 60 to 70 percent of your current income and then make the swap I mean my favorite story to share is plenty of fish the guy you know playing fish calm got bought for 550 million within I think a nine to 10 year period and he started off by running home every day at 4:00 p.m. and coating till 11 p.m. and getting up early at you know 5:00 a.m. and coding before he went to work at 9:00 and go into work and working over lunch and that to me is a beautiful thing so trade equity either higher services or professionals get equity to get them involved in your business to help fund things the third one is startup accelerators in most cities in North America or whatever part of the world you're watching this video at you probably have a startup accelerator that's willing to give you 25 50 K so I'm give 250 K to seed and incubate your idea and you just need to go through the application process and it's crazy like why Commodore and TechStars is harder to get into then Harvard but those are legit options for the local accelerators many of them have a lack of entrepreneurs coming to them with viable ideas like they don't have enough applicants that are serious and motivated and have something worth building so your idea presented in a super compelling way and with a lot of passion and commitment is probably gonna get you in there and get some funding the fourth area is VCS and professional investors so VC stands for venture capitalists these are people that manage funds so they they actually go out and raise their own money which is kind of neat when you understand that so you're raising money from them they actually had to do the exact same exercise and raise from what's called limited partners and now the VCS have to make decisions on who they give money to because they need to generate a return over a 10-year period I say that is because there are thousands of venture capitalists in the world and they're looking for the entrepreneurs and just so you know they don't have a job unless people like you go out there and create the future and I think that's an exciting place to come from in a in a kind of a reframe from what many entrepreneurs starting off get into which is I need their money to be successful at the end of the day they need you to actually be successful in their fund so VC is a great source another one would be local angels and kind of high net worth people so in your community you have angel groups these are people that own real estate they own the car dealerships they may own really profitable high revenue businesses and they want to diversify bit and get involved with like young and eager and fun companies so they're part of these angel groups and you can actually maybe on a quarterly basis they have a meeting where you can come in and pitch and raise money that way so that is a super valuable and typically open up to everybody you know even in towns of a hundred thousand people they have an angel group in your state or province six would be crowdfunding you know one of my buddies clay a bear one of the foremost top experts on crowdfunding he said it best as he said that the cost of failure is gonna go to 0 because crowdfunding has leveled the playing field for market validation before you build anything so not only is crowdfunding an incredible source of capital - or money to start the company it's also a beautiful way of testing if there's a need if there's people out there that actually want to buy what you're gonna build or sell and you can do that on IndieGoGo or you know Kickstarter really doesn't like software projects GoFundMe there's a ton of different crowdfunding platforms but at the end of the day just so you know it's 20% video and the page itself in the story you write about your project your software project and really 80% about marketing and distribution they're not going to get you the project funded you're gonna have to do some work email some bloggers email the press really drum up a lot of interest in that crowdfunding campaign so super powerful but there's work involved so don't you know this be misled and think there's gonna be easy peasy cuz it's not the seventh is friends and family sometimes they call it fools and I just find that super insulting so friends and family these are people that know you best that believe in your vision and are willing to back you I remember when I started my company flowtown with my co-founder Ethan it was early days and I had sold my previous company spheric so financially I was in a good spot and I could have funded the whole company but one thing that I felt and really this was just as a way for us to set the foundation as strong as possible I said to him look I'll fund you know 70% of this but I need you to go and raise the balance 30% from your friends and your family members and whoever literally just like go find somebody's gonna lend you the money and meet me halfway and this was a huge reason this and like I always knew Ethan was incredible but I remember this is like a conversation on a Friday and on Monday he called me and he says I got the money and I was like alright dude did you do anything illegal and he's like no I'm like where did you find that money because we're talking tens of thousands of dollars and he said my mom gave me some money my dad gave me some money and a couple best friends from college gave me some money and for me as a partner that just said so much about Ethan even though we had just kind of got to know each other over the previous year here are people that have known him his whole life and we're willing to part way with arguably one of the most you know valuable assets in somebody's life they were they were willing to invest in him and really before there was any product or proof that this was gonna work and I just thought that said so much so friends and family I think is an incredible just be honest with them just tell them it's high-risk and I'm gonna make the best decision I can with the information I have but don't give me money you wouldn't be comfortable losing a hundred percent I just think that that's where things get a little dicey when people misalign expectations and number eight the most important and I'm gonna share a really quick tip for you right after this eight is to fund yourself I think so many people have jobs and they go I'm gonna quit my job and pursue this idea once I raise money and when I hear that just so you know what I'm thinking is you don't even trust yourself we're willing to bet on yourself and you expect me to fund that risk and that to me is just crazy if you're not willing to put all in you know slide all the chips that's what this my motion is go all-in on your idea but yet you expect everybody else to I think that's just a negative signal and just a really weird place to start a relationship with investors so funding yourself digging into your own savings I mean maritime vacation was friends and family I my dad essentially helped fund that business and I to this day continue to tell the story because it was super incredible for him to believe in me at 17 years old and be host was my line of credit with my brother and his line of credit to fund all the servers spheric technologies was working and funding in myself and saving up seventy thousand dollars to eventually start that company flowtown was again me putting my own money in even putting some of his in and eventually we raise venture capital from professional investors you know guys like you know Steve Anderson from baseline ventures first investors in Instagram and Twitter and just like and then clarity again Mark Cuban invested in that but I put in you know almost half a million dollars of my own money to get that company started and then we eventually raised 1.6 million but it's it's kind of like all eight of these put together now I never did an accelerator I have a great video on how to start your own accelerate if you want to search that out I think it's it's a great way if you don't get in it doesn't mean you should stop doing the things you would have got as value from those accelerators but those 8 tips right you know the going to the bank using lines of credit you know trading equity to help bring in resources and/or sweat equity to build the business to use startup accelerators as a way to fund validate and help you grow the business to reach out to VCS and professional investors is is you know super smart going to the local angel groups or finding those high net with individuals there they're there in your city they've got millions of dollars hundreds of millions in some cases and to throw a check your way for 50k is not crazy crowdfunding cost of zero across the failure goes to zero friends and family is a beautiful thing because it says so much about trust and then finally invest in yourself that is my mission now the tip is is the mindset here's the way I think about it don't raise more money than you're willing to lose and if you lose it you chalk it up as learning okay so that's the way I think about it is you're investing in yourself in your business not so much for the financial outcome but your opportunity to learn so in some ways it becomes education and that's the way I think about it so I don't get too hard on myself if like I put 20k into a small little project and it fails I just chalk it up as learning now the best ultimate financing ever the world's best kind of like crowdfunding I just call it customer financing finding customers to pre buy the product that you want to build as an early adopter it's a whole framework I've created called the customer creation model but it is the best form of financing as per usual I hope this video finds you incredibly well I want to challenge you to live a bigger life and a bigger business and I'll see you next Monday if you like this video be sure to subscribe to my channel for other videos on how to start and grow your startup I'd also encourage you to join my newsletter for invites to private events exclusive contests and other free training materials if you're ready to get going I got two other videos queued up for you right now I'll see you next Monday

Channel: Dan Martell

Views: 59,963

Keywords: How To Fund Your Startup, Ways To Fund Your Startup, Bank Loans, Lines Of Credit, Personal Loans, Sweat Equity, Startup Accelerators, Venture Capital, Local Angel Investors, Crowdfunding, Fund Yourself, Invest In Yourself, Dan Martell, startup funding, how to get funding for a startup, startup fundraising, how to get investors for your startup, how to finance a startup, funding for business start up, funding a startup, how to get startup funding, startup funding options

Id: 8-9176AxXVo

Length: 12min 39sec (759 seconds)

Published: Mon Dec 18 2017