Business

5 Startup Funding Tips For Your Tech Business

By Gowtham Raj on June 2nd, 2019

73% of startups say that they are able to access adequate initial capital.

That is great news for you as you plan to get your tech startup funded. Despite the scary statistics on the death of startups, it is possible to get a fighting chance.

For any founder who has never been through the process of looking for startup funding, it can feel intimidating. While there is no specific path to follow there are many ideas you can capitalize on to land capital.

Here are some tips on how you can turn your business idea into a reality.

1. Create a Business Plan to Guide Your Startup Funding Efforts

A detailed business plan is where you polish and express your business idea.

A good business plan will detail your analysis of the market. It will show who your competitors are, the size of the addressable market, and the opportunities you seek to exploit.

You will also need to include the organizational structure of your startup. Any investor who comes on board will want to know how you plan to operate as you grow.

The business plan will show whether you understand your target market and how you plan on profitably meeting their needs.

Do not forget to include your numbers and projections so that investors can see where you intend to take the business financially.

2. Bootstrap

Bootstrapping is when the founders of a tech startup self-fund to get the business going in its nascent stages.

The history of tech startups is littered with stories of successful firms that began through bootstrapping.

There are several ways you can bootstrap your startup.

Do you have any stocks or securities? Well, you can get a low-margin loan on them as a way to finance your startup.

Of course, the downside of this is that should the market fall, the securities that you’ve put up as collateral might have to go on sale.

For any homeowner looking to bootstrap a startup, your mortgage can be a source of capital. You can get a home-equity loan against that part of the mortgage that you have already paid off.

While home-equity loans are relatively low-interest you should be sure that you can repay it to avoid losing your home.

If you hold a life insurance policy you can borrow against its cash-value and fund your startup. The interest rates are relatively low, and you do not even need to make payments if you don’t want to.

No matter which route you choose to self-fund your startup, ensure you understand the risks.

3. Talk to Friends and Family

Friends and family who believe in you and want to see your startup get off the ground can be a useful source of tech startup funding.

The people around you become especially crucial if your idea is too early to attract professional investors or institutional money.

In certain circumstances, investors looking to put money into your growth funding round would like to see prior capital from friends and family.

However, remember that just because you have a relationship with your family and friends doesn’t make it easy to raise capital from them.

When pitching to this class of investors you should ask for a specific amount of money that will meet a particular goal. An open-ended pitch may not be as successful.

Be wise and don’t seek to ask for more money than they can lose. Remember that if your startup does fail you will still have to deal with them.

You can’t raise funding from friends and family without communicating all the risks that come with the new business. Be upfront with friends who may not know better and family members that trust you to a fault.

4. Find a Strategic Investor

Every business relies on resources to progress towards its goals. These can be financial or non-financial resources.

A strategic investor is one who is in the same industry as you and brings more resources for your startup that go beyond money.

A strategic investor can open up doors for you to push your product to that you never would have accessed on your own. That can provide the revenue push you need to start things off.

Other times a strategic investor will see value in your technology for their already established business. As a result, they might decide to provide you with capital to develop it so that they can benefit from the end product.

While having a partner is a great plus, you need to align with a strategic investor for things to really take off. If both of you aren’t aiming for the same ultimate target it can cause problems down the road.

Weigh the trade-offs you will have to make before sealing the partnership. Things like revenue sharing and strategy misalignment have brought down many tech startups before. You want a strategic investor who lets the business flourish.

5. Enter Pitch Competitions

When you are in need of funding for your startup, entering a pitch competition can give you the boost you need.

A pitch competition does provide you the opportunity to win some startup capital that doesn’t need to be repaid.

These grants will give you the runway you need to work on the business without fear of having to refund investors should you fail.

Presenting your business plan and idea will help you learn how to communicate effectively. You will learn how to hone your message for the audience which is an important tool to help you during future investor meetings.

Pitch competitions also expose you to investors who would want to back your future round of fundraising. These relationships will not only help you get started, but they will also keep you going.

You Can Make Your Vision Come True

Business ideas are a dime a dozen. What separates you from the pack is your ability to execute and bring your idea to reality.

The state of startup funding today is more promising than before. Consequently, you stand good odds of getting your tech startup going.

Tartlabs believes in coming alongside tech founders like you to provide the support they need to build their dreams. Reach out to us today to see what your imagination can fashion and bring to the world.

By Gowtham Raj

June 2nd, 2019

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