Angel Investor Alternatives
English Public
One of the biggest excuses I’ve heard from aspiring entrepreneurs is that they can’t start a business today because they don’t have any money. If only they had $50-100k in seed funding to build the first iteration of the product, they’d be able to a launch a successful startup.
Unfortunately, finding an angel investor that believes in you, your company, and your team isn’t always a walk in the park. Although I recommend bootstrapping for as long as you can to get your startup off the ground, some young companies do require investment to get the ball rolling, particularly if they have a hardware product.
http://www.pokermaniaee.com/angel-investor-alternatives/
If you’re having trouble connecting with an angel investor in your local area via AngelList, tech incubators/accelerators, or traditional networking, then check out my list of angel investment alternatives below.
1. Equity Crowdfunding
equity crowdfunding crowdfunder
Example from Crowdfunder.
Equity crowdfunding refers to when an entrepreneur will offer shares in their business in exchange for investment, typically on one of these crowdfunding portals. Unlike on Kickstarter, investors will receive ownership in your business.
Equity crowdfunding can be used for startups or established businesses. In the USA, entrepreneurs can raise money from accredited investors nation wide through equity crowdfunding, and, if the entrepreneur’s company resides in one of the 12 states that have enacted intrastate crowdfunding exceptions, he or she can raise money from investors in that state. (DISCLAIMER: Nothing in this post is, or is intended to be, legal advice. The information herein is provided for informational purposes only and you should consult with your attorney before using any of this information).
The states that have enacted intrastate crowdfunding exemptions as of Aug 2014: Alabama, Colorado, Georgia, Idaho, Indiana, Kansas, Maine, Maryland, Michigan, Tennessee, Washington, and Wisconsin.
2. Rewards-Based Crowdfunding
rewards based crowdfunding example
Example from Kickstarter
Rewards-based crowdfunding has been one of the most popular types of crowdfunding up until this point. Platforms include Kickstarter, Indiegogo, and others. When you start a rewards-based campaign, you will offer “perks” or “rewards” in exchange for pledges or financing for your project.
Unlike equity crowdfunding, the backers of your project will not have ownership in your product. They typically pledge money to the campaign because they like the individual, the idea, or want to own a copy of the product (pre-order) or one of the other rewards offered.
4. Traditional Loan with Collateral
The SBA (US small business administration) put together a great guide as to what to expect when applying for a business loan. It’s important to do some shopping around before committing to a bank or institution. A strong business plan, founding team, and credit history are a must. It’s also likely the institution will ask for some form of collateral, should you fail to repay the loan.
Benefits of a traditional bank loan: If doing business with a bank in your local community, they may also be able to recommend other service providers, like attorneys, and introduce you to other business people in the community.
Drawbacks of a traditional bank loan: Again, startups are risky and loan repayment is the one certainty, whether it’s of your own will or forfeiture of your collateral.
5. Friends and Family
Friends and family are the only non-sharks I’ve come across in the business world. These are people who have seen your past performance and may be willing to invest their hard earned dollars in your venture because they believe in you.
Do not take their money lightly. It’s important to treat any family member or friend as any other type of investor and keep them up to date on the financials and progression of your company. In addition, assess the implications of the harm that might be done to your personal relationship with these individuals should your venture fail.
Set realistic expectations for the business’s growth and give clear warnings that you may lose their money should your venture not succeed.
Benefits of family and friends financing round: Much easier to convince family and friends of the value of your business, despite lack of inexperience or credit rating.
Unfortunately, finding an angel investor that believes in you, your company, and your team isn’t always a walk in the park. Although I recommend bootstrapping for as long as you can to get your startup off the ground, some young companies do require investment to get the ball rolling, particularly if they have a hardware product.
http://www.pokermaniaee.com/angel-investor-alternatives/
If you’re having trouble connecting with an angel investor in your local area via AngelList, tech incubators/accelerators, or traditional networking, then check out my list of angel investment alternatives below.
1. Equity Crowdfunding
equity crowdfunding crowdfunder
Example from Crowdfunder.
Equity crowdfunding refers to when an entrepreneur will offer shares in their business in exchange for investment, typically on one of these crowdfunding portals. Unlike on Kickstarter, investors will receive ownership in your business.
Equity crowdfunding can be used for startups or established businesses. In the USA, entrepreneurs can raise money from accredited investors nation wide through equity crowdfunding, and, if the entrepreneur’s company resides in one of the 12 states that have enacted intrastate crowdfunding exceptions, he or she can raise money from investors in that state. (DISCLAIMER: Nothing in this post is, or is intended to be, legal advice. The information herein is provided for informational purposes only and you should consult with your attorney before using any of this information).
The states that have enacted intrastate crowdfunding exemptions as of Aug 2014: Alabama, Colorado, Georgia, Idaho, Indiana, Kansas, Maine, Maryland, Michigan, Tennessee, Washington, and Wisconsin.
2. Rewards-Based Crowdfunding
rewards based crowdfunding example
Example from Kickstarter
Rewards-based crowdfunding has been one of the most popular types of crowdfunding up until this point. Platforms include Kickstarter, Indiegogo, and others. When you start a rewards-based campaign, you will offer “perks” or “rewards” in exchange for pledges or financing for your project.
Unlike equity crowdfunding, the backers of your project will not have ownership in your product. They typically pledge money to the campaign because they like the individual, the idea, or want to own a copy of the product (pre-order) or one of the other rewards offered.
4. Traditional Loan with Collateral
The SBA (US small business administration) put together a great guide as to what to expect when applying for a business loan. It’s important to do some shopping around before committing to a bank or institution. A strong business plan, founding team, and credit history are a must. It’s also likely the institution will ask for some form of collateral, should you fail to repay the loan.
Benefits of a traditional bank loan: If doing business with a bank in your local community, they may also be able to recommend other service providers, like attorneys, and introduce you to other business people in the community.
Drawbacks of a traditional bank loan: Again, startups are risky and loan repayment is the one certainty, whether it’s of your own will or forfeiture of your collateral.
5. Friends and Family
Friends and family are the only non-sharks I’ve come across in the business world. These are people who have seen your past performance and may be willing to invest their hard earned dollars in your venture because they believe in you.
Do not take their money lightly. It’s important to treat any family member or friend as any other type of investor and keep them up to date on the financials and progression of your company. In addition, assess the implications of the harm that might be done to your personal relationship with these individuals should your venture fail.
Set realistic expectations for the business’s growth and give clear warnings that you may lose their money should your venture not succeed.
Benefits of family and friends financing round: Much easier to convince family and friends of the value of your business, despite lack of inexperience or credit rating.
by honeylee
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