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Try to MAKE money before you TAKE money
I was recently asked what ways I’d know how to get money to start a company before you really raise money. Except donations, I successfully tried all of them myself. There is a huge value in getting money from other sources than institutional investors in the first place. One of the biggest advantages is being independent and knowing there are many ways to make money before you take money.
1) Friends and family
always the most important starting point. If you don’t have any, it indicates that nobody is trusting you – not a good start. [Trust Money]
2) Early Customers
Your first customers may actually be a great way to make money as they may even pay for the development if the product gives them the needed extra value. [Smart Money]
3) Crowd Funding
Even more early customers with an additional boost of marketing and new early adopters. [Smart Money]
4) Additional Consulting Services
Providing consulting services in the space your startup provides products to augment your financial side. [Smart Money]
5) Training & Education
Paid education programs (Training and general education) you may offer to help clients better understand the space you are in. [Smart Money]
Events with sponsorships – finding sponsors to help you boost events that may end up be profitable for you and help promote your idea. [Smart Money]
7) Advertising Revenue
You may allow others to advertise on your product, your training, your events, in order to get some additional funding. [Just Money]
You may add a “Donate” button to your product or outreach program and get some donations to finance your business. [Friendly Money]
You may look for available grants from your government or universities. They are very difficult to get and mostly takes for ever but certainly a very viable opportunity. [Just Money]
1) Business Angels
While typically the first option startup entrepreneurs think of, yet it should be your last resort. It feels like easy money quickly – but after several startups you will learn it should be your last choice after you considered all the above. [Just Money] [Smart Money only in rare cases]
* note: Smart money means you get a serious extra value – not just hope getting an extra value. Customer money is always smart as you learn from their use, you learn about your sales and marketing process, you learn about improvements and you build the base for institutional investors (VCs) who will want to know what the market is like. Same goes with events, training and consulting, despite the fact that you won’t continue with it long term you learn a ton from your market.
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