5 Ideas to Find Pre-Seed Funding
webmanager • May 17th, 2023
One of the greatest challenges for startups is getting finances.
Traditional loans are typically hard to get if you’re just getting started – and the process is often tedious and overwhelming. However, there are various alternative avenues you can take for funding if you are not successful.
From self-funding, family and friends, angel investors, and credit lines, we’re going to dive into a few alternative options and explore the pros and cons.
Let’s dive in.
Before reaching out to investors, we strongly recommend doing what you can to raise money on your own. It’s not only admirable for investors, but it’s also important to control as much ownership in your business as possible, for the long run. Use savings, ask your friends and family, and ultimately, try any traditional, low-interest rate loans first.
Hosting a crowdfunding campaign can be a great way to increase your cash flow quickly. In fact, successful companies like Bragi, Peak Design, and Exploding Kittens all raised millions in their infancy via a Kickstarter campaign.
Crowdfunding allows you to collect small amounts from a large number of people who may be interested or enthusiastic about your company.
The goal is to try to generate momentum in order to raise the cash in a short period of time. Use LinkedIn, existing networks, and other social media platforms to get the word out as much as you can.
You can explore companies like Kickstarter or GoFundMe to get started.
A great way to secure additional funding, as well as get a foot in the door to your industry is to find a business partner early on.
Find a company in your industry that can utilize your product and/or service and bring them on board.
This is a great way to get some feedback, share resources and have someone who cares about the quality of your product, not just the return on investment.
Pitching your business to private investors can be a viable step when you have exhausted all the other options.
Make sure you’re ready and fully confident about your product and/or service before you get in front of the investors. Your service must offer a solution to an existing problem. And you must demonstrate that you can scale fast in a million(billion) dollar market.
To get advice for your financial books in advance of investor and/or stakeholder review, you can book a quick 15-minute call with any of our accountants here.
At the end of the day, it’s important to remember that raising capital should not be an ongoing mission. You have a business to run.
So, if it takes longer than 3 month, you should rethink your budget and forecasted plans.
$1M to $3M pre-seed round is good for first round, $5M or more is great.
The goal here is to get a substantial amount of seed money, and make it last until your business become self-sustainable.
For help with forecasting and budgeting for your startup, you can get in touch with us anytime.
When raising money at the infancy of your startup, it’s important to get a good team of advisors and strategists behind you in order to set your business up for the maximum success.
Here at Basta & Company, we help startups in all stages structure their business for maximum profitability and tax savings.
Additionally, we can help prepare your financial books for investors and various stakeholders, as well as work with you to financially plan for self-sustaining profitability.
To see how we can help your startup, you can book a free 15-minute consultation with one of our accountants to get started.
Until next time.
Samy Basta brings you more than 20 years experience in tax, financial, and business consulting to his role as founder of Basta & Company. His focus is primarily strategic business planning, empowering clients to set priorities, focus energy and resources, and strengthen operations. In addition, Samy and his firm provide strategic counsel, and technical insight, on a wide range of needs, including tax saving strategies, tax return compliance, as well as choice of entity.
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