Build and test an MVP

The best way to create traction for your startup is to build an MVP (A minimum viable product). The principle behind an MVP is that instead of spending time and money building a perfect product, you create the simplest and fastest version of your future product. An MVP can be as complicated as a prototype or as simple as a landing page. Developing and testing an MVP (or series of MVPs) allows you to get real customer feedback. Positive feedback, early sales, and active users can all help your position and valuation when talking to investors. We go into depth on MVPs and some of our other resources. To learn more, check our library.

Other sources of startup funding

To get traction, many startups need at least some capital to work with, but that doesn't have to come from a VC or angel investor. 

Bootstrapping 

Bootstrapping is when a founder or founding team builds a company without outside investment. Usually, This means a combination of the founder's money and customer revenue covers the operating costs early on. Founders don't pull a salary when bootstrapping until revenue grows enough to justify the expense. 

Small Business Grants

A small business grant is free money for you to use and grow your business. This type of grant is made specifically for small business owners and can favor minority founders and even be specific to business type. To get grants, you have to apply for them, which can require a lot of work. Depending on the type of business you have and the industry you operate in, you may be able to find niche grants that you would have a better chance of winning. 

Small business loans

Small business loans are just what they sound like. This can be a great source of cash early on, but it will need to be paid back. Generally, a business needs two years of operating history to get a small business loan. However, some loans only require six months of operating history.

Crowdfunding 

Crowdfunding has grown in popularity over the last decade. This type of funding leverages the power of many small investors backing something they're interested in or care about. Some crowdfunding platforms allow for equity allocation from micro-investments, but generally, crowdfunding gives investors early access to the product instead of equity. 

Startup accelerators and pitch contests

Start-up accelerators will allow founders to apply for the program and will award accepted companies with an initial investment in the company. Pitch Contests allow entrepreneurs to pitch their idea against other founders and the winners receive prize money.

Friends and family

Friends and family are a startup's most common type of early investor. These people usually have no experience investing in startups, and they invest because of their relationship with the founder. Be very careful accepting friends and family investments since they could damage the relationship later. If you decide to take on friends and family investment, we encourage you to still go through all the steps in preparation as if you were pitching experienced investors. This will help you be the most responsible and effective with the money you receive and give you the highest chances of seeing a return on the investment.

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