Trying to generate funds for your new business idea, especially an attempt to raise money online, is fiercely competitive and can easily become discouraging -- if you let it. But as we all know, the most tenacious and driven entrepreneurs are most likely to succeed.
Approaching VCs and angel investors with your pitch is one way to get funded, but what's the next step if it's not panning out? Check out these 3 ways to raise money without begging investors to give you a shot.
1. Get smarter in how you approach investors.
If you feel like you've been pitching and begging without getting anywhere (or worse, not even getting to present and collecting a stack of rejection letters), you probably need to rejig your approach. I was totally put out by the first pile of rejection letters I received early on when I was trying to get WordStream Inc. funded, but eventually I had to take a step back and rethink my reaction to that rejection.
It became a learning experience and one of the most important lessons I took from those letters was that I needed to make a greater effort to get to know and understand each VC and angel, and the types of businesses they were most likely to fund. It was an epiphany that completely changed my approach -- and my results.
2. Stand out if you're trying to raise money online.
Crowdfunding has opened doors for tens of thousands of entrepreneurs by enabling them to tap into microfunding from many people, rather than trying to convince just a small group of people to back an idea. It's insanely competitive, though.
Kickstarter, for example, likes to share the fact that 100,945 projects have been successfully funded through their site. But in the smaller print in their publicly available stats, you can see that 285,056 projects have been launched (at time of writing), meaning 64% of Kickstarter projects are not funded successfully.
Now, that's not to take anything away from Kickstarter or other sites like it, as they provide a fantastic service to pair investors with entrepreneurs in need of funding, and not every idea has merit. So how can you stand out and increase your chances of getting funded?
Start by identifying what compelling elements of your story are going to set you apart. The most successful crowdfunding campaigns often have a human interest angle, whether it's the circumstances that led the entrepreneur to create what they did, or that the product or service they've created will help others, for example. Find that differentiating factor and use tell your story if you want to raise money online.
3. Know your value, even if your startup isn't sexy or crazy innovative.
Not every business is going to be as exciting as billionaire Elizabeth Holmes' revolutionizing the blood testing industry, or Kevin Henrikson and his co-founders at Acompli deciding to reimagine mobile email. If your product isn't super innovative or pushing technological boundaries, you might be wondering how to raise money when it seems everyone else's ideas have more appeal.
Often, the most brilliant ideas solve a problem or a need by taking something we take for granted--something totally boring that you probably never even really think about--and making it better. Stance used this strategy to raise $86 million--for socks! Not every product is inherently sexy and flashy and exciting, but if you can improve an existing thing in such a way that it gets people excited and just makes more sense than the old way, you have your unique angle for pitching funders.
Compelling funders to believe in your idea enough to put their investment into it is one of the greatest challenges new founders face. It's a learning curve, but as successful entrepreneur Lisa Falzone says, self-motivation and a willingness to learn as you go is key to your startup success.
Still wondering how to raise money? Check out these 5 critical success factors for early stage startups and see how you stack up, and where you can make the most impactful improvements that will lead you to funding success.