How to get seed capital (and avoid early startup death)

In this course, we'll give you the basics on seed capital. You will learn what to be aware of before you go looking for early stage money. We will give you the most common places to look for seed capital and tell you how to reach out to investors at.

Money, money, money

It’s always funny in a rich man’s world, right?

While we wouldn’t know if that’s entirely true, we do know that money makes many things easier. Like starting a business. You need gold to make gold. And unless you got a legitimate email from an unknown, rich uncle who wants to give you all his money, chances are you’re going to have to ask someone for some dollars pretty soon, if you want to get your business off the ground.

Luckily, there are a lot of ways to raise seed money that can support you while you take the first steps of starting your startup. In this article, we’ll walk you through the process.

When your done reading, you'll know

  1. Where to look for seed money
  2. How to reach out to different seed investors
  3. How to craft a pitch that'll get you cash

Show investors that you’re money smart

The first thing you need to know is that before anyone is going to dig deep into their pockets for you, you have to do the same yourself. Financing your own business idea, is called bootstrapping. It basically means that you have to pull yourself together, and it’s the first thing you’ll want to do, if you want to make your idea a reality.

Scraping your own money together, spending them wisely and working hard, is the best way to show investors that you’re really serious about your idea. It also lets you stay in full control of your business for as long as you can. So for most startups, bootstrapping the h*ll out of the business is a really good idea.

Also, if you succeed in building some sort of traction, like launching an early version of your product or finding some customers, before you get outside capital, you will have a much easier time impressing investors to give you the big bucks.

Finding seed money

That being said, bootstrapping will only get you so far, and hopefully outside investment will at some point make sense to your business. Even though you’re probably only at the idea stage right now, there are a couple of things you need to have in place before talking to seed investors…

Once you have those things in place, there are different places you could start looking for seed money.

Friends & Family

Let’s get back to that rich uncle for a second. While you might not have one of those, you may have other people in your inner circle, who want to chip in to get you started. The people closest to you know you and are more likely to back you up if they believe in your idea.

Mixing money and relationships can be tricky, so make sure to put everything in writing, including the risk that they’re not guaranteed to get their money back.

Business Angels

Business Angels are private, (probably) wealthy investors, who wants to spend some of their money backing people and ideas they believe in. They are usually pretty bad-ass business people, and they know what they’re talking about.

They invest in good business ideas, but they also invest in people they really believe in, and they will be more likely to invest in things with some kind of emotional or personal connection to them. The right angel may also want to share their wisdom and act as a mentor to help you overcome obstacles and grow your business.

Crowdfunding

A great way to raise some seed capital and at the same time validate your idea, is through crowdfunding. Luckily, crowdfunding has become quite popular over the years, and there are a lot of online sites that will let you create a funding campaign for your idea or product. 

You'll need to make an awesome written pitch and maybe even a video presentation. Be sure to make it a crowd pleaser!

Incubators

While incubators are not investors in the traditional sense, they deserve a spot in this course. Incubators are one of the absolute best ways to kick off your startup. Becoming part of an incubator program means having all the professional startup help you could wish for. Incubators exist to make more startups succeed.

All incubators are different, and you will have to do your research to find the one that fits you. Once you’re in, you will have access to business mentors, a huge network and all the most crucial resources for turning your idea into something great.

If you're keen of being part of an incubator, here are some for you to check out. And if those aren't enough, jump into our incubator list to find even more.

Getting in touch

Getting investment is kind of like dating. Turning it into something real takes time, and it all depends on likeability. You won’t convince anyone to give you their money, unless they like you and believe in you, your idea and your business model.

Now, while blind dating works out great sometimes, the best way to be sure there’s a match between you and your money (wo)man, is to go through your network.

If you don’t know anyone who can refer you to someone with investment skills, we really encourage you to go for the blind date, but if you do have a network that can help you in some way, don’t be afraid to use it.

The Pitch

Your pitch needs to be sharp and convincing. You should be able to pitch your idea in just a few sentences and leave your listeners intrigued. They also need to know exactly what it is you do. If they don’t, you might as well pack up and go home.

Prepare a pitch, a pitch deck and/or a one-page canvas that outlines your idea. The way to do this is by working through your business plan. Doing this will prepare you to answer as many questions as you possibly can. Even though you’re early in the process, the more you have thought about the business opportunities in your idea, the better you’re off.

Want to dive deeper into the art of pitching? Check out our course: How to create a startup pitch that gets you funded.

In short, this is what should go into your:

  • A presentation of your big idea
  • The problem you've seen in the market
  • The solution you believe is the right one
  • A short, concise presentation of your product
  • Your business model
  • A presentation of the market and the opportunity in it
  • A clear competitive advantage
  • Growth strategies for your startup
  • The traction that finally convinces investors to write you a check
  • Your financials and current funding situation
  • What exactly you are asking for.

If you’re thinking that this is a butt load of work, you’re right. It’s not something you do in a couple of hours, but do it right and you’ll be a lot closer to succeeding than you were before.

Need help creating a convincing business canvas and an awesome pitch?
Cuttles is here for you! You can use our startup builder to craft a beautiful presentation that investors will love.

Sign up right here and get to work 🐙