A great idea, a strong desire to help change the world for the better and a detailed business plan will give you a running start when starting a social entrepreneurial business. But it’s impossible to get off the ground unless you have the funding to back your vision. Rather than waste your time chasing the money, here are four ways for entrepreneurs to raise funding efficiently.
1) Find an incubator or accelerator
It's easy to want to accept any potential startup investment money that’s thrown your way. But with such seed capital often comes strings and an expectation of specific returns or ownership that may not jibe with the founder's vision. Getting accepted into an incubator or accelerator program, such as The Echoing Green Fellowship or Santa Clara University's Global Social Benefit Incubator, gives entrepreneurs a stipend while they spend a specified time period (anywhere from five months to two years depending on the program) formulating a more detailed plan for their business, meeting potential investors and receiving training from academics and industry leaders. By the time they leave, they'll not only have specific access to funding thanks to the program, but they'll know exactly the kind of investors they'll be best suited for.
2) Look for your angel
It’s rare that a wealthy benefactor who wants to invest in your great idea just falls into your lap. A site like Gust plays matchmaker for startups and investors, allowing both sides to evaluate each other in a neutral online platform. A resource for U.S. entrepreneurs is regional small business development offices, which are located in most major cities and can give information on fellow local businesses (and potentially the people who fund them).
3) Take your company public
Crowdfunding has gained popularity as an effective method for a smaller business —especially one that has a specific social purpose or doesn't need a huge influx of money to get started—to get off the ground. Whether it's through Kickstarter, Indiegogo, GoFundMe or any other similar platform, the key is sharing a good story about your mission and making investors feel like they're part of something, no matter how small the contribution. With the right campaign, you could end up with even more startup capital than imagined, as happened to the founders of the pocket-sized medical scanner Scanadu Scout, whose initial fundraising goal of $100,000 turned into almost $1.7 million.
4)Seek professional help
Before you take venture capital money, look for an accountant. Plenty of accounting firms, including big international ones like PWC, have specific professionals dedicated to advising entrepreneurs on the right ways to raise capital in order to prepare for their exit strategy, whether it be an IPO or acquisition. Meet with them before you take any money, not afterwards.
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