Loading...
Answers
MenuHow do you raise funding for a small business that isn't a tech startup?
I have a candle company that is growing organically but I need some capital to take the next step. I know about traditional fundraising for tech Startups (that's my background) but I feel like no one is helping small independent makers get the small capital they need to grow their business.
Answers
When it comes to raising money you must remember that risk is a perception. Your job is to drain the risk!
Below is a link to a resource I provide my investors. The 50 questions are specific to product design/development but the 15 categories are questions that apply to any industry.
If you can answer these questions about your deal you will have gone a long way to "drain the risk" for your investors and get funded.
http://www.jaredjoyce.com/freetreats/50questions.pdf
Once you have answered the questions for your deal schedule a call with me and I can help you integrate the answers into your investor pitch.
The best options for funding the expansion of small businesses are typically debt not equity simply because there's far lower investment appetite for investing in small businesses given the risk/reward ratio. If you haven't already done so, I'd encourage you to really exhaust all the government-funded or supported entrepreneur initiatives that might be available to you.
While they vary from country to country and area to area, there are a surprising number of programs that support different economic initiatives and often even more-so for women, minorities, young people etc.
If you have exhausted those opportunities, you might look at Kickstarter, IndieGoGo, or other online initiatives that could give you some enhanced cash-flow.
Typically, investors outside of friends and family, will want far too much of your business for far too little value (money only) so I would encourage you to think of equity investors as the last resort.
Best of luck.
Firstly, you have to understand that for investors "money" is a product. They are also in a business. They invest money so they can make more money from the venture in the future.
Tech startups often offer the kind of reward that investors look for. You have to really prove that investing in your company will make them money in the future- that will make the deal a lot more attractive for them.
Also, there are many programs offered by government, banks, other organizations for funding small businesses. Connect with your local chamber of commerce and other business organizations in your area who may be helpful.
If you are confident in your venture then funding it via debt is not a bad option, most small businesses are funded this way.
The other way to try is crowdfunding.
Related Questions
-
Pre-seed / seed funding for a community app... valuation and how much to take from investors?
To answer your questions: 1) Mobile companies at your stage usually raise angel funding at a valuation equivalent of $5,000,000 for US based companies and $4,000,000 to $4,500,000 for Canadian companies. 2) The valuation is a function of how much you raise against that valuation. For instance, selling $50,000 at $5,000,000 means you are selling debt that will convert into shares equal to roughly 1% of your company. 3) I would encourage you to check out my other answers that I've recently written that talk in detail about what to raise and when to raise. Given that you've now launched and your launch is "quiet", most seed investors are going to want to see substantial traction before investing. It's best for you to raise this money on a convertible note instead of actually selling equity, especially if you are intending on raising $50,000 - $100,000. Happy to schedule a call with you to provide more specifics and encourage you to read through the answers I've provided re fundraising advice to early-stage companies as well.TW
-
What roles should the CEO and CTO have in a VC meeting?
The more important first impressions to leave a VC with are: 1) That you both are credible and inspire confidence that you can execute the plan you're fundraising on. 2) That there is good chemistry and a great relationship between the two of you; 3) That you can adequately address the concerns/objections/questions the VC raises. The CEO is expected to do most of the talking because the CEO should be the best person in the company at articulating the vision and value of the product and company you're building. If your CTO is comfortable presenting part of the pitch, it would be ideal for the CTO to speak to the product slides. The most important thing is for the CTO not to be a "bump on the log" meaning that you don't want them sitting there for most of the presentation with nothing to say. If you feel that's the case, you really shouldn't bring your CTO. Most VC meetings will not get technical and under the hood. Each question answered should be answered by the person best qualified to speak to that question. You should make eye-contact with your partner and use subtle body language to find a way to cue the other person to speak to that question or simply offer "CTO, would you like to answer that?" Bottom line, make sure that the CTO can speak confidently enough about the product and vision, otherwise -unless specifically asked by the VC - come alone. Fundraising is a big distraction to building and a good VC will always respect that in a first meeting, the CTO can be excused from attending in priority of building product. Happy to talk to you both on a call about helping get you feeling a bit more confident and prepared before your meeting. I was formerly a VC associate for a $500m fund and have raised money from VCs as a serial entrepreneur.TW
-
How do I grow from a one man startup when I don't have the money to hire & don't have skills or time for investors?
Stop thinking you don't have the skills to do something. You can learn anything if you decide to, but assuming up front that you can't (forever) is dangerous. my2centsDM
-
What happens to a convertible note if the company fails?
Convertible notes are by no means "earned." They are often easier to raise for early-stage companies who don't want to or can't raise an equity round. Equity rounds almost always require a simultaneous close of either the whole round or a defined "first close" representing a significant share of the raised amount. Where there are many participants in the round comprised mostly of small seed funds and/or angel investors, shepherding everyone to a closing date can be very difficult. If a company raises money on a note and the company fails, the investors are creditors, getting money back prior to any shareholder and any creditor that doesn't have security or statutory preference. In almost every case, convertible note holders in these situations would be lucky to get pennies back on the dollar. It would be highly unusual of / unheard of for a convertible note to come with personal guarantees. Happy to talk to you about the particulars of your situation and explain more to you based on what you're wanting to know.TW
-
How much equity is typically taken by investors in a seed round?
From my experience I would not advise you to go with Venture Capital when you're a start-up as in the end they will most likely end up screwing you. A much better source for funding would be angel investors or friends/family. The question of how much equity should I give away differs for every start-up. I remember with my first company I gave away 30% because I wanted to get it off the ground. This was the best decision I ever made. Don't over valuate your company as having 70% of something is big is a whole lot better than having 100% of something small. You have to decide your companies value based on Assets/I.P(Intellectual Property)/Projections. I assume you have some follow up questions and I would love to help you so if you need any help feel free to call me. Kind Regards, GiulianoGS
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.