So you’ve found a solution to a problem. All you need is some money to make the solution, a bit for marketing and a few connections to the right people then you, too, can become a successful entrepreneur. Right? Let’s pause for thought.
Can we assume that you are an expert in the particular problem area where you’ve found a solution that no-one else has come up with? I hope so. Clearly the solution is so good that it is obvious to people that they need it but there is a bit of magic sauce that only you can apply. You can start developing the solution and create the magic Minimally Viable Product to demonstrate the brilliance of your idea. At some point you decide to seek some help and money.
First let’s decouple the help and money. It is rare that find both of these attributes in the same person so go out looking for as much help as you can for free. There are lots of people who will offer help, some is better than others. Your skill is to decide which to accept and which to ignore. Get as much as you can for free. Call in favours. Oh, I should mention that while they are helping you they are getting to know how great you are.
Ok, that leaves money.
Can you sell the MVP to raise cash? Do you have any other money? Any savings? Re-mortgage the house? Do you know anyone who has money? A friend? Relative? Neighbour? Work colleague? If so, tell them your idea. All these people know you well and will invest in both you and the idea. This is also a good test of your idea too – it they don’t buy or invest in it; will strangers?
If you still need money, there’s only selling Equity or Shares left.
Equity is the last and most difficult thing for a company to sell. When a company sells equity it is selling itself for a dream of the long term future. You need to persuade a stranger that you have never met, who is slightly sceptical (but wants to believe) that you have the next big thing that is going to return their money and a whole lot more.
This is not a quick sell. It takes months and lots of time. Probably more time that you should spend if you want to get the product out there… in fact, assume it will take nearly all your time.
If you’ve missed any sources of other money, this is how the conversation with your investor will go:
You: I am an expert in X and can show that you will get x10 your investment in three years.
Investor: Sounds good to me. I believe it. Do you have any more money you could put in?
You – option 1: Errr… yes, I could re-mortgage my house/use my savings/my Mum has some.
Investor – option 1: If you will not use your own money to back your idea, why should I? (end of conversation)
You – option 2: I’ve spent all my savings of $100,000 and have no more to put in.
Investor: Do any of the other Directors have money they could put in?
You – option 1: Errr… I haven’t asked them.
Investor – option 1: If your Directors will not back their own idea, why should I? (end of conversation)
You – option 2: No. One has put in $50,000 and the other $75,000 and they have no more cash available.
Investor: So how much do you need then?