Every entrepreneur knows that money for business is like oxygen for man - without it there is no life. That’s why each startup founder thinks constantly about money even from day zero. In this article we will share the most common ways to attract startup funding in Eastern Europe and especially in Bulgaria.
Let’s start with a short disclaimer 😊 Keep in mind that the more time a startup continues to grow without third-party capital, the better. The logic here is that the founders demonstrate strength, consistency, skills and ambition to get the maximum. Of course, this approach also gives the opportunity to get a better deal - selling less shares for more money.
Here founders decide to rely on their savings, time, skills and energy. This is the case mentioned in the disclaimer above. It appears to be the most favored approach by investors. The reason is that they will invest when the startup has some traction and risk is much lower. It is also the most beneficial in the long-term for the founders, but it also brings the highest risk. As it is well- known that 90% of startups fail quickly.
Another great way to fund a startup is by using pre-sales. Getting money from the customers before the product/service is ready means that it is really valuable. This is a smarter way to get a product-market-fit and even traction, which by the way is very attractive for investors. This case is usually the next step for boostrappers when they are running out of cash. Be aware that those money is the sweetest, because you make real sales. It also allows for an organic and stable growth.
3. Family andFriends
Here, founders usually raise several thousand euros which is enough for a quick, basic test of the idea. The capital is usually invested in building a minimal viable product (MVP) in 1-2 month sand a small marketing campaign in order to check the market readiness. Based on the results, founders decide how to move forward – to find the next round of funding, to pilot or to resign. It is a good way to test the idea because you spread the risk around your network and everyone is fine with losing a small amount of money.
It is a suitable approach for idea stage product companies that want to validate their idea and generate revenue for the first prototypes. Sounds great but keep in mind that crowdfunding today is a big industry and launching a campaign requires a lot of marketing effort and investment. Here the risk is that founders invest everything in marketing and if the campaign is not successful, they don’t have any feedback from the market. So, it is kind of a one- time shot. But if the shot is successful, then “Voila”. If not, you are starting from scratch with some experience.
Startup competitions are more about getting visibility of the startup rather than winning funding. Anyway, being a winner in a startup competition secures a small investment ticket but more importantly opens the doors widely for other funding resources and media coverage. It is also a good way to get feedback from experienced people in the ecosystem.
Continue to the second part > https://bit.ly/3HO0BRG