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10 Ways to Fund Your Startup: Angel Investors, Incubators & Venture Capitalists



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10 Ways to Fund Your Startup: Angel Investors, Incubators & Venture Capitalists

Hello all who are looking for ways to fund your new startup idea! Over the past week or so, I've been posting 10+ ways to fund your new startup idea. And I've been posting very tangible, viable, realistic ways for you to do that. And so far, I've talked about using crowdfunding, bootstrapping and using traditional lenders such as your bank. And in this part of the series, I'm going to be talking about using Angel Investors, Incubators & Venture Capitalists. Such as what they are, how they work and how you can use them for getting funding from! 10 Ways to Fund Your Startup: Angel Investors, Incubators & Venture Capitalists

Angel Investors
Angel investors are people that will back your company or business in exchange for some ownership or equity of it. Angel investors usually team up with other angel investors in what are known as "Angel Networks" and pool all of their individual resources and connections and can also provide you with advice on how to run your business more effectively and efficiently. The only downside to using angel investors is that they only like to invest their money in sure thing businesses. Businesses that are a sure thing to be successful. Business ideas that will return their investment quickly. If your business idea doesn't practically guarantee a return of their investment plus royalties on top, it's likely they wont want to help you.

Pros:

  • These guys can be real angels hence their name "Angel" Investors proving to help your startup up idea start up and stay up!
  • They can provide your startup idea with the capital it needs to get up and running and stay up and running.
Cons:
  • Your startup business idea must be super solid and a sure fire thing for them to be interested to help.
  • They'll likely want their investment back through equity of your business or even part ownership of it.

Incubators
Incubators are people that can provide you with the things your business needs to get started such as an office room, mailboxes, phone lines, conference rooms etc. Many of them will also be able to offer your some investment and even support with finance, marketing decisions etc. They usually have established networks of experts that can guide and nurse your business to success. The only downside to using an incubator is that they will expect some return in the form of ownership or equity of your business which will have to be agreed on from the start. Another downside to using incubators is that since they will have a vested interest in your business, they may also want to be involved with the decision making process which might not always line up with your goals.

Pros:
  • They can provide you with the things your business needs to start running such as office space, phone lines and the like.
  • They can provide you with support, advice and tips on how to run your business successful and be successful with it.
Cons:
  • They will require a return on their investment through part ownership or equity of your business.
  • They may want to be told of any decisions before you make them and offer their own instead.

Venture Capitalists
Venture capitalists (or VC's for short) are people that also will invest some initial growth capital in return for some equity of your business. Like incubators, many VC agencies will also be able to provide you with business support, advice and tips to help your business become successful which could be very helpful indeed for someone that doesn't have much business knowledge and experience. The only downside to using a VC is that like incubators, they'll also have a vested stake in your business and may also want to be involved with the decision making process of things. They may even want to add a member of their team to your upper management to overview and or approve decisions first which might not be to your liking.

Pros:
  • VC's can be all you need to use for some businesses especially those without much business knowledge / experience.
  • They can provide you with business support, advice and tips to help your business grow and be successful.
Cons:
  • They will have a vested interest in your business so may want to be involved with the decision making process.
  • They may want to send in one of their team to overview your business running's and have you run things past them first.
Overview NoteAnd that completes this part of the series for using Angel Investors, Incubators & Venture Capitalists to fund your startup idea! I hope that I've explained enough about each of them and their pros and cons to give you enough insight into using each.
Have you ever used an Angel Investor, Incubator or Venture Capitalist to fund your startup?

Comments

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Makefort

Thanks for sharing. This is definitely nice to know. The bad thing is, if you are starting something on your own and want it to liven up to your expectations, having someone who wants it to go otherwise could lead to problems. If I could, I would avoid these deals. You want your own company with your own goals, right? Getting investors is a good thing, but getting investors that might also ruin your dreams isn't something many people would like to see.




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idealmike

Yeah damn straight! If I was to use an AC or VC and they was to tell me something like they don't like my decision and want to do x instead and I didn't thing that fitted with my goal. I'd be like hold on, this is my startup and the whole reason we're all here in the first place let's not forget that. But then, I would have to remember why they are there as well and that without them, there might not even be any decisions to be made. It's one of those things where you have to sort of bite your tongue for a while because even though in the short term, it's not doing things how you want them done, it's still getting them done so that in the long run, eventually, you can shake off your VC and wave goodbye to your angel depending on the deal you closed from the start. Some of them are in it for life! But if your business makes you a mint who cares if it's working and living its dream. If you get there, call me lol 10 Ways to Fund Your Startup: Angel Investors, Incubators & Venture Capitalists




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Makefort

Yeah, I guess if your deal is good and you can shake them off afterwards that would work out. But that is where people should be careful though. You do not want to make bad deals that might give you such issues in the first place. I guess that you could keep an eye out for more than 1 potential investor at the time and later categorize them and see what each of them wants and what is the best thing for you in the end.




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overcast

I prefer bootstrapping for the same reason. I don't have the resources to stand up for the angel investors. And without investment you don't grow quickly. So another thing is that venture capitalist can be another reason people have to fix as well. Things need to be thought about when it comes to managing the funds. I have realized that startups take various ways to fix that sort of issue. But based on what I have found out it seems like VC around the world needs to be changed.




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augusta

These are the people we really need to kick start that conglomerate that we are dreaming of.We really need angel investors to help us with the initial business capital because without a little bit of capital,we can't even lift a business from the ground. So we needed them,then the incubators and capitalist can follow.Nice strategy I must say.




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vinaya

I think Angel Inverters are the right investors for me. However, at this moment any kind of investor whether he is an angel investor, incubator investor or venture capitalist, will do for me. I have a brick and mortar business. I invested about $20000, which is a lot of money in my home country, however, from the day one, the business caught into a problem. I lost my asset and my sales did not meet the running cost.




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Corzhens

I have second thoughts with the so called angel investors. To give them a portion of the ownership is not a bad idea since those investors are putting in money to the business. However, what happens if those investors would stand up and claim the business? You will be left out in the cold. That has happened many times and I guess it’s still happening that when the business gets going, the founder of the business loses the ownership to the investors.




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