Where do you find startup capital?
I'm in the early steps of putting together a business plan. When it's finished, I'm definitely going to need to secure funding. How do you go about finding potential investors?
Tips to consider on the topic of angel investors vs. venture capitalists is appreciated as well.
Edit: In short, it's a mobile game development company with a focus on the Android platform.
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If you tell us more about your area of business (web application, SaaS hosting provider, blah) and where you're based it'll be way easier to help. Investors don't like to travel, and the smaller they are, the less they do. – John Sjölander 13 years ago
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Why are you "definitely going to need to secure funding"? – Alphadogg 13 years ago
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@John - I edited the question to include a short response and can expand if necessary. @alphadogg - I don't have the personal savings necessary to fully fund the idea myself. – Matt Huggins 13 years ago
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check out roarengine.com its all the back end systems and game mechanics you need to be able to scale so you can just focus on building the games – Ben 13 years ago
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@Ben: Do you happen to work for roarengine? – Alphadogg 13 years ago
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@Matt: Your business is actually one of the better ones to bootstrap. If it had been a restaurant chain, or some widget company, then yes you often need lots of upfront capital to build out before you can sell anything. – Alphadogg 13 years ago
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@Matt: Also, what kind of investors and where to find those kinds depends on how much you think you need. – Alphadogg 13 years ago
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@alphadogg I used to work there a few months ago now im working on a visual search engine project. Seems like a good fit for a new mobile game dev company – Ben 13 years ago
2 Answers
Short answer - get customers first, then funding options become simpler.
Here is a good venturehacks video on what to do before raising money - definitely worth a look.
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I wish I could Vote this up 100000 times! – Frank 13 years ago
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The only thing i would add is if you need to raise capital, raise it by cutting down your own personal costs first. Get a roommate, sell your car, whatever it takes. Next look at family and friends, then angels. – Frank 13 years ago
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If this is a web-based business with no need for special upfront investments I also would upvote the answer. However, since we're left with so little context from the asker, I'm going to wait. "Get customers first" just isn't an option for every company. There is a case for the fat startup. – John Sjölander 13 years ago
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Chances are that if its a "fat" startup, like bio tech or retail than the asker is biting off a lot more than he/she can chew. Even "fat" startups can start bootstrapped. – Frank 13 years ago
First, generate your own cashflow. Bootstrap it. If your idea is good, you should be able to find someone willing to buy/use it, even if at a discount. If you have customers, you don't have to give away your controlling stake when you do go for capital.
Then, get a credit line or other banking investment. In this economy, it's admittedly difficult, but not if you have contracts with steady revenue. Often a small credit line allows you to float a couple of months of payroll for growth ahead of orders, for example.
Then, when you are clearly on your way up, try to get an angel investor. You do this more for the experience/mentoring of that individual, and access to a network of contacts, than the money at this point. Very rarely does the third step occur without proof of viability of your vision. The goal for an investor is to be able to see major upside on their investment.
And, avoid VCs unless you really need serious capital fast. And, always reserve a little money for a barrel upon which to bend over.
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This is a good answer for how startups should be built, but if I'm not mistaken, the asker is asking where these investors are. And wihtout more context from him, that's hard to answer. – John Sjölander 13 years ago
