Raising Money For Your Startup (Solo Founder With a Team)

Here are some of the sources of funding I’ve seen hundreds of women founders use at this stage of building their company and some key insights to help you consider them: 

Non-dilutive sources of funding (where you don’t give up any equity):

Business Credit Cards: use your company credit cards from time to time to manage company expenses and potentially make some adhoc big purchases on credit while waiting for more revenue to come in. Most credit cards offer rewards for using their cards with specific partners, so make sure you get your reward points to clock up air miles, hotel nights and other perks to continue to remain lean and manage your monthly burn rate.

Subsídios are a great way of funding your business. They are mainly perceived as ‘free money, yet they require a lot of paperwork, reporting and time. You may get grants to do feasibility studies, carry out research or for to develop very technical/health tech types of companies. Many grants expect you to pay the expenses upfront and submit receipts for reimbursement afterwards so make sure you have enough cashflow to cover the time you are waiting for reimbursement. Research local, national and international grants, including from big corporations like Google for Startups, Cartier Women’s Initiative and make sure you use the Dell Grants Office services to help you identify and apply for the right grants at this stage.

Bank Loans: if you have a steady income coming in, or other forms of collateral you may qualify for working capital or business loans from your local bank. It’s normal to have some forms of debt funding in your business and they allow you to hold on to more equity. Explore loans from different banks, not just the current business bank you are with, and ask other founders who got loans there about the rates they negotiated to increase your bargaining power.

Competições de campo: most pitch competitions offer prizemoney which is essentially free money, no strings attached as well as other perks such as products, mentoring or learning. Take time to strategically choose the pitch competitions you will go for this year, to get you in front of the right investors you are targeting or increase your visibility to key customer groups. Be sure to check out the pitch resources from the DWEN Funding Hub below to help you have more success when pitching potential investors.

Customer revenue: The best form of funding is a paying customer. Focus on getting paying, returning customers, so you’ll have enough cashflow to build runway. Investors at this stage will really look at your revenue as signs of traction and potential, so focusing here not only gives you more financial stability, you’ll have more leverage when negotiating term sheets with potential investors. Always explore other types of customer segments or countries to increase your revenue streams. Remember to look at relevant government contracts you could service too.

Revenue financing: If you have steady, growing revenue streams, you can look into getting revenue financing (where you give up a % of future revenue for equity) or factoring, where you ‘sell’ customer invoices (mainly with big corporates or government contracts) at a discount in order to receive immediate cash. The buyer of the invoice, known as the factor, takes on the risk of collections and usually charges a fee for this service. Both can be interesting, especially if you need money upfront to pay for production runs or manage cashflow, while waiting for big clients to pay.

Donation or Rewards based Crowdfunding: Donation crowdfunding is where people make a donation to your cause without expecting something in return – usually good for social enterprises and non-profits. Rewards based crowdfunding sites help you raise money for a product or service you are building. These types of crowdfunding can be great sources of funding and help you prove a market, engage your community and inject some cash in your business. Remember that preparing a good crowdfunding campaign takes at least 3 months preparation and a lot of dedication and time to make sure you reach your target.

Pre-Sales: offering your customers to pre-buy something from you or buy a voucher in advance at a special price, are great ways for you to fund production runs of your product or service or test real demand for what you are building before your build it. Make sure you deliver that version of your product though, and don’t over promise. This was a very successful tactic for service businesses during Covid 19 lockdowns, where people could buy vouchers for services and use them once things opened up again. A good tactic to have up your sleeve.

Dilutive sources of funding:

Equity Crowdfunding: equity crowdfunding campaigns allow you to offer a limited amount of stock to many potential investors, most of whom you don’t know. This can be a good way to raise funding while proving customer traction and building your community. The equity crowdfunding platform will make you go through due diligence and charge you a commission on the amount raised as well as a fee for managing the legal documents post raise, so be sure to factor that in. You’ll still need to prepare at least 3 months in advance, and it will be up to you to drive traffic to your campaign and bring your community, so make sure you factor that time into whether or not you’ll choose this source of funding.

Accelerators: There are many accelerator programmes out there, so be sure to choose the ones that are sector specific and will bring you the best return on your time there. You’ll need to choose some key team members to come with you, while still building your business in parallel, which will be challenging and exhilarating. Remember they can take anything from 5-15% equity, some make you pay for their programmes so make sure they are a good fit. Get as much feedback from founders who have been on that specific programme to help you decide. Most accelerators offer demo days at the end, where you pitch to their investors and many founders go on to raise significant money. Many women founders I interviewed who successfully raised several rounds, have been through an accelerator programme. Investors like founders who go through accelerators as they can help de-risk key parts of the business model/product/service and most investors see accelerators as a key pipeline for potential investments.

Angel Investors / Syndicates: Angel investors are individuals or syndicates (groups of angels that co-invest together), that invest their private money in companies. Many angel investors want to be more or less active in helping you and all expect a return on investment. Make sure you choose your angels well – learn more from our DWEN Funding talks below to hear from real angels.

Early stage VCs (venture capitalists):  venture capitalists are professional investors investing money they have raised in a fund, who need to give outsized returns to their own investors. They usually only invest in high growth companies and sectors. There are more and more pre-seed and seed vcs out there, so be sure to start building relationships with them, even if you are too early for them now. If they give you a No, make sure you get precise feedback from them about their reasons and also ask for at least 3 other vcs you should talk to who could be interested. Remember, VC is not for everyone, so make sure you are on the trajectory to become a high growth company in a high growth sector with over $1B+ market size, before you approach them.

You’ll need to choose the right sources of funding for your company from the above funding menu, that fit the stage you are at. Remember above all, that raising funding takes 3-12 months and will require a lot of your time as CEO, so make sure you set up your colleagues to keep things moving while you fundraise in parallel, to ensure a greater chance of success.